XML 19 R8.htm IDEA: XBRL DOCUMENT

Note 3 - Leases

6 Months Ended

Jul. 31, 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 and twenty-six weeks ended July 31, 2021 and August 1, 2020 (in thousands).

	*Thirteen weeks ended*				*Twenty-six weeks ended*
	*July 31, 2021*		*August 1, 2020*		*July 31, 2021*		*August 1, 2020*

Operating lease costs		8,732		9,928		17,312		19,584
Variable lease costs		1,288		148		2,167		422
Short term lease costs		16		6		30		94
Total Operating Lease costs	$	10,036	$	10,082	$	19,509	$	20,100

Other information

The table below presents supplemental cash flow information related to leases for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 (in thousands).

Thirteen weeks ended

Twenty-six weeks ended

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Operating cash flows for operating leases

11,343

8,474

22,472

15,929

Operating cash flow for the second quarter and year-to-date fiscal 2021 exceeded expense recorded for the same periods, 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 $2.3 million remaining of rent deferrals to be paid in the remainder of fiscal 2021, whose liability is recorded in the Operating lease liability short term line of the Condensed Consolidated Balance Sheet.

As of July 31, 2021 and August 1, 2020, the weighted-average remaining operating lease term was 4.6 years and 5.0 years, respectively, and the weighted-average discount rate was 6.0% and 6.0%, respectively, for operating leases recognized on the Company's Condensed Consolidated Balance Sheets.

For the thirteen and twenty-six weeks ended July 31, 2021, the Company did not incur impairment charges against its right-of-use operating lease assets. For the thirteen and twenty-six weeks ended August 1, 2020, the Company incurred right-of-use asset impairment charges of $1.2 million and $3.6 million, respectively.

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		18,450
2022		32,181
2023		26,296
2024		21,898
2025		16,287
Thereafter		20,612
Total minimum lease payments		135,724
Less: amount of lease payments representing interest		(17,822	)
Present value of future minimum lease payments		117,902
Less: current obligations under leases		(28,019	)
Long-term lease obligations	$	89,883

As of July 31, 2021, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $2.0 million. These leases are expected to commence in 2021 with lease terms ranging from one to three years.