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Leases

6 Months Ended

Jul. 31, 2022

10. Leases

We have operating leases for warehouses, showrooms, manufacturing facilities, offices and equipment. We recognized sub-lease income of $34,000 for the three-month period and $381,000 for the six-month period, both ended July 31, 2022. We recognized sub-lease income of $150,000 for the three-month period and $296,000 for the six-month period, both ended August 1, 2021.

The components of lease cost and supplemental cash flow information for leases for the three-months and six-months ended July 31, 2022 and August 1, 2021 were:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Operating lease cost	$	2,270	$	1,906	$	4,797	$	3,919
Variable lease cost		56		65		111		109
Short-term lease cost		78		19		164		28
Total lease cost	$	2,404	$	1,990	$	5,072	$	4,056


Operating lease cash outflows	$	2,389	$	1,954	$	5,224	$	3,936

The right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of July 31, 2022 and January 30, 2022 were as follows:

	July 31, 2022		January 30, 2022
Real estate	$	53,787	$	50,749
Property and equipment		947		1,105
Total leases right-of-use assets	$	54,734	$	51,854

Current portion of operating lease liabilities	$	7,254	$	7,471
Long term operating lease liabilities		49,514		46,570
Total lease liabilities	$	56,768	$	54,041

For leases that commenced before July 2022, we used our incremental borrowing rate which was LIBOR plus 1.5%. When we entered into the new loan agreement our incremental borrowing rate for unsecured term loan became the current BSBY rate plus 1.40%. We use this rate as discount rate for leases commenced in July 2022 and thereafter. The weighted-average discount rate is 3.02%. The weighted-average remaining lease term is 7.9 years.

The following table reconciles the undiscounted future lease payments for operating leases to the operating lease liabilities recorded in the condensed consolidated balance sheets on July 31, 2022:

	Undiscounted Future Operating Lease Payments
Remainder of 2023	$	4,590
2024		8,523
2025		8,549
2026		8,516
2027		8,167
2028 and thereafter		26,217
Total lease payments	$	64,562
Less: impact of discounting		(7,794	)
Present value of lease payments	$	56,768

As of July 31, 2022, the Company had an additional lease for a showroom in High Point, North Carolina. This lease is expected to commence in the Fall of calendar 2022 with an initial lease term of 10 years and estimated future minimum rental commitments of approximately $23.7 million. Since the lease has not yet commenced, the undiscounted amounts are not included in our financial statements or in the table above.