Properties and Leases

12 Months Ended

Jan. 30, 2021

Property Plant And Equipment And Leases Of Lessee [Abstract]

Properties and Leases

5. Properties and Leases

Property and Equipment, net

The major classes of property and equipment, net as of January 30, 2021 and February 1, 2020 are as follows:

	January 30,		February 1,
	2021		2020
	(millions)
Land	$	1,390	$	1,436
Buildings on owned land		3,650		3,822
Buildings on leased land and leasehold improvements		1,268		1,365
Fixtures and equipment		4,032		4,402
		10,340		11,025
Less accumulated depreciation and amortization		4,400		4,392
	$	5,940	$	6,633

In connection with various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to fifteen years. Some of these agreements require that the stores be operated under a particular name.

Leases

The Company leases a portion of the real estate and personal property used in its operations. Most leases require the Company to pay real estate taxes, maintenance, insurance and other similar costs; some also require additional payments based on percentages of sales and some contain purchase options. Certain of the Company's leases contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions (including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial tests.

ROU assets and lease liabilities consist of:

		January 30,		February 1,
		2021		2020
	Classification	(millions)
Assets
Finance lease assets (a)	Right of Use Assets	$	12	$	13
Operating lease assets (b)	Right of Use Assets		2,866		2,655
Total lease assets		$	2,878	$	2,668
Liabilities
Current
Finance (a)	Accounts payable and accrued liabilities	$	2	$	2
Operating (b)	Accounts payable and accrued liabilities		198		331
Noncurrent
Finance (a)	Long-Term Lease Liabilities		19		21
Operating (b)	Long-Term Lease Liabilities		3,166		2,897
Total lease liabilities		$	3,385	$	3,251

(a) Finance lease assets are recorded net of accumulated amortization of $13 million and $12 million as of January 30, 2021 and February 1, 2020, respectively. As of January 30, 2021 and February 1, 2020, finance lease assets and noncurrent lease liabilities each included $2 million of non-lease components.

(b) As of January 30, 2021, operating lease assets included $383 million of non-lease components and current and noncurrent lease liabilities included $35 million and $384 million, respectively, of non-lease components.  As of February 1, 2020, operating lease assets included $403 million of non-lease components and current and noncurrent lease liabilities included $36 million and $397 million, respectively, of non-lease components.

The components of net lease expense, recognized primarily within selling, general and administrative expenses are disclosed below. For 2020 and 2019, lease expense included $87 million and $83 million, respectively, related to non-lease components.

	2020			2019			2018
				(millions)
Real estate
Operating leases (c) –
Minimum rents	$	376		$	364		$	317
Variable rents		45			54			11
		421			418			328
Less income from subleases –
Operating leases		(1	)		(2	)		(1	)
	$	420		$	416		$	327
Personal property – Operating leases	$	7		$	8		$	9

(c) Certain supply chain operating lease expense amounts are included in cost of sales.

As of January 30, 2021, the maturity of lease liabilities is as follows:

			Operating
	Finance		Leases
	Leases		(d and e)		Total
			(millions)
Fiscal year
2021	$	3	$	239	$	242
2022		3		350		353
2023		3		344		347
2024		3		334		337
2025		3		329		332
After 2025		16		5,443		5,459
Total undiscounted lease payments		31		7,039		7,070
Less amount representing interest		10		3,675		3,685
Total lease liabilities	$	21	$	3,364	$	3,385

(d) Operating lease payments include $3,063 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $2 million of legally binding minimum lease payments for leases signed but not yet commenced.

(e) Operating lease payments include $1,151 million related to non-lease component payments, with $840 million of such payments related to options to extend lease terms that are reasonably certain of being exercised.

Additional supplemental information regarding assumptions and cash flows for operating and finance leases is as follows:

	January 30,			February 1,
Lease Term and Discount Rate	2021			2020
Weighted-average remaining lease term (years)
Finance leases		12.1			12.7
Operating leases		22.4			23.3
Weighted-average discount rate
Finance leases		6.70	%		6.69	%
Operating leases		6.32	%		6.53	%

	52 Weeks Ended		52 Weeks Ended
Other Information	January 30, 2021		February 1, 2020
	(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used from operating leases	$	521	$	363
Financing cash flows used from financing leases		4		2
Leased assets obtained in exchange for new operating lease liabilities		430		216

The Company is a guarantor with respect to certain lease obligations associated with The May Department Stores Company and previously disposed subsidiaries or businesses. The leases, one of which includes potential extensions to 2070, have future minimum lease payments aggregating $211 million and are offset by payments from existing tenants and subtenants. In addition, the Company is contingently liable for other expenses related to the above leases, such as property taxes and common area maintenance, which are also payable by existing tenants and subtenants. Potential liabilities related to these guarantees are subject to certain defenses by the Company. The Company believes that the risk of significant loss from the guarantees of these lease obligations is remote.