Leases (Notes)

3 Months Ended

Mar. 31, 2021

– Leases

The Company leases office space, sample production space, warehouses, showrooms, storage units and retail stores under operating leases. The Company’s portfolio of leases is primarily related to real estate. Since most of its leases do not provide a readily determinable implicit rate, the Company estimated its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Some of the leases for the Company’s retail store leases provide for variable lease payments based on future sales volumes at the leased location, which are not measurable at the inception of the lease and are therefore not included in the measurement of the right-of-use assets and lease liabilities. Under ASC 842, these variable lease costs are expensed as incurred.

As a result of the effects of the COVID-19 pandemic, the Company executed amendments to certain leases in its existing operating lease portfolio which included changes to rental payments either to be fully or partially based on the future sales volumes at the leased location or in the form of rent abatements or reductions of the remaining lease costs obligations. The Company considered these concessions in accordance with the FASB Staff Q&A—Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic (the “Lease Modification Q&A”), and determined that the concessions resulted in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, the Company elected to account for these concessions as if they were contemplated in the enforceable rights and obligations of the existing contract.

The Company made payments amounting to $6,570 for COVID-19 lease amendments during the three months ended March 31, 2021 which are included in variable lease costs.

Lease Position

The table below presents the lease-related assets and liabilities recorded on the balance sheet as of March 31, 2021 and December 31, 2020:


	Classification on the Balance Sheet	March 31, 2021			December 31, 2020
Assets
Noncurrent (1) (2)	Operating lease right-of-use asset	$	99,510		$	101,379

Liabilities
Current	Operating leases - current portion	$	33,359		$	34,257
Noncurrent	Operating leases - long-term portion	96,246			98,592
Total operating lease liabilities		$	129,605		$	132,849

Weighted-average remaining lease term		5.0 years			5.0 years
Weighted-average discount rate		4.2		%	4.3		%

(1) During the first quarter of 2021, the Company recorded a pre-tax impairment charge related to its right-of-use assets of $433

(2) During the year ended December 31, 2020, the Company recorded a pre-tax impairment charge related to its right-of-use assets of $22,183.

Lease Costs

The table below presents certain information related to lease costs during the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021		2020
Operating lease cost	$	10,192	$	11,383
Variable lease cost (1)	7,343		43
Short-term lease cost	—		13
Less: sublease income	80		201
Total lease cost	$	17,455	$	11,238

(1) The Company has incurred lease modification expenses of $6,570 which have been included in variable lease cost for the three months ended March 31, 2021.

Other Information

The table below presents supplemental cash flow information related to leases as of the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	10,901	$	11,545


	Three Months Ended March 31,
	2021		2020
Noncash transactions:
Right-of-use asset obtained in exchange for new operating lease liabilities	$	7,283	$	—
Right-of-use asset amortization expense	$	8,770	$	10,333

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities recorded on the balance sheet as of March 31, 2021:


2021 (remaining 9 months)	$	30,199
2022	32,274
2023	23,792
2024	18,740
2025	15,345
Thereafter	23,398
Total minimum lease payments	143,748
Less: interest	14,143
Present value of lease liabilities	$	129,605