XML 18 R8.htm IDEA: XBRL DOCUMENT

Note 3 - Leases

9 Months Ended

Oct. 28, 2023

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 and thirty-nine weeks ended October 28, 2023 and October 29, 2022 (in thousands).

	*Thirteen weeks ended*				*Thirty-nine weeks ended*
	*October 28, 2023*		*October 29, 2022*		*October 28, 2023*		*October 29, 2022*

Operating lease costs	$	9,261	$	8,905	$	27,357	$	25,874
Variable lease costs ⁽¹⁾		2,134		2,039		6,374		6,228
Short term lease costs		34		19		74		46
Total Operating Lease costs	$	11,429	$	10,963	$	33,805	$	32,148

(1)

Variable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines.

Other information

The table below presents supplemental cash flow information related to leases for the thirteen and thirty-nine weeks ended October 28, 2023 and October 29, 2022 (in thousands).

	*Thirteen weeks ended*				*Thirty-nine weeks ended*
	*October 28, 2023*		*October 29, 2022*		*October 28, 2023*		*October 29, 2022*
Operating cash flows for operating leases	$	9,994	$	9,497	$	29,775	$	27,772

As of October 28, 2023 and October 29, 2022, the weighted-average remaining operating lease term was 4.0 years and 4.3 years, respectively, and the weighted-average discount rate was 6.5% and 5.7%, respectively, for operating leases recognized on the Company's condensed consolidated balance sheets.

For the thirteen and thirty-nine weeks ended October 28, 2023 and the thirteen and thirty-nine weeks ended October 29, 2022 the Company incurred no 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
2023	$	1,306
2024		31,110
2025		20,855
2026		12,765
2027		7,994
Thereafter		15,797
Total minimum lease payments		89,827
Less: amount of lease payments representing interest		(11,402	)
Present value of future minimum lease payments		78,425
Less: current obligations under leases		(26,002	)
Long-term lease obligations	$	52,423

As of October 28, 2023, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $12.9 million. These leases are expected to commence in the fourth quarter of fiscal 2023 and the first quarter of fiscal 2024 with lease terms of five to ten years.