Lease Accounting (Tables)

9 Months Ended

Oct. 30, 2021

The components of leases are (in thousands):


		Oct 30, 2021		Jan 30, 2021
Assets	Balance Sheet Location
Operating	Operating lease right-of-use assets	$	706,161	$	764,804
Finance	Property and equipment, net	18,425		20,595
Total lease assets		$	724,586	$	785,399

Liabilities	Balance Sheet Location
Current:
Operating	Current portion of operating lease liabilities	$	209,072	$	222,800
Finance	Current portion of borrowings and finance lease obligations	4,939		4,698
Noncurrent:
Operating	Long-term operating lease liabilities	599,472		662,657
Finance	Long-term debt and finance lease obligations	15,122		17,365
Total lease liabilities		$	828,605	$	907,520

Lease cost

The components of lease costs are (in thousands):


		Three Months Ended				Nine Months Ended
	Income Statement Location	Oct 30, 2021		Oct 31, 2020		Oct 30, 2021		Oct 31, 2020
Operating lease costs	Cost of product sales	$	44,729	$	50,684	$	137,189	$	156,058
Operating lease costs	Selling, general and administrative expenses	6,300		5,191		18,846		15,722
Operating lease costs1	Net (gains) losses on lease modifications	3,006		(21)		441		(450)
Finance lease costs
Amortization of leased assets2	Cost of product sales	5		5		33		37
Amortization of leased assets2	Selling, general and administrative expenses	1,233		1,185		4,000		2,523
Interest on lease liabilities	Interest expense	474		353		1,103		843
Variable lease costs3	Cost of product sales	19,321		14,755		51,700		42,312
Variable lease costs3	Selling, general and administrative expenses	552		33		1,571		1,250
Short-term lease costs	Cost of product sales	99		142		330		562
Short-term lease costs	Selling, general and administrative expenses	1,341		2,407		3,635		4,366
Total lease costs		$	77,060	$	74,734	$	218,848	$	223,223

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Notes:

1During the three and nine months ended October 30, 2021 and October 31, 2020, net (gains) losses 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.

2Amortization 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).

3During the three and nine months ended October 30, 2021, variable lease costs included certain rent concessions of approximately $2.6 million and $14.5 million, respectively, received by the Company, primarily in Europe, related to the COVID-19 pandemic. During the three and nine months ended October 31, 2020, variable lease costs included certain rent concessions of approximately $8.0 million and $18.4 million, respectively, received by the Company, primarily in Europe, related to the COVID-19 pandemic.

Operating lease liabilities maturity schedule

Maturities of the Company’s operating and finance lease liabilities as of October 30, 2021 are (in thousands):


	Operating Leases
Maturity of Lease Liabilities	Non-Related Parties		Related Parties		Finance Leases		Total
20221	$	82,693	$	2,235	$	1,607	$	86,535
2023	185,312		7,695		5,911		198,918
2024	154,744		7,916		5,796		168,456
2025	112,165		7,284		3,864		123,313
2026	81,444		6,892		2,959		91,295
After 2026	201,303		36,265		2,995		240,563
Total lease payments	817,661		68,287		23,132		909,080
Less: Interest	66,551		10,853		3,071		80,475
Present value of lease liabilities	$	751,110	$	57,434	$	20,061	$	828,605

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Notes:

1Represents the maturity of lease liabilities for the remainder of fiscal 2022 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 30, 2021.

Finance lease liabilities maturity schedule

Maturities of the Company’s operating and finance lease liabilities as of October 30, 2021 are (in thousands):


	Operating Leases
Maturity of Lease Liabilities	Non-Related Parties		Related Parties		Finance Leases		Total
20221	$	82,693	$	2,235	$	1,607	$	86,535
2023	185,312		7,695		5,911		198,918
2024	154,744		7,916		5,796		168,456
2025	112,165		7,284		3,864		123,313
2026	81,444		6,892		2,959		91,295
After 2026	201,303		36,265		2,995		240,563
Total lease payments	817,661		68,287		23,132		909,080
Less: Interest	66,551		10,853		3,071		80,475
Present value of lease liabilities	$	751,110	$	57,434	$	20,061	$	828,605

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Notes:

Other supplemental information

Other supplemental information is (dollars in thousands):

Lease Term and Discount Rate

Oct 30, 2021

Weighted-average remaining lease term

Operating leases

6.1 years

Finance leases

4.4 years

Weighted-average discount rate

Operating leases

3.4%

Finance leases

6.8%


	Nine Months Ended
Supplemental Cash Flow Information	Oct 30, 2021		Oct 31, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	167,444	$	133,776


New operating ROU assets obtained in exchange for lease liabilities	$	99,603	$	49,810