Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes ROU assets and lease liabilities related to leases on the Company’s Consolidated Balance Sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease.

The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2041. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from five years to fifteen years with renewal options and rent escalation provisions. At the commencement of a lease, the Company includes only the initial lease term as the option to extend is not reasonably certain. The Company does not record leases with a lease term of 12 months or less on the Company’s Consolidated Balance Sheets.

When calculating the lease liability on a discounted basis, the Company applies its estimated discount rate. The Company bases this discount rate on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.

In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable lease expenses and does not include such costs as a lease component.

The expense components of the Company’s leases reflected on the Company’s Consolidated Statement of Operations were as follows:


	Consolidated Statement of Operations	January 28, 2024		January 29, 2023
(in thousands)
Finance lease expense
Amortization of right-of-use ‎ assets	Selling, general and administrative expenses	$	3,361	$	3,361
Interest on lease liabilities	Interest expense		1,709		1,822
Total finance lease expense		$	5,070	$	5,183
Operating lease expense	Selling, general and administrative expenses	$	20,267	$	18,725
Amortization of build-to-suit leases capital contribution	Selling, general and administrative expenses		1,284		1,284
Variable lease expense	Selling, general and administrative expenses		10,927		10,380
Total lease expense		$	37,548	$	35,572



	January 28, 2024		January 29, 2023
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	2,842	$	2,701
Operating cash flows from finance leases	$	1,709	$	1,822
Operating cash flows from operating leases	$	20,842	$	18,477

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	5,468	$	25,297

Weighted-average remaining lease term (in years):
Finance leases		10		11
Operating leases		7		8

Weighted-average discount rate:
Finance leases		4.5%		4.4%
Operating leases		4.2%		4.1%

Future minimum lease payments under the non-cancellable leases are as follows as of January 28, 2024:



		Finance	Operating
Fiscal year		Leases	Leases
(in thousands)
2024	$	4,736	$	21,205
2025		5,099		20,613
2026		3,993		19,660
2027		3,993		18,411
2028		4,017		16,631
Thereafter		25,214		46,794
Total future minimum lease payments	$	47,052	$	143,314
Less - Discount		9,627		20,500
Lease liability	$	37,425	$	122,814