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Lease Accounting | 3 Months Ended
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Apr. 29, 2023
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 January 2028. 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 lease payments based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 28%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for lease payments primarily based upon a percentage of annual sales volume, which averages approximately 32%. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $13.6 million for leases where the Company has not yet taken possession of the underlying asset as of April 29, 2023. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of April 29, 2023. The components of leases are (in thousands):
|  | Apr 29, 2023 |  | Jan 28, 2023 |  |
Assets | Balance Sheet Location |  |  |  |  |
Operating | Operating lease right-of-use assets | $ | 645,713 |  |  | $ | 636,148 |  |  |
Finance | Property and equipment, net | 17,777 |  |  | 19,055 |  |  |
Total lease assets | $ | 663,490 |  |  | $ | 655,203 |  |  |
Liabilities | Balance Sheet Location |  |  |  |  |
Current: |  |  |  |  |  |
Operating | Current portion of operating lease liabilities | $ | 172,628 |  |  | $ | 170,192 |  |  |
Finance | Current portion of borrowings and finance lease obligations | 6,733 |  |  | 6,684 |  |  |
Noncurrent: |  |  |  |  |  |
Operating | Long-term operating lease liabilities | 530,939 |  |  | 528,236 |  |  |
Finance | Long-term debt and finance lease obligations | 12,189 |  |  | 13,181 |  |  |
Total lease liabilities | $ | 722,489 |  |  | $ | 718,293 |  |  |
The components of lease costs are (in thousands):
|  |  |  | Three Months Ended
| Income Statement Location |  |  |  |  | Apr 29, 2023 |  | Apr 30, 2022
Operating lease costs | Cost of product sales |  |  |  |  | $ | 46,052 |  |  | $ | 44,372 |
Operating lease costs | Selling, general and administrative expenses |  |  |  |  | 6,597 |  |  | 6,301 |
Operating lease costs 1 | Net gains on lease modifications |  |  |  |  | — |  |  | (601) |
Finance lease costs |  |  |  |  |  |  |  |
Amortization of leased assets | Cost of product sales |  |  |  |  | 23 |  |  | 19 |
Amortization of leased assets | Selling, general and administrative expenses |  |  |  |  | 1,529 |  |  | 1,502 |
Interest on lease liabilities | Interest expense |  |  |  |  | 209 |  |  | 287 |
Variable lease costs 2 | Cost of product sales |  |  |  |  | 24,491 |  |  | 21,996 |
Variable lease costs 2 | Selling, general and administrative expenses |  |  |  |  | 661 |  |  | 956 |
Short-term lease costs | Cost of product sales |  |  |  |  | 70 |  |  | 96 |
Short-term lease costs | Selling, general and administrative expenses |  |  |  |  | 1,639 |  |  | 1,558 |
Total lease costs |  |  |  |  | $ | 81,271 |  |  | $ | 76,486 |
______________________________________________________________________ Notes: 1 During the three months ended April 30, 2022, net gains on lease modifications related primarily to the early termination of lease agreements for 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. 2 During the three months ended April 29, 2023 and April 30, 2022, variable lease costs included certain rent concessions of approximately $0.4 million and $1.3 million, respectively, received by the Company, primarily in Europe. Maturities of the Company’s operating and finance lease liabilities as of April 29, 2023 are (in thousands):
| Operating Leases |  |  |  |  |  |
Maturity of Lease Liabilities | Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total |  |
Fiscal 2024 | $ | 151,672 |  |  | $ | 6,252 |  |  | $ | 6,050 |  |  | $ | 163,974 |  |  |
Fiscal 2025 | 144,730 |  |  | 7,241 |  |  | 5,668 |  |  | 157,639 |  |  |
Fiscal 2026 | 110,236 |  |  | 6,849 |  |  | 5,204 |  |  | 122,289 |  |  |
Fiscal 2027 | 91,709 |  |  | 7,550 |  |  | 2,668 |  |  | 101,927 |  |  |
Fiscal 2028 | 71,291 |  |  | 7,717 |  |  | 810 |  |  | 79,818 |  |  |
After fiscal 2028 | 179,314 |  |  | 20,826 |  |  | — |  |  | 200,140 |  |  |
Total lease payments | 748,952 |  |  | 56,435 |  |  | 20,400 |  |  | 825,787 |  |  |
Less: Interest | 89,100 |  |  | 12,720 |  |  | 1,478 |  |  | 103,298 |  |  |
Present value of lease liabilities | $ | 659,852 |  |  | $ | 43,715 |  |  | $ | 18,922 |  |  | $ | 722,489 |  |  |
Other supplemental information is (in thousands):
Lease Term and Discount Rate | Apr 29, 2023 |  |  |  |  |  |
Weighted-average remaining lease term |  |  |  |  |  |  |
Operating leases | 6.2 years |  |  |  |  |  |
Finance leases | 3.4 years |  |  |  |  |  |
Weighted-average discount rate |  |  |  |  |  |  |
Operating leases | 4.5% |  |  |  |  |  |
Finance leases | 4.7% |  |  |  |  |  |
| Three Months Ended
Supplemental Cash Flow Information | Apr 29, 2023 |  | Apr 30, 2022
Cash paid for amounts included in the measurement of lease liabilities |  |  |
Operating cash flows from operating leases | $ | 51,225 |  |  | $ | 63,896 |
New operating ROU assets obtained in exchange for lease liabilities | $ | 36,068 |  |  | $ | 35,378 |
Impairment During the three months ended April 29, 2023 and April 30, 2022, there were no ROU asset impairment charges. Asset impairment charges are generally determined based on the excess of carrying value over the fair value of the ROU assets. The Company uses estimates of market participant rents to calculate fair value of the ROU assets. Refer to Note 15 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 January 2028. 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 lease payments based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 28%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for lease payments primarily based upon a percentage of annual sales volume, which averages approximately 32%. In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $13.6 million for leases where the Company has not yet taken possession of the underlying asset as of April 29, 2023. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of April 29, 2023. The components of leases are (in thousands):
|  | Apr 29, 2023 |  | Jan 28, 2023 |  |
Assets | Balance Sheet Location |  |  |  |  |
Operating | Operating lease right-of-use assets | $ | 645,713 |  |  | $ | 636,148 |  |  |
Finance | Property and equipment, net | 17,777 |  |  | 19,055 |  |  |
Total lease assets | $ | 663,490 |  |  | $ | 655,203 |  |  |
Liabilities | Balance Sheet Location |  |  |  |  |
Current: |  |  |  |  |  |
Operating | Current portion of operating lease liabilities | $ | 172,628 |  |  | $ | 170,192 |  |  |
Finance | Current portion of borrowings and finance lease obligations | 6,733 |  |  | 6,684 |  |  |
Noncurrent: |  |  |  |  |  |
Operating | Long-term operating lease liabilities | 530,939 |  |  | 528,236 |  |  |
Finance | Long-term debt and finance lease obligations | 12,189 |  |  | 13,181 |  |  |
Total lease liabilities | $ | 722,489 |  |  | $ | 718,293 |  |  |
The components of lease costs are (in thousands):
|  |  |  | Three Months Ended
| Income Statement Location |  |  |  |  | Apr 29, 2023 |  | Apr 30, 2022
Operating lease costs | Cost of product sales |  |  |  |  | $ | 46,052 |  |  | $ | 44,372 |
Operating lease costs | Selling, general and administrative expenses |  |  |  |  | 6,597 |  |  | 6,301 |
Operating lease costs 1 | Net gains on lease modifications |  |  |  |  | — |  |  | (601) |
Finance lease costs |  |  |  |  |  |  |  |
Amortization of leased assets | Cost of product sales |  |  |  |  | 23 |  |  | 19 |
Amortization of leased assets | Selling, general and administrative expenses |  |  |  |  | 1,529 |  |  | 1,502 |
Interest on lease liabilities | Interest expense |  |  |  |  | 209 |  |  | 287 |
Variable lease costs 2 | Cost of product sales |  |  |  |  | 24,491 |  |  | 21,996 |
Variable lease costs 2 | Selling, general and administrative expenses |  |  |  |  | 661 |  |  | 956 |
Short-term lease costs | Cost of product sales |  |  |  |  | 70 |  |  | 96 |
Short-term lease costs | Selling, general and administrative expenses |  |  |  |  | 1,639 |  |  | 1,558 |
Total lease costs |  |  |  |  | $ | 81,271 |  |  | $ | 76,486 |
______________________________________________________________________ Notes: 1 During the three months ended April 30, 2022, net gains on lease modifications related primarily to the early termination of lease agreements for 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. 2 During the three months ended April 29, 2023 and April 30, 2022, variable lease costs included certain rent concessions of approximately $0.4 million and $1.3 million, respectively, received by the Company, primarily in Europe. Maturities of the Company’s operating and finance lease liabilities as of April 29, 2023 are (in thousands):
| Operating Leases |  |  |  |  |  |
Maturity of Lease Liabilities | Non-Related Parties |  | Related Parties |  | Finance Leases |  | Total |  |
Fiscal 2024 | $ | 151,672 |  |  | $ | 6,252 |  |  | $ | 6,050 |  |  | $ | 163,974 |  |  |
Fiscal 2025 | 144,730 |  |  | 7,241 |  |  | 5,668 |  |  | 157,639 |  |  |
Fiscal 2026 | 110,236 |  |  | 6,849 |  |  | 5,204 |  |  | 122,289 |  |  |
Fiscal 2027 | 91,709 |  |  | 7,550 |  |  | 2,668 |  |  | 101,927 |  |  |
Fiscal 2028 | 71,291 |  |  | 7,717 |  |  | 810 |  |  | 79,818 |  |  |
After fiscal 2028 | 179,314 |  |  | 20,826 |  |  | — |  |  | 200,140 |  |  |
Total lease payments | 748,952 |  |  | 56,435 |  |  | 20,400 |  |  | 825,787 |  |  |
Less: Interest | 89,100 |  |  | 12,720 |  |  | 1,478 |  |  | 103,298 |  |  |
Present value of lease liabilities | $ | 659,852 |  |  | $ | 43,715 |  |  | $ | 18,922 |  |  | $ | 722,489 |  |  |
Other supplemental information is (in thousands):
Lease Term and Discount Rate | Apr 29, 2023 |  |  |  |  |  |
Weighted-average remaining lease term |  |  |  |  |  |  |
Operating leases | 6.2 years |  |  |  |  |  |
Finance leases | 3.4 years |  |  |  |  |  |
Weighted-average discount rate |  |  |  |  |  |  |
Operating leases | 4.5% |  |  |  |  |  |
Finance leases | 4.7% |  |  |  |  |  |
| Three Months Ended
Supplemental Cash Flow Information | Apr 29, 2023 |  | Apr 30, 2022
Cash paid for amounts included in the measurement of lease liabilities |  |  |
Operating cash flows from operating leases | $ | 51,225 |  |  | $ | 63,896 |
New operating ROU assets obtained in exchange for lease liabilities | $ | 36,068 |  |  | $ | 35,378 |
Impairment During the three months ended April 29, 2023 and April 30, 2022, there were no ROU asset impairment charges. Asset impairment charges are generally determined based on the excess of carrying value over the fair value of the ROU assets. The Company uses estimates of market participant rents to calculate fair value of the ROU assets. Refer to Note 15 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 https://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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