Leases

6 Months Ended

Aug. 02, 2025

4. Leases

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 5 years to 10 years, with options that usually permit renewal for additional five-year periods.

In the second quarter of fiscal 2025, the Company extended the term of its corporate lease from February 1, 2026 to January 31, 2033, with the opportunity to extend for three additional consecutive periods of five years. In connection with the lease amendment to extend the term of the lease, the landlord provided the Company with an improvement allowance in an amount up to $4.7 million, which has been included as an offset to the ROU asset and will be amortized as a reduction to rent expense over the lease term.

The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance fees relating to its leases, which are considered variable lease costs and are expensed as incurred.

ASC 842 requires the assessment of any lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied. Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term. As of August 2, 2025, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications.

Lease costs related to store locations are included in cost of goods sold, including occupancy costs on the Consolidated Statements of Operations, and expenses and lease costs related to the corporate headquarters and equipment leases are included in selling, general and administrative expenses on the Consolidated Statements of Operations.

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 2, 2025 and August 3, 2024, respectively:


	For the three months ended				For the six months ended
	August 2, 2025		August 3, 2024		August 2, 2025		August 3, 2024
(in thousands)
Operating lease cost	$	13,277	$	12,222	$	26,258	$	23,699
Variable lease costs(1)		3,878		3,151		7,503		6,544
Total lease costs	$	17,155	$	15,373	$	33,761	$	30,243

(1)

Variable lease costs include the cost of property taxes, insurance and common area maintenance fees related to leases.

Supplemental cash flow and balance sheet information related to leases as of and for the first six months ended August 2, 2025 and August 3, 2024 was as follows:



(dollars in thousands)	For the six months ended
Cash paid for amounts included in the measurement of lease liabilities:	August 2, 2025			August 3, 2024
Operating cash flows for operating leases (1)	$	27,747		$	25,750
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	53,413		$	43,087

	As of
	August 2, 2025			August 3, 2024
Weighted average remaining lease term	5.9 yrs.			5.4 yrs.
Weighted average discount rate		6.50	%		6.38	%

(1)

The cash paid for the first six months of fiscal 2025 and fiscal 2024 included prepaid rent of $4.6 million and $4.3 million, respectively.

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 2, 2025:


(in thousands)
2025 (remaining)	$	15,561
2026		54,810
2027		49,374
2028		41,089
2029		33,499
Thereafter		73,929
Total minimum lease payments	$	268,262
Less: amount of lease payments representing interest		49,128
Present value of future minimum lease payments	$	219,134
Less: current obligations under leases		33,192
Long-term lease obligations	$	185,942