Leases

12 Months Ended

Jan. 30, 2021

Leases [Abstract]

Leases

14. Leases

The majority of our leases are operating leases for our company-operated retail store locations. We also lease, among other things, distribution and warehouse facilities, and office space for corporate administrative purposes.  Operating lease periods generally range from 5 to 10 years and generally contain rent escalation provisions. Some of the store leases contain renewal options with varying terms and conditions.

Amounts recognized in the Consolidated Balance Sheet were as follows:

($ in millions)	January 30, 2021		February 1, 2020
Operating leases:
Operating lease right-of-use assets	$	2,716	$	2,899
Operating lease liabilities classified as current	$	580	$	518
Operating lease liabilities classified as long-term		2,499		2,678
Total operating lease liabilities	$	3,079	$	3,196
Finance leases:
Property and equipment, net	$	10	$	—
Current portion of debt and obligations under finance leases	$	2	$	—
Long-term obligations under finance leases		8		—
Total finance lease obligations	$	10	$	—

Other information related to operating leases as of January 30, 2021 and February 1, 2020 consisted of the following:

	January 30, 2021			February 1, 2020
Weighted-average remaining lease term (years)
Operating leases		6.7			7.3
Finance leases		4.4			—
Weighted-average discount rate
Operating leases		5.0	%		5.4	%
Finance leases		4.1	%		—	%

Total lease costs include fixed operating lease costs, variable lease costs, and short-term lease costs. Most of our real estate leases require we pay certain expenses, such as CAM costs, real estate taxes, and other executory costs, of which the fixed portion is included in operating lease costs. Variable lease costs include non-lease components which are not fixed and are not included in determining the present value of our lease liability. Variable lease costs also include amounts based on a percentage of gross sales in excess of specified levels that are recognized when probable.

Lease costs which relate to retail stores and distribution centers are classified within cost of sales, while non-store lease costs are included in SG&A. Amortization of leased assets is classified in depreciation and amortization. The components of lease cost for the years ended January 30, 2021 and February 1, 2020 were as follows:

($ in millions)	2020		2019
Operating lease costs:	$	620	$	668
Variable lease costs		290		332
Short-term lease costs		23		23
Sublease income		(1)		(1)
Total operating lease costs	$	932	$	1,022
Finance leases costs:
Amortization of leased assets		1		—
Total lease cost	$	933	$	1,022

Rent expense for operating leases for 2018, under previous accounting guidance, amounted to $750 million and consisted of minimum and contingent rentals of $728 million and $27 million, respectively, less sublease income of $5 million. Other costs related to our leases, including the amortization of lease rights, totaled $147 million for the year ended February 2, 2019.

Maturities of lease liabilities as of January 30, 2021 are as follows:

($ in millions)	Operating leases		Finance leases		Total
2021	$	718	$	3	$	721
2022		624		3		627
2023		542		2		544
2024		458		2		460
2025		366		1		367
Thereafter		943		—		943
Total lease payments		3,651		11		3,662
Less: Interest		572		1		573
Total lease liabilities	$	3,079	$	10	$	3,089

As of January 30, 2021, we signed operating leases primarily for retail stores that have not yet commenced and the total future undiscounted lease payments under these leases are $29 million.

Supplemental cash flow information related to leases for the year ended January 30, 2021 and February 1, 2020 were as follows:

($ in millions)	2020		2019
Cash paid for amounts included in measurement of operating lease liabilities	$	626	$	679
Right-of-use assets obtained in exchange for lease obligations		331		322
Cash paid for amounts included in measurement of finance lease liabilities		1		—
Leases obtained in exchange for finance lease obligations		11		—