Leases

6 Months Ended

Aug. 03, 2019

4. 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 5 years to 10 years, with options that usually permit renewal for additional five-year periods. The initial term of the lease for the corporate headquarter was for 20 years, with the opportunity to extend for six additional successive 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.

The following table is a summary of the Company’s components of net lease cost for the three and six months ended August 3, 2019:

	For the three		For the six
	months ended		months ended
	August 3, 2019		August 3, 2019
(in thousands)
Operating lease cost⁽¹⁾	$	13,215	$	26,468
Short-term lease costs ⁽²⁾		—		—
Variable lease costs⁽¹⁾		3,954		7,999
Total lease costs	$	17,169	$	34,467

(1)

Lease costs related to store locations are included in Cost of Goods Sold Including Occupancy Costs on the Consolidated Statement of Operations and expenses and lease costs related to the corporate headquarters, automobile and equipment leases are included in Selling, General and Administrative expenses on the Consolidated Statement of Operations.

(2)

For the second quarter and first six months of fiscal 2019, the Company had no short-term lease costs.

Supplemental cash flow information related to leases for the first six months ended August 3, 2019 is as follows:

(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	29,221
Non-cash operating activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	3,053

Supplemental balance sheet information related to leases as of August 3, 2019 is as follows:

Operating leases:
Weighted average remaining lease term	5.6 yrs
Weighted average discount rate		7.10	%

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of August 3, 2019:

(in thousands)
2019 (remaining)	$	28,785
2020		54,800
2021		53,422
2022		48,417
2023		40,251
Thereafter		65,169
Total minimum lease payments	$	290,844
Less: amount of lease payments representing interest		52,084
Present value of future minimum lease payments	$	238,760
Less: current obligations under leases		41,372
Long-term lease obligations	$	197,388

As previously disclosed in the Company's Consolidated Financial Statements for the year ending February 2, 2019, future minimum lease payments for noncancelable operating leases, under the previous lease accounting standard, were as follows at February 2, 2019:

(in thousands)
2019	$	57,364
2020		52,699
2021		50,380
2022		45,061
2023		36,605
Thereafter		56,638
Total minimum lease payments	$	298,747