LEASES

3 Months Ended

May 03, 2024

The Company enters into leasing transactions in which the Company is the lessee. These lease contracts are typically classified as operating leases. The Company’s lease contracts are generally for office buildings used to conduct its business, and the determination of whether such contracts contain leases generally does not require significant estimates or judgments. The Company also leases certain global logistics warehouses, employee vehicles, and equipment. As of May 3, 2024, the remaining terms of the Company’s leases range from one month to approximately ten years. As of May 3, 2024 and February 2, 2024, there were no material finance leases in which the Company was a lessee.

The Company also enters into leasing transactions in which the Company is the lessor, primarily through customer financing arrangements offered through DFS. DFS originates leases that are primarily classified as either sales-type leases or operating leases. See Note 4 of the Notes to the Condensed Consolidated Financial Statements for more information about the Company’s lessor arrangements.

The following table presents components of lease costs included in the Condensed Consolidated Statements of Income for the periods indicated:


	Three Months Ended
		May 3, 2024		May 5, 2023

		(in millions)
Operating lease costs		$	71	$	79
Variable costs		18		24
Total lease costs		$	89	$	103

During the three months ended May 3, 2024 and May 5, 2023, sublease income, finance lease costs, and short-term lease costs were immaterial.

The following table presents supplemental information related to operating leases included in the Condensed Consolidated Statements of Financial Position as of the dates indicated:


	Classification	May 3, 2024			February 2, 2024

		(in millions, except for term and discount rate)
Operating lease right-of-use assets	Other non-current assets	$	643		$	707

Current operating lease liabilities	Accrued and other current liabilities	$	242		$	253
Non-current operating lease liabilities	Other non-current liabilities	520			576
Total operating lease liabilities		$	762		$	829

Weighted-average remaining lease term (in years)		4.34			4.56
Weighted-average discount rate		4.93		%	4.79		%

The following table presents supplemental cash flow information related to leases for the periods indicated:


	Three Months Ended
	May 3, 2024		May 5, 2023

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities — operating cash outflows from operating leases	$	69	$	77

Right-of-use assets obtained in exchange for new operating lease liabilities	$	10	$	81

The following table presents the future maturity of the Company’s operating lease liabilities under non-cancelable leases and reconciles the undiscounted cash flows for these leases to the lease liability recognized on the Condensed Consolidated Statements of Financial Position as of the date indicated:


	May 3, 2024
	(in millions)
Fiscal 2025 (remaining nine months)	$	187
Fiscal 2026	205
Fiscal 2027	167
Fiscal 2028	121
Fiscal 2029	73
Thereafter	84
Total lease payments	837
Less: Imputed interest	75
Total	$	762
Current operating lease liabilities	$	242
Non-current operating lease liabilities	$	520

As of May 3, 2024, the Company’s undiscounted operating leases that had not yet commenced were immaterial.