Leases

9 Months Ended

Oct. 28, 2023

(6) Leases

At the inception of the lease, the Company’s operating leases have lease terms of up to 15 years, which typically includes multiple options for the Company to extend the lease which are not reasonably certain.

The Company determines whether a contract is or contains a lease at contract inception. As the rate implicit in the lease is not readily determinable in most of the Company’s leases, the Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The operating lease asset also includes any fixed lease payments made and includes lease incentives and incurred initial direct costs. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease. Additionally, the Company’s leases do not contain any material residual guarantees or material restrictive covenants.

During the 13 and 39 weeks ended October 28, 2023, the Company recorded a non-cash increase of $6,233 and $52,314 to the right of use assets and operating lease liabilities resulting from lease remeasurements from the exercise of lease extension options, acquired leases, and new leases added.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In accordance with ASC 842, total lease expense was comprised of the following for the periods presented:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 28,		October 29,		October 28,		October 29,
	2023		2022		2023		2022
Operating lease expense	$	16,448	$	14,729	$	48,165	$	43,674
Variable lease expense		5,474		4,635		16,702		13,697
Short-term lease expense		385		337		994		921
Total lease expense	$	22,307	$	19,701	$	65,861	$	58,292

In accordance with ASC 842, other information related to leases was as follows for the periods presented:


	Thirty-Nine Weeks Ended
	October 28,			October 29,
	2023			2022
Operating cash flows from operating leases	$	(51,849	)	$	(47,402	)


	As of October 28,			As of October 29,
	2023			2022
Right-of-use assets obtained in exchange for new or remeasured operating lease liabilities	$	52,314		$	46,050
Terminated right-of-use assets and liabilities		—			—
Weighted-average remaining lease term - operating leases		5.83			5.83
Weighted-average discount rate - operating leases		7.76	%		8.06	%

In accordance with ASC 842, maturities of operating lease liabilities as of October 28, 2023 were as follows:


	Operating
Fiscal Year Ending:	Leases
2023 (remainder)	$	18,129
2024		71,934
2025		65,851
2026		60,797
2027		53,252
Thereafter		188,817
Undiscounted cash flows	$	458,780
Reconciliation of lease liabilities:
Present values	$	347,633
Lease liabilities - current		48,254
Lease liabilities - noncurrent		299,379
Lease liabilities - total	$	347,633
Difference between undiscounted and discounted cash flows	$	111,147

The Company has excluded in the table above approximately $7.9 million of leases (undiscounted basis) that were entered into as of December 7, 2023. These leases will commence in 2025 with lease terms of 12 years.