Leases (Notes)

6 Months Ended

Aug. 01, 2020

Leases of Lessee Disclosure [Text Block]

The Company is a party to leases related to its Company-operated retail stores as well as for certain of its distribution centers, office space, information technology and equipment.

During the thirteen and twenty-six weeks ended August 1, 2020, the Company suspended rent payments for a significant number of stores that were closed as a result of COVID-19, and continues to engage with its landlords to find a mutually beneficial and agreeable path forward. To the extent that the Company is successful in negotiating further rent abatements, these benefits will be recognized as a component of variable lease cost. For stores where the Company suspended payments, the Company reclassified related amounts from operating lease liability to accrued expenses in the period during which rent was due, while continuing to recognize operating lease cost in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

The following table provides a summary of the Company’s operating lease costs for the thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019:



	Thirteen Weeks Ended				Twenty-six Weeks Ended
(in thousands)	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Single lease cost ⁽¹⁾	$	87,698	$	121,270	$	181,189	$	213,544
Variable lease cost ⁽²⁾	19,433		60,238		47,335		103,083
Operating lease right-of-use asset impairment ⁽³⁾	5,410		3,589		40,418		3,589
Total operating lease cost	$	112,541	$	185,097	$	268,942	$	320,216


⁽¹⁾	Includes amortization and interest expense associated with operating lease right-of-use assets and liabilities.


⁽²⁾	Includes variable payments related to both lease and nonlease components, such as contingent rent payments made by the Company based on performance, and payments related to taxes, insurance, and maintenance costs, as well as rent abatements agreed upon during the period.


⁽³⁾	Refer to Note 9, “ASSET IMPAIRMENT,” for details related to operating lease right-of-use asset impairment charges.

During the twenty-six weeks ended August 1, 2020 and August 3, 2019, the Company paid $122.1 million and $200.5 million, respectively, for amounts included in measurement of operating lease liabilities, net of rent abatements agreed upon during the period which are classified as a component variable lease cost as noted in the above table. These payments are included within operating activities on the Condensed Consolidated Statements of Cash Flows.

During the twenty-six weeks ended August 1, 2020 and August 3, 2019, the Company obtained operating lease right-of-use assets of $23.1 million and $204.5 million, respectively, in exchange for operating lease liabilities.

As of August 1, 2020, the Company had minimum commitments related to additional operating lease contracts the terms of which have not yet commenced, primarily for its Company-operated retail stores, of approximately $2.8 million.