Leases

12 Months Ended

Feb. 03, 2024

E. LEASES

The Company leases all of its store locations and its corporate headquarters, which also includes its distribution center, under operating leases. The store leases typically have initial terms of 10 years, with options that usually permit renewal for additional five-year periods. The initial term of the lease for the corporate headquarters is for 20 years, with the opportunity to extend for six additional consecutive periods of five years, beginning in fiscal 2026. The Company also leases certain equipment and other assets under operating leases, typically with initial terms of 3 to 5 years. The Company is generally obligated for the cost of property taxes, insurance and common area maintenance fees relating to its leases, which are considered variable lease costs and are expensed as incurred.

ASC 842 requires the assessment of any lease modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied. Lease modification accounting requires the recalculation of the ROU asset, lease liability and lease expense over the respective lease term. As of February 3, 2024, the Company’s operating leases liabilities represent the present value of the remaining future minimum lease payments updated based on concessions and lease modifications, as applicable.

Lease costs related to store locations are included in cost of goods sold including occupancy costs on the Consolidated Statements of Operations, and expenses and lease costs related to the corporate headquarters and equipment leases are included in selling, general and administrative expenses on the Consolidated Statements of Operations.

The following table is a summary of the Company’s components of lease costs for fiscal 2023, fiscal 2022 and fiscal 2021:


	Fiscal 2023		Fiscal 2022		Fiscal 2021
(in thousands)
Operating lease cost	$	45,018	$	44,297	$	43,921
Variable lease costs(1)		12,849		12,885		13,290
Total lease costs	$	57,867	$	57,182	$	57,211

(1)

Variable lease costs include the cost of property taxes, insurance and common area maintenance fees related to its leases.

Supplemental cash flow and balance sheet information related to leases for fiscal 2023, fiscal 2022 and fiscal 2021 is as follows:


(in thousands)	Fiscal 2023			Fiscal 2022			Fiscal 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	51,411		$	55,068		$	57,816
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	46,960		$	26,239		$	30,777

Weighted average remaining lease term	4.9 yrs.			4.3 yrs.			4.3 yrs.
Weighted average discount rate		6.52	%		6.39	%		6.91	%

The table below reconciles the undiscounted cash flows for each of the next five years and thereafter to the operating lease liabilities recorded on the Consolidated Balance Sheet as of February 3, 2024:


(in thousands)
2024	$	45,945
2025		42,651
2026		30,181
2027		22,765
2028		14,696
Thereafter		25,049
Total minimum lease payments	$	181,287
Less: amount of lease payments representing interest		26,750
Present value of future minimum lease payments	$	154,537
Less: current obligations under leases		37,221
Noncurrent lease obligations	$	117,316

As of February 3, 2024, the Company had entered into a ten-year store lease that has not yet commenced with aggregated estimated future lease payments of approximately $1.2 million, which are not included in the above table. The lease is expected to commence in the first quarter of fiscal 2024.