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Note 3 - Leases

3 Months Ended

Apr. 30, 2022

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 given 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 April 30, 2022 and May 1, 2021 (in thousands).

	*Thirteen weeks ended*
	*April 30, 2022*		*May 1, 2021*

Operating lease costs		8,344		8,580
Variable lease costs		2,130		879
Short term lease costs		18		14
Total Operating Lease costs	$	10,492	$	9,473

Other information

The table below presents supplemental cash flow information related to leases for the thirteen weeks ended April 30, 2022 and May 1, 2021 (in thousands).

	*Thirteen weeks ended*
	*April 30, 2022*		*May 1, 2021*
Operating cash flows for operating leases		8,741		11,129

Operating cash flows for operating leases for the first quarter of fiscal 2022 decreased from the operating cash flows for operating leases for the same period in fiscal 2021, which is expected to continue for the remainder of fiscal 2022, as the Company made payments related to lease deferrals in fiscal 2021 that were negotiated in fiscal 2020 during the pandemic.

As of April 30, 2022 and May 1, 2021, the weighted-average remaining operating lease term was 4.5 years and 4.7 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 weeks ended April 30, 2022 and for the thirteen weeks ended May 1, 2021, the Company did not incur impairment charges against its right-of-use operating lease assets.

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
2022		20,921
2023		25,634
2024		20,757
2025		15,185
2026		8,813
Thereafter		11,617
Total minimum lease payments		102,927
Less: amount of lease payments representing interest		(12,840	)
Present value of future minimum lease payments		90,087
Less: current obligations under leases		(23,470	)
Long-term lease obligations	$	66,617

As of April 30, 2022, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $2.7 million. These leases are expected to commence in the second and third quarters of fiscal 2022 with lease terms ranging from one to ten years.