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Lease Accounting (Notes) | 12 Months Ended
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Feb. 01, 2020
Leases [Abstract] |
Lease Accounting | Lease Accounting The Company primarily leases its showrooms, advertising, licensing, sales and merchandising offices, remote distribution and warehousing facilities and retail and factory outlet store locations under operating lease agreements expiring on various dates through January 2039. The Company also leases some of its equipment as well as computer hardware and software under operating and finance lease agreements expiring on various dates through May 2027. The Company’s lease agreements primarily provide for lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 24%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for rents primarily based upon a percentage of annual sales volume which average approximately 35% of annual sales volume. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $11.9 million for leases where the Company has not yet taken possession of the underlying asset as of February 1, 2020. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s consolidated balance sheet as of February 1, 2020. As of February 1, 2020, the components of leases and lease costs are as follows (in thousands):
| Feb 1, 2020
Assets | Balance Sheet Location |
Operating | Operating right-of-use assets | $ | 851,990 |
Finance | Property and equipment, net | 15,972 |
Total lease assets | $ | 867,962 |
Liabilities | Balance Sheet Location |
Current: |  |
Operating | Current portion of operating lease liabilities | $ | 192,066 |
Finance | Current portion of borrowings and finance lease obligations | 2,273 |
Noncurrent: |  |
Operating | Long-term operating lease liabilities | 714,079 |
Finance | Long-term debt and finance lease obligations | 14,262 |
Total lease liabilities | $ | 922,680 |
|  | Year Ended Feb 1, 2020
| Income Statement Location |
Operating lease costs 1 | Cost of product sales | $ | 244,222 |
Operating lease costs 1 | Selling, general and administrative expenses | 24,565 |
Finance lease costs |  |
Amortization of leased assets 2 | Cost of product sales | 2,793 |
Amortization of leased assets 2 | Selling, general and administrative expenses | 4,197 |
Interest on lease liabilities | Interest expense | 1,035 |
Variable lease costs 1 | Cost of product sales | 93,534 |
Variable lease costs 1 | Selling, general and administrative expenses | 2,227 |
Short-term lease costs 1 | Cost of product sales | 344 |
Short-term lease costs 1 | Selling, general and administrative expenses | 3,543 |
Total lease costs | $ | 376,460 |
______________________________________________________________________
1 | Rental expense for all property and equipment operating leases during fiscal 2019 and fiscal 2018 aggregated to $292.1 million and $272.3 million, respectively, including percentage rent of $67.2 million and $61.2 million, respectively. During fiscal 2019 and fiscal 2018, the Company also recognized insurance, taxes, sales promotion, common area maintenance and certain utility charges that were paid to the landlord totaling $72.3 million and $75.6 million, respectively, related to its operating leases.
2 | Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s consolidated statements of income (loss).
Maturities of the Company’s operating and finance lease liabilities as of February 1, 2020 are as follows (in thousands):
| Operating Leases |  |  |  |
| Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total
Maturity of Lease Liabilities: |  |  |  |  |  |  |
2021 | $ | 218,109 |  |  | $ | 2,255 |  |  | $ | 3,349 |  |  | $ | 223,713 |
2022 | 197,857 |  |  | 257 |  |  | 3,653 |  |  | 201,767 |
2023 | 165,367 |  |  | — |  |  | 3,249 |  |  | 168,616 |
2024 | 137,637 |  |  | — |  |  | 3,092 |  |  | 140,729 |
2025 | 95,058 |  |  | — |  |  | 2,311 |  |  | 97,369 |
After 2025 | 186,781 |  |  | — |  |  | 4,922 |  |  | 191,703 |
Total lease payments | 1,000,809 |  |  | 2,512 |  |  | 20,576 |  |  | 1,023,897 |
Less: Interest | 97,132 |  |  | 44 |  |  | 4,041 |  |  | 101,217 |
Present value of lease liabilities | $ | 903,677 |  |  | $ | 2,468 |  |  | $ | 16,535 |  |  | $ | 922,680 |
Other supplemental information as of February 1, 2020 is as follows (dollars in thousands):
| Feb 1, 2020
Lease Term and Discount Rate: |
Weighted-average remaining lease term (years) |
Operating leases | 5.9 years
Finance leases | 6.4 years
Weighted-average discount rate |
Operating leases | 3.5%
Finance leases | 7.1%
| Year Ended Feb 1, 2020
Supplemental Cash Flow Information: |
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 250,972 |
New operating ROU assets obtained in exchange for lease liabilities | 127,232 |
Impairment During fiscal 2020, the Company recorded asset impairment charges of $1.0 million related primarily to ROU assets at certain retail locations in North America. The asset impairment charges were determined based on the excess of the carrying value over the fair value of the ROU assets. The Company uses market participant rents to calculate fair value of ROU assets. Refer to Note 1 for more information on the Company’s impairment testing.
Lease Accounting | Lease Accounting The Company primarily leases its showrooms, advertising, licensing, sales and merchandising offices, remote distribution and warehousing facilities and retail and factory outlet store locations under operating lease agreements expiring on various dates through January 2039. The Company also leases some of its equipment as well as computer hardware and software under operating and finance lease agreements expiring on various dates through May 2027. The Company’s lease agreements primarily provide for lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 24%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for rents primarily based upon a percentage of annual sales volume which average approximately 35% of annual sales volume. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $11.9 million for leases where the Company has not yet taken possession of the underlying asset as of February 1, 2020. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s consolidated balance sheet as of February 1, 2020. As of February 1, 2020, the components of leases and lease costs are as follows (in thousands):
| Feb 1, 2020
Assets | Balance Sheet Location |
Operating | Operating right-of-use assets | $ | 851,990 |
Finance | Property and equipment, net | 15,972 |
Total lease assets | $ | 867,962 |
Liabilities | Balance Sheet Location |
Current: |  |
Operating | Current portion of operating lease liabilities | $ | 192,066 |
Finance | Current portion of borrowings and finance lease obligations | 2,273 |
Noncurrent: |  |
Operating | Long-term operating lease liabilities | 714,079 |
Finance | Long-term debt and finance lease obligations | 14,262 |
Total lease liabilities | $ | 922,680 |
|  | Year Ended Feb 1, 2020
| Income Statement Location |
Operating lease costs 1 | Cost of product sales | $ | 244,222 |
Operating lease costs 1 | Selling, general and administrative expenses | 24,565 |
Finance lease costs |  |
Amortization of leased assets 2 | Cost of product sales | 2,793 |
Amortization of leased assets 2 | Selling, general and administrative expenses | 4,197 |
Interest on lease liabilities | Interest expense | 1,035 |
Variable lease costs 1 | Cost of product sales | 93,534 |
Variable lease costs 1 | Selling, general and administrative expenses | 2,227 |
Short-term lease costs 1 | Cost of product sales | 344 |
Short-term lease costs 1 | Selling, general and administrative expenses | 3,543 |
Total lease costs | $ | 376,460 |
______________________________________________________________________
1 | Rental expense for all property and equipment operating leases during fiscal 2019 and fiscal 2018 aggregated to $292.1 million and $272.3 million, respectively, including percentage rent of $67.2 million and $61.2 million, respectively. During fiscal 2019 and fiscal 2018, the Company also recognized insurance, taxes, sales promotion, common area maintenance and certain utility charges that were paid to the landlord totaling $72.3 million and $75.6 million, respectively, related to its operating leases.
2 | Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s consolidated statements of income (loss).
Maturities of the Company’s operating and finance lease liabilities as of February 1, 2020 are as follows (in thousands):
| Operating Leases |  |  |  |
| Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total
Maturity of Lease Liabilities: |  |  |  |  |  |  |
2021 | $ | 218,109 |  |  | $ | 2,255 |  |  | $ | 3,349 |  |  | $ | 223,713 |
2022 | 197,857 |  |  | 257 |  |  | 3,653 |  |  | 201,767 |
2023 | 165,367 |  |  | — |  |  | 3,249 |  |  | 168,616 |
2024 | 137,637 |  |  | — |  |  | 3,092 |  |  | 140,729 |
2025 | 95,058 |  |  | — |  |  | 2,311 |  |  | 97,369 |
After 2025 | 186,781 |  |  | — |  |  | 4,922 |  |  | 191,703 |
Total lease payments | 1,000,809 |  |  | 2,512 |  |  | 20,576 |  |  | 1,023,897 |
Less: Interest | 97,132 |  |  | 44 |  |  | 4,041 |  |  | 101,217 |
Present value of lease liabilities | $ | 903,677 |  |  | $ | 2,468 |  |  | $ | 16,535 |  |  | $ | 922,680 |
Other supplemental information as of February 1, 2020 is as follows (dollars in thousands):
| Feb 1, 2020
Lease Term and Discount Rate: |
Weighted-average remaining lease term (years) |
Operating leases | 5.9 years
Finance leases | 6.4 years
Weighted-average discount rate |
Operating leases | 3.5%
Finance leases | 7.1%
| Year Ended Feb 1, 2020
Supplemental Cash Flow Information: |
Cash paid for amounts included in the measurement of lease liabilities |
Operating cash flows from operating leases | $ | 250,972 |
New operating ROU assets obtained in exchange for lease liabilities | 127,232 |
Impairment During fiscal 2020, the Company recorded asset impairment charges of $1.0 million related primarily to ROU assets at certain retail locations in North America. The asset impairment charges were determined based on the excess of the carrying value over the fair value of the ROU assets. The Company uses market participant rents to calculate fair value of ROU assets. Refer to Note 1 for more information on the Company’s impairment testing.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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