Leases

9 Months Ended

Nov. 02, 2019

9. Leases

The Company leases all store premises, some of its office space and certain information technology and office equipment. These leases are generally classified as operating leases.

Store leases generally provide for a combination of base rentals and contingent rent based on store sales. Additionally, most leases include lessor incentives such as construction allowances and rent holidays. The Company is typically responsible for tenant occupancy costs including maintenance costs, common area charges, real estate taxes, and certain other expenses.

Most leases include one or more options to renew. The exercise of lease renewal options is at the Company’s discretion and is not reasonably certain at lease commencement. When measuring ROU assets and lease liabilities after the date of adoption of ASC 842, the Company only includes cash flows related to options to extend or terminate leases once those options are executed.

Some leases have variable payments. However, because they are not based on an index or rate, they are not included in the measurement of ROU assets and lease liabilities.

The Company uses its incremental borrowing rate as a basis for the discount rates used in the measurement of ROU assets and lease liabilities.

For leases that qualify for the short-term lease exemption, the Company does not record a lease liability or ROU asset. Short-term lease payments are recognized on a straight-line basis over the lease term of 12 months or less.

	13 Weeks Ended			39 Weeks Ended
	Nov 2, 2019			Nov 2, 2019
(In thousands)
Lease costs
Operating lease costs	$	89,382		$	257,463
Variable lease costs		24,268			72,723
Short-term leases and other lease costs		7,752			31,653
Total lease costs	$	121,402		$	361,839

Other information
Cash paid for operating lease liability	$	(82,422	)	$	(235,825	)
New ROU asset for operating leases entered into during the period	$	98,194		$	254,121

Lease term and discount rate		Nov 2, 2019
Weighted-average remaining lease term - operating leases		6.4 years
Weighted-average discount rate - operating leases		5.1%

The table below is a maturity analysis of the operating leases in effect as of the end of the period. Undiscounted cash flows for finance leases and short-term leases are not material for the periods reported and are excluded from the table below:

	Undiscounted cash flows
	Nov 2, 2019
(In thousands)
Fiscal years:
2019 (remaining 13 weeks)	$	61,493
2020		370,199
2021		329,180
2022		277,434
2023		255,086
Thereafter		667,638
Total undiscounted cash flows	$	1,961,030
Less: discount on lease liability		(314,899	)
Total lease liability	$	1,646,131