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Note 3 - Leases

3 Months Ended

May 01, 2021

3. Leases

The majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most new retail store leases have an original term of a five to ten-year base period and may include renewal options to extend the lease term beyond the initial base period. The extension periods are typically much shorter than the original lease term giving the Company's strategic decision to maintain a high level of lease optionality. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.

The table below presents certain information related to the lease costs for operating leases for the thirteen weeks ended May 1, 2021 and May 2, 2020 (in thousands).

	*Thirteen weeks ended*
	*May 1, 2021*		*May 2, 2020*

Operating lease costs		8,580		9,656
Variable lease costs		879		274
Short term lease costs		14		88
Total Operating Lease costs	$	9,473	$	10,018

Other information

The table below presents supplemental cash flow information related to leases for the thirteen weeks ended May 1, 2021 and May 2, 2020 (in thousands).

	*Thirteen weeks ended*
	*May 1, 2021*		*May 2, 2020*
Operating cash flows for operating leases		11,129		7,455

Operating cash flow for the fiscal 2021 first quarter exceeded expense recorded for the same period, which is expected to continue for the remainder of fiscal 2021, as the Company's deferred rent obligations obtained during rent negotiations in fiscal 2020 are to be paid during fiscal 2021. The Company has approximately $3.6 million remaining of rent deferrals to be paid in the remainder of fiscal 2021.

As of May 1, 2021 and May 2, 2020, the weighted-average remaining operating lease term was 4.7 years and 5.6 years, respectively, and the weighted-average discount rate was 6.0% and 6.1%, respectively, for operating leases recognized on the Company's Condensed Consolidated Balance Sheets.

For the thirteen weeks ended May 1, 2021, the Company did not incur impairment charges against its right-of-use operating lease assets. For the thirteen weeks ended May 2, 2020, the Company incurred right-of-use asset impairment charges of $2.4 million.

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 operating lease liabilities recorded on the balance sheet (in thousands).

Operating Leases
2021		28,659
2022		31,804
2023		26,416
2024		22,030
2025		16,438
Thereafter		20,642
Total minimum lease payments		145,989
Less: amount of lease payments representing interest		(19,704	)
Present value of future minimum lease payments		126,285
Less: current obligations under leases		(30,631	)
Long-term lease obligations	$	95,654

As of May 1, 2021, the Company had an additional executed lease that had not yet commenced with operating lease liabilities of $0.2 million. This lease is expected to commence in 2021 with a lease term of two years.