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Derivative Financial Instruments | 12 Months Ended
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Feb. 03, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Hedging Strategy Foreign Exchange Currency Contracts The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations. The Company’s primary objective is to hedge the variability in forecasted cash flows due to the foreign currency risk. The Company enters into certain forward exchange currency contracts to hedge the risk of a portion of these anticipated foreign currency transactions against foreign currency rate fluctuations. The Company may also hedge the translation and economic exposures related to its net investments in certain of its international subsidiaries. Interest Rate Swap Agreements The Company is exposed to interest rate risk on its floating-rate debt. The Company has entered into interest rate swap agreements for certain of these agreements to effectively convert its floating-rate debt to a fixed-rate basis. The principal objective of these contracts is to eliminate or reduce the variability of the cash flows in interest payments associated with the Company’s floating-rate debt, thus reducing the impact of interest rate changes on future interest payment cash flows. Refer to Note 8 for further information. Summary of Derivative Instruments The fair value of derivative instruments in the consolidated balance sheets is as follows (in thousands):
| Fair Value at Feb 3, 2024 |  | Fair Value at Jan 28, 2023 |  | Derivative Balance Sheet Location
ASSETS: |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow hedges: |  |  |  |  |
Foreign exchange currency contracts | $ | 1,590 |  |  | $ | 1,073 |  |  | Other current assets/Other assets
Interest rate swap | 797 |  |  | 1,034 |  |  | Other assets
Total derivatives designated as hedging instruments | 2,387 |  |  | 2,107 |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign exchange currency contracts | 688 |  |  | 1,146 |  |  | Other current assets
2028 Bond Hedge | 85,918 |  |  | — |  |  | Other assets
Total | $ | 88,993 |  |  | $ | 3,253 |  |  |
LIABILITIES: |  |  |  |  |
Derivatives designated as hedging instruments: |  |  |  |  |
Cash flow hedges: |  |  |  |  |
Foreign exchange currency contracts | $ | 763 |  |  | $ | 12,930 |  |  | Accrued expenses/Other long-term liabilities
Interest rate swaps | — |  |  | — |  |  | Other long-term liabilities
Total derivatives designated as hedging instruments | 763 |  |  | 12,930 |  |  |
Derivatives not designated as hedging instruments: |  |  |  |  |
Foreign exchange currency contracts | 939 |  |  | 3,774 |  |  | Accrued expenses and other current liabilities
Embedded derivatives | 16,390 |  |  | — |  |  | Convertible senior notes due 2028, net
Total | $ | 18,092 |  |  | $ | 16,704 |  |  |
Derivatives Designated as Hedging Instruments Foreign Exchange Currency Contracts Designated as Cash Flow Hedges During fiscal 2024, the Company purchased U.S. dollar forward contracts in Europe totaling $119.0 million that were designated as cash flow hedges. As of February 3, 2024, the Company had forward contracts outstanding for its European operations of $104.0 million to hedge forecasted merchandise purchases, which are expected to mature over the next 11 months. As of February 3, 2024, AOCL related to foreign exchange currency contracts included a net unrealized loss of approximately $1.2 million, net of tax, of which $1.3 million will be recognized in cost of product sales over the following 12 months, at the then current values on a pre-tax basis, which can be different than the current year-end values. At January 28, 2023, the Company had forward contracts outstanding for its European operations of $253.0 million that were designated as cash flow hedges. Interest Rate Swap Agreement Designated as Cash Flow Hedge During fiscal 2017, the Company entered into an interest rate swap agreement with a notional amount of $21.5 million, designated as a cash flow hedge, to hedge the variability of cash flows in interest payments associated with the Company’s floating-rate debt. This interest rate swap agreement matures in January 2026 and converts the nature of the Company’s real estate secured term loan from LIBOR floating-rate debt to fixed-rate debt, resulting in a swap fixed rate of approximately 3.06%. Effective May 1, 2023, the Company amended its existing interest rate swap agreement from LIBOR to SOFR, resulting in a swap fixed rate of approximately 3.14%. This amended interest rate swap agreement matures in January 2026 and converts the nature of the Mortgage Debt from SOFR floating-rate debt to fixed-rate debt. As of February 3, 2024, AOCL related to the interest rate swap agreement included a net unrealized gain of approximately $0.6 million, net of tax, which will be recognized in interest expense over the following 12 months, at the then current values on a pre-tax basis, which can be different than the current year-end values. The following summarizes the gains (losses) before income taxes recognized on the derivative instruments designated as cash flow hedges in OCL and net earnings (in thousands):
| Gain (Loss) Recognized in OCL |  | Gain (Loss) Reclassified from AOCL into Earnings |  | Location of Gain (Loss) Reclassified from AOCL into Earnings
| Year Ended February 3, 2024
Foreign exchange currency contracts | $ | 5,705 |  |  | $ | 4,392 |  |  | Cost of product sales
Interest rate swap | $ | 411 |  |  | $ | 647 |  |  | Interest expense
| Year Ended January 28, 2023
Foreign exchange currency contracts | $ | (929) |  |  | $ | 9,988 |  |  | Cost of product sales
Interest rate swap | $ | 1,136 |  |  | $ | 28 |  |  | Interest expense
| Year Ended January 29, 2022
Foreign exchange currency contracts | $ | 10,807 |  |  | $ | (2,051) |  |  | Cost of product sales |  |
Interest rate swap | $ | 653 |  |  | $ | (272) |  |  | Interest expense |  |
The following summarizes net after income tax derivative activity recorded in AOCL (in thousands):
|  | Year Ended
|  | Feb 3, 2024 |  | Jan 28, 2023
Beginning balance gain (loss) |  | $ | (1,584) |  |  | $ | 7,280 |
Net gains from changes in cash flow hedges |  | 5,451 |  |  | 47 |
Net (gains) reclassified to earnings |  | (4,411) |  |  | (8,911) |
Ending balance loss |  | $ | (544) |  |  | $ | (1,584) |
Derivative Instruments Not Designated as Hedging Instruments As of February 3, 2024, the Company had euro foreign exchange currency contracts to purchase $52.0 million expected to mature over the next 2 months. At January 28, 2023, the Company had euro foreign exchange currency contracts to purchase $83.5 million. As discussed in Note 10, the Company has recognized equity-linked derivatives including the embedded derivative associated with the Additional 2028 Notes. In connection with the 2028 Notes, the Company also purchased 2028 Bond Hedge which did not qualify for the derivative scope exception for equity-linked instruments. These derivatives are not designated as hedging instruments for accounting purposes. Changes in fair value of these derivatives are reported in net earnings (loss) as part of other income (expense). The following summarizes the gains (losses) before income taxes recognized on the derivative instruments not designated as hedging instruments in other income (expense) (in thousands):
|  | Location of Gain (Loss) Recognized in Earnings |  | Gain (Loss) Recognized in Earnings
|  |  | Year Ended
|  |  | Feb 3, 2024 |  | Jan 28, 2023 |  | Jan 29, 2022
Foreign exchange currency contracts |  | Other expense |  | $ | 2,253 |  |  | $ | (2,833) |  |  | $ | 1,941 |
2028 Bond Hedge |  | Other expense |  | $ | 1,233 |  |  | $ | — |  |  | $ | — |
Embedded derivatives |  | Other expense |  | $ | (235) |  |  | $ | — |  |  | $ | — |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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