Leases (Notes)

12 Months Ended

Jan. 30, 2021

LeasesThe Company determines if an arrangement contains a lease at the inception of a contract. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and operating lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the rate implicit in the lease is not readily determinable for the Company's leases, the Company utilizes its incremental borrowing rate to determine the present value of future lease payments. The incremental borrowing rate represents a significant judgment and is determined based on an analysis of the Company's synthetic credit rating, prevailing financial market conditions, corporate bond yields, treasury bond yields, and the effect of collateralization. The operating lease assets also include lease payments made before commencement and exclude lease incentives.

The Company’s real estate leases typically contain options that permit renewals for additional periods of up to five years. For real estate leases, except for renewals that generally take the lease to a ten-year term, the options to renew are not considered reasonably certain at lease commencement because the Company reevaluates each lease on a regular basis to consider the economic and strategic benefits of exercising the renewal options, and regularly opens, relocates or closes stores to align with its operating strategy. Therefore, generally, except for renewals that take the lease to a ten-year term, the renewal option periods are not included within the lease term and the associated payments are not included in the measurement of the operating lease asset and operating lease liability as the exercise of such options is not reasonably certain. The Company’s operating lease agreements, including assumed renewals, which are generally those that take the lease to a ten-year term, expire through fiscal 2034. Similarly, renewal options are not included in the lease term for non-real estate leases because they are not considered reasonably certain of being exercised at lease commencement. Leases with an initial term of 12 months or less are not recorded on the balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

For certain real estate leases, the Company accounts for lease components and nonlease components as a single lease component. Certain real estate leases require additional payments for reimbursement of real estate taxes, common area maintenance and insurance as well as payments based on sales volume, all of which are expensed as incurred as variable lease costs. Other real estate leases contain one fixed lease payment that includes real estate taxes, common area maintenance and insurance. These fixed payments are considered part of the lease payment and included in the operating lease assets and operating lease liabilities.

In response to the COVID-19 pandemic, certain of the Company's landlords agreed to temporary rent concessions. These rent concessions generally related to abatements and deferrals of certain rent payments due between April through October into future periods.

In accordance with the Financial Accounting Standards Board's recent staff guidance regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the obligations of the lessee as if the enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and right-of-use assets. For qualifying rent abatement concessions, the Company has recorded negative variable lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a non-interest bearing payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future.

All of the Company's leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. As of January 30, 2021 and February 1, 2020, the weighted average remaining lease term for the Company's operating leases was 7.9 years and 8.1 years respectively, and the weighted average discount rate is 6.2% and 6.6%, respectively.

The following table is a summary of the Company's components for net lease costs as of January 30, 2021 and February 1, 2020 (in thousands):


	Fifty-Two Weeks Ended
Lease Cost		January 30, 2021		February 1, 2020
Operating lease cost		$	171,390	$	144,971
Variable lease cost		46,638		40,379
Net lease cost*		$	218,028	$	185,350

* Excludes short-term lease cost, which is immaterial

The following table summarizes the maturity of lease liabilities under operating leases as of January 30, 2021 (in thousands):


Maturity of Lease Liabilities	Operating Leases
2021	$	204,238
2022	188,402
2023	181,274
2024	170,271
2025	155,514
After 2025	494,814
Total lease payments	1,394,513
Less: imputed interest	284,184
Present value of lease liabilities	$	1,110,329

The following table summarizes the supplemental cash flow disclosures related to leases as of January 30, 2021 and February 1, 2020 (in thousands):


	Fifty-Two Weeks Ended
	January 30, 2021		February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Cash payments arising from operating lease liabilities (1)	$	134,130	$	129,670
Supplemental non-cash information:
Operating lease liabilities arising from obtaining right-of-use assets	$	233,174	$	273,832

(1) Included within operating activities in the Company's Consolidated Statements of Cash Flows.

As of January 30, 2021, the Company has entered into commitments for new stores for which the leases have not yet commenced that have future minimum lease payments of approximately $174.5 million.

During the fifty-two weeks ended January 30, 2021, the Company committed to 138 new store leases with average terms of approximately ten years that have future minimum lease payments of approximately $286.8 million.

The following disclosures for the year ended February 2, 2019 were made in accordance with the accounting guidance for operating leases in effect at that time.

The Company’s minimum rental commitments under operating lease agreements, including assumed extensions, as of February 2, 2019, are as follows (in thousands):


Fiscal Year	Retail stores		Corporate office, distribution centers and other		Total
2019	$	136,858	$	10,529	$	147,387
2020	139,892		11,885		151,777
2021	133,356		11,834		145,190
2022	123,858		11,441		135,299
2023	115,229		9,897		125,126
Thereafter	379,150		55,071		434,221
	$	1,028,343	$	110,657	$	1,139,000

Rent expense, including base and contingent rent under operating leases, was $119.0 million in fiscal 2018. Contingent rents was $0.6 million in fiscal 2018.

From January 31, 2021 to March 18, 2021, the Company committed to 23 new leases with terms of ten years that have future minimum lease payments of approximately $46.0 million.