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Note 3 - Leases

9 Months Ended

Oct. 30, 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 thirty-nine weeks ended October 30, 2021 and October 31, 2020 (in thousands).

	*Thirteen weeks ended*				*Thirty-nine weeks ended*
	*October 30, 2021*		*October 31, 2020*		*October 30, 2021*		*October 31, 2020*

Operating lease costs		8,537		8,880		25,849		28,464
Variable lease costs		1,596		1,000		3,762		1,422
Short term lease costs		16		17		46		111
Total Operating Lease costs	$	10,149	$	9,897	$	29,657	$	29,997

Other information

The table below presents supplemental cash flow information related to leases for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 (in thousands).

Thirteen weeks ended

Thirty-nine weeks ended

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Operating cash flows for operating leases

10,817

9,949

33,289

25,878

Operating cash flow for operating leases for the third 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 $0.7 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 October 30, 2021 and October 31, 2020, the weighted-average remaining operating lease term was 4.5 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 thirty-nine weeks ended October 30, 2021, the Company did not incur impairment charges against its right-of-use operating lease assets. For the thirteen and thirty-nine weeks ended October 31, 2020, the Company incurred right-of-use asset impairment charges of $0.1 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		7,635
2022		32,407
2023		26,384
2024		21,980
2025		16,379
Thereafter		21,111
Total minimum lease payments		125,896
Less: amount of lease payments representing interest		(16,381	)
Present value of future minimum lease payments		109,515
Less: current obligations under leases		(26,815	)
Long-term lease obligations	$	82,700

As of October 30, 2021, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $1.5 million. These leases are expected to commence in the fourth quarter of fiscal 2021 with lease terms ranging from five to ten years.