Leases

9 Months Ended

Oct. 31, 2020

Leases [Abstract]

Leases

Leases

In April 2020, the Financial Accounting Standards Board (FASB) issued interpretive guidance to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments that are not stipulated in the original lease are generally accounted for as lease modifications under ASC Topic 842, Leases. The interpretive guidance grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications.

We elected not to utilize this exception and accounted for COVID-19 related lease concessions as modifications triggering lease remeasurement. The majority of the lease modifications during the 13-weeks ended October 31, 2020, were in the form of deferred rent payments totaling $0.5 million, which will generally be repaid by us over the next six to eighteen months and rent abatements with lease term extensions which resulted in $1.9 million of additional rent considered in our remeasurement. For the 39-weeks ended October 31, 2020, there were $1.9 million in deferred rent lease modifications and $7.7 million in rent abatements with lease term extensions.

ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. Asset group impairment charges of approximately $1.4 million and $0.3 million were recognized in the 13-weeks ended October 31, 2020 and November 2, 2019, respectively. Asset group impairment charges of approximately $6.0 million and $1.2 million were recognized in the 39-weeks ended October 31, 2020 and November 2, 2019, respectively.

Lease costs are as follows (in thousands):

	13-Weeks Ended				39-Weeks Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Operating lease cost	$	16,467	$	17,051	$	50,236	$	52,593
Finance lease cost:
Amortization of assets	234		224		712		684
Interest on lease liabilities	43		53		137		176
Variable lease cost	388		(49)		734		55
	$	17,132	$	17,279	$	51,819	$	53,508

Finance ROU assets on the unaudited condensed consolidated balance sheet at October 31, 2020, February 1, 2020 and November 2, 2019 are shown net of accumulated amortization of $1.4 million, $0.8 million and $0.7 million, respectively.

The following table provides supplemental balance sheet information related to leases:

	October 31, 2020		February 1, 2020		November 2, 2019
Weighted-average remaining lease term (in years):
Operating leases	5		5		5
Finance leases	4		4		3
Weighted-average discount rate:
Operating leases	3.7	%	4.1	%	4.2	%
Finance leases	6.4	%	8.8	%	13.5	%

The following table provides supplemental cash flow and other information related to leases (in thousands):

	39-Weeks Ended
	October 31, 2020		November 2, 2019
Operating cash flows from operating leases	$	57,461	$	53,020
Operating cash flows from finance leases	$	137	$	176
Financing cash flows from finance leases	$	766	$	722
ROU assets obtained in exchange for lease liabilities, net:
Operating leases	$	42,895	$	32,699
Finance leases	$	1,351	$	—

Maturities of lease liabilities as of October 31, 2020 (in thousands):

	Operating		Finance		Total
Remainder of Fiscal 2021	$	13,048	$	280	$	13,328
Fiscal 2022	72,752		955		73,707
Fiscal 2023	57,797		923		58,720
Fiscal 2024	42,967		810		43,777
Fiscal 2025	31,744		276		32,020
Thereafter	51,865		253		52,118
Total minimum lease payments	270,173		3,497		273,670
Less amount representing interest	23,493		335		23,828
	$	246,680	$	3,162	$	249,842

As of October 31, 2020, we have entered into approximately $2.1 million of operating lease liabilities related to future store locations that have not yet commenced.

Leases

Leases

In April 2020, the Financial Accounting Standards Board (FASB) issued interpretive guidance to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Under current U.S. GAAP, subsequent changes to lease payments that are not stipulated in the original lease are generally accounted for as lease modifications under ASC Topic 842, Leases. The interpretive guidance grants relief by allowing companies to make an accounting policy election to not evaluate lease concessions related to the effects of the COVID-19 pandemic as lease modifications.

We elected not to utilize this exception and accounted for COVID-19 related lease concessions as modifications triggering lease remeasurement. The majority of the lease modifications during the 13-weeks ended October 31, 2020, were in the form of deferred rent payments totaling $0.5 million, which will generally be repaid by us over the next six to eighteen months and rent abatements with lease term extensions which resulted in $1.9 million of additional rent considered in our remeasurement. For the 39-weeks ended October 31, 2020, there were $1.9 million in deferred rent lease modifications and $7.7 million in rent abatements with lease term extensions.

ROU lease assets are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, to determine when to test ROU assets (or asset groups that contain one or more ROU assets) for impairment, whether ROU assets are impaired, and if so, the amount of the impairment loss to recognize. Asset group impairment charges of approximately $1.4 million and $0.3 million were recognized in the 13-weeks ended October 31, 2020 and November 2, 2019, respectively. Asset group impairment charges of approximately $6.0 million and $1.2 million were recognized in the 39-weeks ended October 31, 2020 and November 2, 2019, respectively.

Lease costs are as follows (in thousands):

	13-Weeks Ended				39-Weeks Ended
	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Operating lease cost	$	16,467	$	17,051	$	50,236	$	52,593
Finance lease cost:
Amortization of assets	234		224		712		684
Interest on lease liabilities	43		53		137		176
Variable lease cost	388		(49)		734		55
	$	17,132	$	17,279	$	51,819	$	53,508

Finance ROU assets on the unaudited condensed consolidated balance sheet at October 31, 2020, February 1, 2020 and November 2, 2019 are shown net of accumulated amortization of $1.4 million, $0.8 million and $0.7 million, respectively.

The following table provides supplemental balance sheet information related to leases:

	October 31, 2020		February 1, 2020		November 2, 2019
Weighted-average remaining lease term (in years):
Operating leases	5		5		5
Finance leases	4		4		3
Weighted-average discount rate:
Operating leases	3.7	%	4.1	%	4.2	%
Finance leases	6.4	%	8.8	%	13.5	%

The following table provides supplemental cash flow and other information related to leases (in thousands):

	39-Weeks Ended
	October 31, 2020		November 2, 2019
Operating cash flows from operating leases	$	57,461	$	53,020
Operating cash flows from finance leases	$	137	$	176
Financing cash flows from finance leases	$	766	$	722
ROU assets obtained in exchange for lease liabilities, net:
Operating leases	$	42,895	$	32,699
Finance leases	$	1,351	$	—

Maturities of lease liabilities as of October 31, 2020 (in thousands):

	Operating		Finance		Total
Remainder of Fiscal 2021	$	13,048	$	280	$	13,328
Fiscal 2022	72,752		955		73,707
Fiscal 2023	57,797		923		58,720
Fiscal 2024	42,967		810		43,777
Fiscal 2025	31,744		276		32,020
Thereafter	51,865		253		52,118
Total minimum lease payments	270,173		3,497		273,670
Less amount representing interest	23,493		335		23,828
	$	246,680	$	3,162	$	249,842

As of October 31, 2020, we have entered into approximately $2.1 million of operating lease liabilities related to future store locations that have not yet commenced.