Leases

12 Months Ended

Jan. 30, 2021

TJX is committed under long-term leases related to its continuing operations for the rental of real estate and certain service contracts containing embedded leases, all of which are operating leases. Real estate leases represent virtually all of our store locations as well as some of our distribution centers and office space. Most of TJX’s leases in the U.S. and Canada are store operating leases with ten-year terms and options to extend for one or more five-year periods. Leases in Europe generally have an initial term of ten to fifteen years and leases in Australia generally have an initial lease term of primarily seven to ten years, some of which have options to extend. Many of the Company's leases have options to terminate prior to the lease expiration date. The exercise of both lease renewal and termination options is at our sole discretion and is not reasonably certain at lease commencement. The Company has deemed that the expense of store renovations makes the renewal of the next lease option reasonably certain to be exercised after these renovations occur.

While the overwhelming majority of leases have fixed payment schedules, some leases have variable lease payments based on market indices adjusted periodically for inflation, or include rental payments based on a percentage of retail sales over contractual levels. In addition, for real estate leases, TJX is generally required to pay insurance, real estate taxes and other operating expenses including common area maintenance based on a proportionate share of premises, and some of these costs are based on a market index, primarily in Canada. For leases with these payments based on a market index, the initial lease payment amount is used in the calculation of the operating lease liability and corresponding operating lease assets included on the Consolidated Balance Sheets. Future payment changes to these market index rate leases are not reflected in the operating lease liability and are instead included in variable lease cost. Variable lease cost also includes variable operating expenses for third party service centers and dedicated transportation contracts that are deemed embedded leases. The operating lease ROU assets also includes any lease payments made in advance of the assets use and is reduced by lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Supplemental balance sheet information related to leases is as follows:


	Fiscal Year Ended
	January 30, 2021		February 1, 2020
Weighted-average remaining lease term	6.8 years		7.2 years
Weighted-average discount rate	2.6	%	2.9	%

The following table is a summary of the Company’s components of net lease cost for the fiscal years ended:


		Fiscal Year Ended
In thousands	Classification	January 30, 2021		February 1, 2020
Operating lease cost	Cost of sales, including buying and occupancy costs	$	1,820,396	$	1,752,122
Variable and short term lease cost	Cost of sales, including buying and occupancy costs	1,162,971		1,226,716
Total lease cost		$	2,983,367	$	2,978,838

Supplemental cash flow information related to leases is as follows:


	Fiscal Year Ended
In thousands	January 30, 2021		February 1, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	1,663,005	$	1,736,403
Lease liabilities arising from obtaining right of use assets	$	1,380,402	$	1,786,212

During fiscal 2021, the Company negotiated rent deferrals (primarily for second quarter lease payments) for a significant number of our stores, with repayment at later dates, primarily in fiscal 2022. See Note B—Impact of the COVID-19 Pandemic for additional information.

The following table summarizes the maturity of lease liabilities under operating leases as of January 30, 2021:


In thousands	January 30, 2021
Fiscal Year
2022	$	2,049,652
2023	1,741,490
2024	1,559,123
2025	1,331,267
2026	1,087,555
Later years	2,507,701
Total lease payments(a)	10,276,788
Less: imputed interest(b)	855,967
Total lease liabilities(c)	$	9,420,821

(a)Operating lease payments exclude legally binding minimum lease payments for leases signed but not yet commenced and include options to extend lease terms that are now deemed reasonably certain of being exercised according to our Lease Accounting Policy.

(b)Calculated using the incremental borrowing rate for each lease.

(c)Total lease liabilities are broken out on the Consolidated Balance Sheets between Current portion of operating lease liabilities and Long-term operating lease liabilities.