Leases

12 Months Ended

Feb. 02, 2024

Leases

Leases

4.Leases

As of February 2, 2024, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities. Many of the Company’s store locations are subject to

build-to-suit arrangements with landlords which typically carry a primary lease term of up to 15 years. The Company does not control build-to-suit properties during the construction period. Store locations not subject to build-to-suit arrangements are typically shorter-term leases. Certain of the Company’s leased store locations have variable payments based upon actual costs of common area maintenance, real estate taxes and property and liability insurance. In addition, some of the Company’s leased store locations have provisions for variable payments based upon a specified percentage of defined sales volume. The Company’s lease agreements generally do not contain material restrictive covenants.

Most of the Company’s leases include one or more options to renew and extend the lease term. The exercise of lease renewal options is at the Company’s sole discretion. Generally, a renewal option is not deemed to be reasonably certain to be exercised until such option is legally executed. The Company’s leases do not include purchase options or residual value guarantees on the leased property. The depreciable life of leasehold improvements is limited by the expected lease term.

Substantially all of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. Finance lease assets are included in net property and equipment, and finance lease liabilities are included in long-term obligations, in the consolidated balance sheets. At February 2, 2024, the weighted-average remaining lease term for the Company’s leases was 9.5 years, and the weighted average discount rate was 4.3%. For 2023, 2022 and 2021, operating lease cost of $1.75 billion, $1.61 billion and $1.49 billion, respectively, and variable lease cost of $0.36 billion, $0.31 billion and $0.28 billion, respectively, were reflected as selling, general and administrative expenses in the consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities of $1.76 billion, $1.62 billion and $1.5 billion, respectively, were reflected in cash flows from operating activities in the consolidated statements of cash flows for 2023, 2022 and 2021.

The scheduled maturities of the Company’s operating lease liabilities are as follows:

(In thousands)
2024	$	1,822,383
2025		1,738,768
2026		1,627,370
2027		1,491,141
2028		1,318,226
Thereafter		5,481,482
Total lease payments (a)		13,479,370
Less imputed interest		(2,388,788)
Present value of lease liabilities	$	11,090,582

a) Excludes approximately $407.4 million of legally binding minimum lease payments for leases signed which have not yet commenced.