Lease Accounting (Tables)

9 Months Ended

Oct. 31, 2020

As of October 31, 2020 and February 1, 2020, the components of leases are as follows (in thousands):


		Oct 31, 2020		Feb 1, 2020
Assets	Balance Sheet Location
Operating	Operating lease right-of-use assets	$	789,742	$	851,990
Finance	Property and equipment, net	20,933		15,972
Total lease assets		$	810,675	$	867,962

Liabilities	Balance Sheet Location
Current:
Operating	Current portion of operating lease liabilities	$	227,209	$	192,066
Finance	Current portion of borrowings and finance lease obligations	4,414		2,273
Noncurrent:
Operating	Long-term operating lease liabilities	689,251		714,079
Finance	Long-term debt and finance lease obligations	17,748		14,262
Total lease liabilities		$	938,622	$	922,680

Lease cost


		Three Months Ended				Nine Months Ended
	Income Statement Location	Oct 31, 2020		Nov 2, 2019		Oct 31, 2020		Nov 2, 2019
Operating lease costs	Cost of product sales	$	50,684	$	56,370	$	156,058	$	173,935
Operating lease costs	Selling, general and administrative expenses	5,191		6,746		15,722		17,730
Operating lease costs1, 2	Net gains on lease modifications	(21)		—		(450)		—
Finance lease costs
Amortization of leased assets1, 3	Cost of product sales	5		132		37		219
Amortization of leased assets1, 3	Selling, general and administrative expenses	1,185		561		2,523		1,741
Interest on lease liabilities	Interest expense	353		165		843		738
Variable lease costs4	Cost of product sales	14,755		24,592		42,312		74,500
Variable lease costs4	Selling, general and administrative expenses	33		677		1,250		2,132
Short-term lease costs	Cost of product sales	142		—		562		—
Short-term lease costs	Selling, general and administrative expenses	2,407		208		4,366		603
Total lease costs1		$	74,734	$	89,451	$	223,223	$	271,598

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Notes:

1 The Company has made certain reclassifications to prior period amounts to conform to the current period presentation.

2During the three and nine months ended October 31, 2020, net gains on lease modifications related primarily to the early termination of lease agreements for certain of the Company’s retail locations. Operating lease costs for these retail locations prior to the early termination were included in cost of product sales.

3Amortization of leased assets related to finance leases are included in depreciation expense within cost of product sales or selling, general and administrative expenses depending on the nature of the asset in the Company’s condensed consolidated statements of income (loss).

4During the three and nine months ended October 31, 2020, variable lease costs included certain rent concessions received by the Company, primarily in Europe, related to the COVID-19 pandemic of approximately $8.0 million and $18.4 million, respectively. Refer to Note 1 for further information.

Operating lease liabilities maturity schedule

Maturities of the Company’s operating and finance lease liabilities as of October 31, 2020 are as follows (in thousands):


Maturity of Lease Liabilities	Operating Leases		Finance Leases		Total
20211	$	91,693	$	1,452	$	93,145
2022	215,039		5,809		220,848
2023	180,630		5,327		185,957
2024	154,320		5,148		159,468
2025	110,724		3,285		114,009
After 2025	258,149		5,414		263,563
Total lease payments	1,010,555		26,435		1,036,990
Less: Interest	94,095		4,273		98,368
Present value of lease liabilities	$	916,460	$	22,162	$	938,622

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Notes:

1Represents the maturity of lease liabilities for the remainder of fiscal 2021 and also includes rent payments that have been deferred due to the COVID-19 pandemic. This amount does not include payments made during the nine months ended October 31, 2020.

Finance lease liabilities maturity schedule

Maturities of the Company’s operating and finance lease liabilities as of October 31, 2020 are as follows (in thousands):


Maturity of Lease Liabilities	Operating Leases		Finance Leases		Total
20211	$	91,693	$	1,452	$	93,145
2022	215,039		5,809		220,848
2023	180,630		5,327		185,957
2024	154,320		5,148		159,468
2025	110,724		3,285		114,009
After 2025	258,149		5,414		263,563
Total lease payments	1,010,555		26,435		1,036,990
Less: Interest	94,095		4,273		98,368
Present value of lease liabilities	$	916,460	$	22,162	$	938,622

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Notes:

Other supplemental information

Other supplemental information is as follows (dollars in thousands):

Lease Term and Discount Rate

Oct 31, 2020

Weighted-average remaining lease term

Operating leases

6.0 years

Finance leases

5.2 years

Weighted-average discount rate

Operating leases

3.6%

Finance leases

7.1%


	Nine Months Ended
Supplemental Cash Flow Information	Oct 31, 2020		Nov 2, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	133,776	$	187,523


New operating ROU assets obtained in exchange for lease liabilities	$	49,810	$	118,486