Commitments and Contingencies

12 Months Ended

Aug. 03, 2019

Commitments and Contingencies Disclosure [Abstract]

Leases

We have entered into various lease arrangements for our corporate offices and fulfillment centers. Such leases generally have original lease terms between five and eight years. We had security deposits totaling $1.2 million and $1.3 million as of August 3, 2019, and July 28, 2018, respectively. We had unsecured letters of credit totaling $13.9 million as of August 3, 2019. We had secured letters of credit totaling $12.9 million as of July 28, 2018, which were collateralized by time deposits.

A schedule of the future minimum rental commitments under our non-cancelable operating lease agreements with an initial or remaining term in excess of one year as of August 3, 2019, is as follows:



(in thousands)	August 3, 2019
2020	$	27,018
2021	27,680
2022	25,451
2023	23,258
2024	19,696
Thereafter	56,687
Total	$	179,790

At one fulfillment center, the Company recognizes contingent rent in excess of its minimum lease payments. Contingent rental amounts are determined based on additional square footage utilized in excess of the Company’s contractual minimum commitments.

Total rent expense classified within selling, general, and administrative expenses in the consolidated statements of operations was $26.9 million, $18.2 million, and $16.6 million for 2019, 2018, and 2017, respectively.

Future minimum rental commitments as of August 3, 2019, have not been reduced by sublease rental income of $1.8 million due to the Company under non-cancelable subleases through fiscal 2021.

We entered into an amendment to our fulfillment center arrangement in Dallas effective February 20, 2019 (the “Amendment”). The Amendment increases our existing square footage at this location by approximately 174,000 square feet to approximately 490,000 square feet and extends the original lease term by approximately 18 months to June 2024. The arrangement is being accounted for as an operating lease with future minimum lease payments of approximately $10.0 million through June 2024.

On October 12, 2018, we executed an agreement with a third-party logistics contractor to lease and operate a fulfillment center in Leicester, England (the “Fulfillment Center Logistics Agreement”). The agreement commits the Company to a five-year contract for logistics services at the Leicester fulfillment center that can be terminated after two years, with six months’ advance notice. The leasing component of the arrangement is being accounted for as an operating lease with future minimum lease payments over the five-year term of $11.1 million.

On June 13, 2019, we entered into an amendment to our office lease in Austin, Texas. The amendment extends our existing lease for the current space through March 2025. The arrangement will continue to be accounted for as an operating lease with future minimum lease payments of approximately $6.7 million through March 2025.

On June 17, 2019, we entered into an agreement to lease approximately 925,000 square feet of space to be used as a fulfillment center in the Atlanta, Georgia, metropolitan area. The lease has a term of 86 months and will be accounted for as an operating lease with future minimum lease payments of approximately $23.5 million over the 86-month lease term.

Contingencies

We record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. Although we cannot predict with assurance the outcome of any litigation or tax matters, we do not believe there are currently any such actions that, if resolved unfavorably, would have a material impact on our operating results, financial position, or cash flows.

On October 11, 2018, October 26, 2018, November 16, 2018, and December 10, 2018, four putative class action lawsuits alleging violations of the federal securities laws were filed in the U.S. District Court for the Northern District of California, naming as defendants us and certain of our officers. The four lawsuits each make the same allegations of violations of the Securities Exchange Act of 1934, as amended, by us and our officers for allegedly making materially false and misleading statements regarding our active client growth and strategy with respect to television advertising between June 2018 and October 2018. The plaintiffs seek unspecified monetary damages and other relief. The four lawsuits have been consolidated and a lead plaintiff has been appointed. The lead plaintiff filed a consolidated amended complaint on September 18, 2019. The Company disputes these claims and intends to defend the matter vigorously. On December 12, 2018, a derivative action was filed against our directors in the same court, alleging the same violations of securities laws as alleged in the four putative class action lawsuits described above and breach of fiduciary duties. The derivative action has been stayed pending the outcome of the motion to dismiss in the related class action lawsuits.

On December 29, 2017, a lawsuit was filed by a holder of shares of our Class A common stock in the Court of Chancery of the State of Delaware, naming as defendants us and certain of our directors, as well as two other public companies and certain of their directors. The lawsuit sought a court determination that Article VI, Section E of our amended and restated certificate of incorporation, purporting to limit to federal court the forum in which a stockholder could bring a claim under the Securities Act of 1933, as amended (the “Securities Act”), and similar provisions in our co-defendants’ certificates of incorporation, were invalid. On December 19, 2018, the Chancery Court of the State of Delaware issued an opinion in Sciabacucchi v. Salzberg, invalidating our federal exclusive forum provision. We have appealed this decision to the Delaware Supreme Court.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, directors, officers, and other parties with respect to certain matters. We have not incurred any material costs as a result of such indemnifications and have not accrued any liabilities related to such obligations in our consolidated financial statements.