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Leases

9 Months Ended

Oct. 29, 2023

9. Leases

We have operating leases for warehouses, showrooms, manufacturing facilities, offices and equipment. We recognized sub-lease income of $27,000 and $101,000 for the third quarter and nine-month period of fiscal 2024, respectively. We recognized sub-lease income of $34,000 and $415,000 for the third quarter and nine-month period of fiscal 2023, respectively.

The components of lease cost and supplemental cash flow information for leases for the three-months and nine-months ended October 29, 2023 and October 30, 2022 were:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 29, 2023		October 30, 2022		October 29, 2023		October 30, 2022
Operating lease cost	$	2,715	$	2,291	$	8,414	$	7,089
Variable lease cost		50		62		202		172
Short-term lease cost		119		79		282		246
Total operating lease cost	$	2,884	$	2,432	$	8,898	$	7,507


Operating cash outflows	$	2,668	$	2,518	$	8,033	$	7,745

During fiscal 2024 second quarter, we reduced our footprint by 200,000 square feet in the Georgia warehouse. During the third quarter, we entered into an agreement to further reduce our footprint by 200,000 square feet by early calendar 2024. These modifications resulted in an approximate $13 million decrease in the lease right-of-use assets and liabilities. The right-of-use assets and lease liabilities recorded on our condensed consolidated balance sheets as of October 29, 2023 and January 29, 2023 were as follows:

	October 29, 2023		January 29, 2023
Real estate	$	53,374	$	68,212
Property and equipment		828		737
Total operating leases right-of-use assets	$	54,202	$	68,949


Current portion of operating lease liabilities	$	7,045	$	7,316
Long term operating lease liabilities		49,651		63,762
Total operating lease liabilities	$	56,696	$	71,078

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 (described in Note 10 below), our incremental borrowing rate became the current BSBY rate plus 1.40%. We use this rate as the discount rate for leases commenced in July 2022 and thereafter. The weighted-average discount rate is 5.05%. The weighted-average remaining lease term is 7 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 29, 2023:

	Undiscounted Future Operating Lease Payments
Remainder of fiscal 2024	$	2,424
2025		9,732
2026		9,797
2027		9,635
2028		8,010
2029 and thereafter		29,166
Total lease payments	$	68,764
Less: impact of discounting		(12,068	)
Present value of lease payments	$	56,696