Leases

12 Months Ended

Jan. 31, 2021

The Company leases all of its fulfillment and customer service centers and corporate offices under non-cancelable operating lease agreements. The terms of the Company’s real estate leases generally range from 5 to 15 years and typically allow for the leases to be renewed for up to three additional five-year terms. Fulfillment and customer service centers and corporate office leases expire at various dates through 2034, excluding renewal options. The Company also leases certain equipment under operating and finance leases. The terms of equipment leases generally range from 3 to 5 years and do not contain renewal options. These leases expire at various dates through 2025.

The Company’s finance leases as of January 31, 2021 and February 2, 2020 were not material and were included in property and equipment, on the Company's consolidated balance sheets. The table below presents the operating lease-related assets and liabilities recorded on the consolidated balance sheets (in thousands):


		As of
Leases	Balance Sheet Classification	January 31, 2021		February 2, 2020
Assets
Operating	Operating lease right-of-use assets	$	297,213	$	179,052
Total operating lease assets		$	297,213	$	179,052

Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	19,142	$	15,491
Non-current
Operating	Operating lease liabilities	328,231		200,439
Total operating lease liabilities		$	347,373	$	215,930

For Fiscal Year 2020 and Fiscal Year 2019, assets acquired in exchange for new operating lease liabilities were $119.0 million and $30.7 million, respectively. Lease expense primarily related to operating lease costs and were included within selling, general and administrative expenses in the consolidated statements of operations. Lease expense for Fiscal Year 2020 and Fiscal Year 2019 was $62.2 million, and $47.9 million, of which short-term and variable lease payments were $12.2 million and $9.3 million, respectively.

As of January 31, 2021, the weighted-average remaining lease term and weighted-average discount rate for operating leases was 12.3 years and 9.8%, respectively. As of February 2, 2020, the weighted-average remaining lease term and weighted-average discount rate for operating leases was 10.4 years and 11.3%, respectively.

Operating cash flows related to cash paid for operating leases were approximately $52.9 million and $37.9 million for Fiscal Years 2020 and 2019, respectively.

The table below presents the maturity of lease liabilities as of January 31, 2021 (in thousands):


	Operating Leases
2021	$	42,983
2022	51,005
2023	48,003
2024	44,135
2025	43,856
Thereafter	372,801
Total lease payments	602,783
Less: interest	255,410
Present value of lease liabilities	$	347,373

The table above includes all locations for which the Company had the right to control the use of the property. In addition, as of January 31, 2021, the Company had lease arrangements which had not yet commenced with total future lease payments of $167.5 million. The lease term for these lease arrangements is approximately 17.0 years.

On August 12, 2020, the Company finalized agreements with a local government agency for certain ad valorem tax benefits provided to the Company in connection with a maximum capital investment of $70.0 million in property, plant, and equipment purchases for a new fulfillment center over a three-year timeframe. To facilitate the incentives, the government agency will issue its Taxable Industrial Development Revenue Bonds, Series 2020 (the “Bonds”), in a maximum aggregate principal amount of $70.0 million. In exchange for the Bonds, the Company will convey the purchased equipment to the local government agency and will lease the equipment from this agency. The Company will not pay any cash for the Bonds nor receive any cash for the conveyance of the equipment. Upon termination of the lease, including early termination, the equipment will be conveyed to the Company for a nominal fee.