In the first quarter of fiscal 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” and related amendments. See Note 9 of the Notes to Consolidated Financial Statements for additional information.

The Company leases certain property consisting principally of its corporate headquarters, its retail stores, the majority of its distribution and fulfillment centers, and certain equipment under operating leases. Many of the Company’s leases include options to renew at the Company’s discretion. The renewal options are not included in the measurement of right-of-use (“ROU”) assets and lease liabilities as the Company is not reasonably certain to exercise available options. Rent escalations occurring during the term of the leases are included in the calculation of the future minimum lease payments and the rent expense related to these leases is recognized on a straight-line basis over the lease term.

The Company determines whether an agreement contains a lease at inception based on the Company’s right to obtain substantially all of the economic benefits from the use of the identified asset and its right to direct the use of the identified asset. Lease liabilities represent the present value of future lease payments and the ROU assets represent the Company’s right to use the underlying assets for the respective lease terms. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The ROU asset is further adjusted to account for previously recorded lease-related expenses such as deferred rent and other lease liabilities. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate to calculate the present value of future lease payments. The incremental borrowing rate represents an estimate of the interest rate that would be required to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

The Company elected not to recognize a ROU asset and a lease liability for leases with an initial term of twelve months or less and not to separate lease and non-lease components. In addition to minimum lease payments, certain leases require payment of a proportionate share of real estate taxes and certain building operating expenses or payments based on a percentage of sales in excess of a specified base. These variable lease costs are not included in the measurement of the ROU asset or lease liability due to unpredictability of the payment amount and are recorded as a lease expense in the period incurred. The Company’s lease agreements do not contain residual value guarantees or significant restrictions or covenants other than those customary in such arrangements. As of November 30, 2019, the Company did not have material leases that had been signed but not yet commenced.

The Company entered into finance leases for certain equipment during the third quarter of fiscal 2020. As of November 30, 2019, finance lease right-of-use assets totaling $266,000 are included in other noncurrent assets and current finance lease liabilities of $84,000 and long-term finance lease liabilities of $183,000 are included in other accrued liabilities and other noncurrent liabilities, respectively.

	13 Weeks Ended			39 Weeks Ended
	November 30,			November 30,
	2019			2019
Operating lease cost		$	52,717		$	162,320
Short-term lease cost			829			2,911
Finance lease cost:
Amortization of ROU assets			8			8
Interest on lease liabilities			2			2
Variable lease cost			14,522			42,898
Less: Sublease income			463			1,319
Total lease cost		$	67,615		$	206,820

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company’s leases as of November 30, 2019:

	Operating Leases			Finance Leases
Weighted-average remaining lease term (years)	4.82				3.00
Weighted-average discount rate		10.02	%		9.27	%

At November 30, 2019, the Company had the following future minimum lease payments (in thousands):

Fiscal Year	Operating Leases		Finance Leases		Total
2020 (remaining)	$	53,752	$	26	$	53,778
2021		197,094		104		197,198
2022		168,630		104		168,734
2023		133,807		70		133,877
2024		97,484		—		97,484
Thereafter		157,612		—		157,612
Total lease payments		808,379		304		808,683
Less: Interest		173,576		37		173,613
Total lease obligations	$	634,803	$	267	$	635,070

The following table discloses supplemental cash flow information related to the Company’s leases (in thousands):

	13 Weeks Ended			39 Weeks Ended
		November 30,			November 30,
		2019			2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$	55,017		$	169,146
Operating cash flows from finance leases		$	—		$	—