Note 15 - Leases

12 Months Ended

Feb. 03, 2024

Notes to Financial Statements

Lessee Leases [Text Block]

15. 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:

	February 3,		January 28,
($ in millions)	2024		2023
Operating leases:
Operating lease right-of-use assets	$	2,188	$	2,443
Operating lease liabilities classified as current	$	492	$	544
Operating lease liabilities classified as long-term		2,004		2,230
Total operating lease liabilities	$	2,496	$	2,774

	February 3,		January 28,
($ in millions)	2024		2023
Finance leases:
Property and equipment, net	$	47	$	53
Finance lease obligations classified as current	$	5	$	6
Finance lease obligations classified as long-term		47		51
Total finance lease obligations	$	52	$	57

Other information related to our leases as of February 3, 2024 and January 28, 2023 consisted of the following:

	February 3,			January 28,
	2024			2023
Weighted-average remaining lease term (years):
Operating leases		6.5			6.5
Finance leases		14.5			14.7
Weighted-average discount rate:
Operating leases		5.5	%		5.0	%
Finance leases		4.3	%		4.3	%

Total lease costs include fixed operating lease costs, variable lease costs, and short-term lease costs. Most of our real estate leases require us to 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 equipment assets is classified in depreciation and amortization. The components of lease cost for 2023, 2022, and 2021 were as follows: ​

($ in millions)	2023			2022			2021
Operating lease costs	$	613		$	657		$	653
Variable lease costs		304			308			331
Short-term lease costs		48			19			23
Sublease income		(1	)		(1	)		(1	)
Total operating lease costs		964			983			1,006
Finance lease costs:
Amortization of leased assets		6			6			4
Interest on lease liabilities		2			3			1
Total finance lease costs		8			9			5
Total lease cost	$	972		$	992		$	1,011

Maturities of lease liabilities as of February 3, 2024 are as follows:

($ in millions)	Operating leases		Finance leases		Total
2024	$	598	$	8	$	606
2025		523		6		529
2026		431		4		435
2027		351		4		355
2028		285		4		289
Thereafter		797		45		842
Total lease payments		2,985		71		3,056
Less: Interest		489		19		508
Total lease liabilities	$	2,496	$	52	$	2,548

As of February 3, 2024, we signed operating leases that have not yet commenced and the total future undiscounted lease payments under these leases are $227 million.​ This amount reflected leases for retail stores and two new distribution centers to support WSS and our European businesses.