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Lease Accounting | 12 Months Ended
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Jan. 30, 2021
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 1% to 23%, 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 33% 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 $1.4 million for leases where the Company has not yet taken possession of the underlying asset as of January 30, 2021. 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 January 30, 2021. As of January 30, 2021 and February 1, 2020, the components of leases and lease costs are as follows (in thousands):
| Jan 30, 2021 |  | Feb 1, 2020 |  |  |
Assets |  |  |  |  | Balance Sheet Location |  |
Operating |  | $ | 764,804 |  |  | $ | 851,990 |  | Operating right-of-use assets |  |
Finance |  | 20,595 |  |  | 15,972 |  | Property and equipment, net |  |
Total lease assets | $ | 785,399 |  |  | $ | 867,962 |  |  |  |
Liabilities |  |  |  |  | Balance Sheet Location |  |
Current: |  |  |  |  |  |  |
Operating |  | $ | 222,800 |  |  | $ | 192,066 |  | Current portion of operating lease liabilities |  |
Finance |  | 4,698 |  |  | 2,273 |  | Current portion of borrowings and finance lease obligations |  |
Noncurrent: |  |  |  |  |  |  |
Operating |  | 662,657 |  |  | 714,079 |  | Long-term operating lease liabilities |  |
Finance |  | 17,365 |  |  | 14,262 |  | Long-term debt and finance lease obligations |  |
Total lease liabilities | $ | 907,520 |  |  | $ | 922,680 |  |  |  |
|  | Year Ended Jan 30, 2021 |  | Year Ended Feb 1, 2020 |
|  |  |  |  | Income Statement Location
Operating lease costs 1 |  | $ | 205,065 |  |  | $ | 244,222 |  | Cost of product sales
Operating lease costs 1 |  | 21,726 |  |  | 24,565 |  | Selling, general and administrative expenses
Operating lease costs 1, 2 |  | (2,801) |  |  | — |  | Net gains on lease modifications
Finance lease costs |  |  |  |  |
Amortization of leased assets 3 |  | 49 |  |  | 289 |  | Cost of product sales
Amortization of leased assets 3 |  | 3,834 |  |  | 2,234 |  | Selling, general and administrative expenses
Interest on lease liabilities |  | 1,237 |  |  | 1,035 |  | Interest expense
Variable lease costs 1, 4 |  | 52,304 |  |  | 93,534 |  | Cost of product sales
Variable lease costs 1, 4 |  | 1,795 |  |  | 2,227 |  | Selling, general and administrative expenses
Short-term lease costs 1 |  | 694 |  |  | 344 |  | Cost of product sales
Short-term lease costs 1 |  | 5,023 |  |  | 3,543 |  | Selling, general and administrative expenses
Total lease costs 1 | $ | 288,926 |  |  | $ | 371,993 |  |
______________________________________________________________________ 1 Rental expense for all property and equipment operating leases during fiscal 2019 aggregated to $292.1 million, including percentage rent of $67.2 million. During fiscal 2019, 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 related to its operating leases. 2 During the year ended January 30, 2021, net gains on lease modifications related primarily to the early termination of lease agreements for certain of the Company’s retail locations. During fiscal 2019, the Company recognized net gains on lease modifications of $0.5 million related primarily to the early termination of lease agreements related to certain of the Company’s retail locations. Operating lease costs for these retail locations prior to the early termination were included in cost of product sales. 3 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). 4 During the year ended January 30, 2021, variable lease costs included certain rent concessions received by the Company, primarily in Europe, related to the COVID-19 pandemic of approximately $33.1 million. Refer to Note 1 for further information. Maturities of the Company’s operating and finance lease liabilities as of January 30, 2021 are as follows (in thousands):
| Operating Leases |  |  |  |  |  |
| Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total |  |
Maturity of Lease Liabilities: |  |  |  |  |  |  |  |  |
2022 | $ | 240,843 |  |  | $ | 8,182 |  |  | $ | 6,068 |  |  | $ | 255,093 |  |  |
2023 | 185,107 |  |  | 6,310 |  |  | 5,579 |  |  | 196,996 |  |  |
2024 | 150,223 |  |  | 6,727 |  |  | 5,388 |  |  | 162,338 |  |  |
2025 | 106,810 |  |  | 6,370 |  |  | 3,433 |  |  | 116,613 |  |  |
2026 | 76,403 |  |  | 5,977 |  |  | 2,460 |  |  | 84,840 |  |  |
After 2026 | 150,859 |  |  | 32,610 |  |  | 3,197 |  |  | 186,666 |  |  |
Total lease payments | 910,245 |  |  | 66,176 |  |  | 26,125 |  |  | 1,002,546 |  |  |
Less: Interest | 79,219 |  |  | 11,745 |  |  | 4,062 |  |  | 95,026 |  |  |
Present value of lease liabilities | $ | 831,026 |  |  | $ | 54,431 |  |  | $ | 22,063 |  |  | $ | 907,520 |  |  |
Other supplemental information is as follows (dollars in thousands):
| Jan 30, 2021 |  |  |  |  |  |
Lease Term and Discount Rate: |  |  |  |  |  |  |
Weighted-average remaining lease term (years) |  |  |  |  |  |  |
Operating leases | 5.9 years |  |  |  |  |  |
Finance leases | 5.0 years |  |  |  |  |  |
Weighted-average discount rate |  |  |  |  |  |  |
Operating leases | 3.6% |  |  |  |  |  |
Finance leases | 7.1% |  |  |  |  |  |
| Year Ended Jan 30, 2021 | 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 | $ | 193,776 |  | $ | 250,972 |  |  |  |  |  |  |
New operating ROU assets obtained in exchange for lease liabilities | $ | 189,412 |  | $ | 127,232 |  |  |  |  |  |  |
Impairment of ROU Assets During fiscal 2021, the Company recorded asset impairment charges of $45.4 million related to ROU assets at certain retail locations primarily in North America and Europe. 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 1% to 23%, 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 33% 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 $1.4 million for leases where the Company has not yet taken possession of the underlying asset as of January 30, 2021. 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 January 30, 2021. As of January 30, 2021 and February 1, 2020, the components of leases and lease costs are as follows (in thousands):
| Jan 30, 2021 |  | Feb 1, 2020 |  |  |
Assets |  |  |  |  | Balance Sheet Location |  |
Operating |  | $ | 764,804 |  |  | $ | 851,990 |  | Operating right-of-use assets |  |
Finance |  | 20,595 |  |  | 15,972 |  | Property and equipment, net |  |
Total lease assets | $ | 785,399 |  |  | $ | 867,962 |  |  |  |
Liabilities |  |  |  |  | Balance Sheet Location |  |
Current: |  |  |  |  |  |  |
Operating |  | $ | 222,800 |  |  | $ | 192,066 |  | Current portion of operating lease liabilities |  |
Finance |  | 4,698 |  |  | 2,273 |  | Current portion of borrowings and finance lease obligations |  |
Noncurrent: |  |  |  |  |  |  |
Operating |  | 662,657 |  |  | 714,079 |  | Long-term operating lease liabilities |  |
Finance |  | 17,365 |  |  | 14,262 |  | Long-term debt and finance lease obligations |  |
Total lease liabilities | $ | 907,520 |  |  | $ | 922,680 |  |  |  |
|  | Year Ended Jan 30, 2021 |  | Year Ended Feb 1, 2020 |
|  |  |  |  | Income Statement Location
Operating lease costs 1 |  | $ | 205,065 |  |  | $ | 244,222 |  | Cost of product sales
Operating lease costs 1 |  | 21,726 |  |  | 24,565 |  | Selling, general and administrative expenses
Operating lease costs 1, 2 |  | (2,801) |  |  | — |  | Net gains on lease modifications
Finance lease costs |  |  |  |  |
Amortization of leased assets 3 |  | 49 |  |  | 289 |  | Cost of product sales
Amortization of leased assets 3 |  | 3,834 |  |  | 2,234 |  | Selling, general and administrative expenses
Interest on lease liabilities |  | 1,237 |  |  | 1,035 |  | Interest expense
Variable lease costs 1, 4 |  | 52,304 |  |  | 93,534 |  | Cost of product sales
Variable lease costs 1, 4 |  | 1,795 |  |  | 2,227 |  | Selling, general and administrative expenses
Short-term lease costs 1 |  | 694 |  |  | 344 |  | Cost of product sales
Short-term lease costs 1 |  | 5,023 |  |  | 3,543 |  | Selling, general and administrative expenses
Total lease costs 1 | $ | 288,926 |  |  | $ | 371,993 |  |
______________________________________________________________________ 1 Rental expense for all property and equipment operating leases during fiscal 2019 aggregated to $292.1 million, including percentage rent of $67.2 million. During fiscal 2019, 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 related to its operating leases. 2 During the year ended January 30, 2021, net gains on lease modifications related primarily to the early termination of lease agreements for certain of the Company’s retail locations. During fiscal 2019, the Company recognized net gains on lease modifications of $0.5 million related primarily to the early termination of lease agreements related to certain of the Company’s retail locations. Operating lease costs for these retail locations prior to the early termination were included in cost of product sales. 3 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). 4 During the year ended January 30, 2021, variable lease costs included certain rent concessions received by the Company, primarily in Europe, related to the COVID-19 pandemic of approximately $33.1 million. Refer to Note 1 for further information. Maturities of the Company’s operating and finance lease liabilities as of January 30, 2021 are as follows (in thousands):
| Operating Leases |  |  |  |  |  |
| Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total |  |
Maturity of Lease Liabilities: |  |  |  |  |  |  |  |  |
2022 | $ | 240,843 |  |  | $ | 8,182 |  |  | $ | 6,068 |  |  | $ | 255,093 |  |  |
2023 | 185,107 |  |  | 6,310 |  |  | 5,579 |  |  | 196,996 |  |  |
2024 | 150,223 |  |  | 6,727 |  |  | 5,388 |  |  | 162,338 |  |  |
2025 | 106,810 |  |  | 6,370 |  |  | 3,433 |  |  | 116,613 |  |  |
2026 | 76,403 |  |  | 5,977 |  |  | 2,460 |  |  | 84,840 |  |  |
After 2026 | 150,859 |  |  | 32,610 |  |  | 3,197 |  |  | 186,666 |  |  |
Total lease payments | 910,245 |  |  | 66,176 |  |  | 26,125 |  |  | 1,002,546 |  |  |
Less: Interest | 79,219 |  |  | 11,745 |  |  | 4,062 |  |  | 95,026 |  |  |
Present value of lease liabilities | $ | 831,026 |  |  | $ | 54,431 |  |  | $ | 22,063 |  |  | $ | 907,520 |  |  |
Other supplemental information is as follows (dollars in thousands):
| Jan 30, 2021 |  |  |  |  |  |
Lease Term and Discount Rate: |  |  |  |  |  |  |
Weighted-average remaining lease term (years) |  |  |  |  |  |  |
Operating leases | 5.9 years |  |  |  |  |  |
Finance leases | 5.0 years |  |  |  |  |  |
Weighted-average discount rate |  |  |  |  |  |  |
Operating leases | 3.6% |  |  |  |  |  |
Finance leases | 7.1% |  |  |  |  |  |
| Year Ended Jan 30, 2021 | 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 | $ | 193,776 |  | $ | 250,972 |  |  |  |  |  |  |
New operating ROU assets obtained in exchange for lease liabilities | $ | 189,412 |  | $ | 127,232 |  |  |  |  |  |  |
Impairment of ROU Assets During fiscal 2021, the Company recorded asset impairment charges of $45.4 million related to ROU assets at certain retail locations primarily in North America and Europe. 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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