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Leases

9 Months Ended

Oct. 28, 2023

10. Leases

The Company leases its retail store locations, distribution centers, and certain office space and equipment. Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods. In April 2022, the Company completed a sale-leaseback of its distribution center in Darlington, South Carolina that resulted in a gain of $34.9 million and a 20-year lease term with the option to extend for six additional periods of five years each. In September 2022, the Company completed a sale-leaseback of its distribution center in Roland, Oklahoma that resulted in a gain of $29.2 million and a 15-year lease term with the option to extend for six additional periods of five years each.

The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized. Leases with an initial term of 12 months or less and leases with mutual termination clauses are not included on the condensed consolidated balance sheets. The lease liability is measured at the present value of future lease payments as of the lease commencement date.

Total lease cost is comprised of operating lease costs, short-term lease costs and variable lease costs, which include rent paid as a percentage of sales, common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Lease costs consisted of the following (in thousands):


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Operating lease cost	$	15,521	$	15,443	$	46,930	$	44,326
Variable lease cost		2,628		2,510		8,406		7,423
Short term lease cost		393		343		1,171		1,062
Total lease cost	$	18,542	$	18,296	$	56,507	$	52,811

Future minimum lease payments as of October 28, 2023 are as follows (in thousands):


Fiscal Year	Lease Costs
Remainder of 2023	$	10,896
2024		61,555
2025		51,678
2026		40,248
2027		29,574
Thereafter		124,026
Total future minimum lease payments		317,977
Less: imputed interest		(74,610)	(1)
Total present value of lease liabilities	$	243,367	(2)

(1)

Calculated using the discount rate for each lease.

(2)

Includes short-term and long-term portions of operating lease liabilities.

Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts):


	Thirty-Nine Weeks Ended
	October 28, 2023		October 29, 2022
Cash paid for operating leases	$	52,734	$	44,754
Right of use assets obtained in exchange for new operating lease liabilities	$	22,322	$	95,809

Weighted average remaining lease term (years) - operating leases		7.60		8.11
Weighted average discount rate - operating leases		4.90%		4.38%