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Leases

9 Months Ended

Oct. 30, 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 $415,000 for the nine-month period, both ended October 30, 2022. We recognized sub-lease income of $266,000 for the three-month period and $561,000 for the nine-month period, both ended October 31, 2021.

The components of lease cost and supplemental cash flow information for leases for the three-months and nine-months ended October 30, 2022 and October 31, 2021 were:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 30, 2022		October 31, 2021		October 30, 2022		October 31, 2021
Operating lease cost	$	2,291	$	1,794	$	7,089	$	5,712
Variable lease cost		62		53		172		162
Short-term lease cost		79		27		246		94
Total lease cost	$	2,432	$	1,874	$	7,507	$	5,968

Operating lease cash outflows	$	2,518	$	1,843	$	7,745	$	5,818

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

	October 30, 2022		January 30, 2022
Real estate	$	51,635	$	50,749
Property and equipment		843		1,105
Total leases right-of-use assets	$	52,478	$	51,854

Current portion of operating lease liabilities	$	6,922	$	7,471
Long term operating lease liabilities		47,504		46,570
Total lease liabilities	$	54,426	$	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 3.17%. The weighted-average remaining lease term is 8.0 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 October 30, 2022:

	Undiscounted Future Operating Lease Payments
Remainder of 2023	$	2,152
2024		8,523
2025		8,549
2026		8,516
2027		8,167
2028 and thereafter		26,218
Total lease payments	$	62,125
Less: impact of discounting		(7,699	)
Present value of lease payments	$	54,426

As of October 30, 2022, the Company had an additional lease for a showroom in High Point, North Carolina. This lease was commenced in November 2022 with an initial lease term of 10 years and estimated future minimum rental commitments of approximately $23.7 million. Since the lease was not commenced as of October 30, 2022, the undiscounted amounts are not included in our financial statements or in the table above.