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Lease Accounting
 3 Months Ended
May 04, 2024
Leases [Abstract]  
Lease Accounting Lease Accounting
The Company primarily leases its showrooms, advertising, licensing, sales and merchandising offices, remote distribution and warehousing facilities and retail and factory outlet store locations under operating lease agreements expiring on various dates through March 2039. The Company also leases some of its equipment, as well as computer hardware and software, under operating and finance lease agreements expiring on various dates through April 2029.
The Company’s lease agreements primarily provide for lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. Certain retail store leases provide for lease payments based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 26%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for lease payments primarily based upon a percentage of annual sales volume, which averages approximately 25%.
In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $17.1 million for leases where the Company has not yet taken possession of the underlying asset as of May 4, 2024. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of May 4, 2024.
The components of leases are (in thousands):
May 4, 2024Feb 3, 2024
AssetsBalance Sheet Location
OperatingOperating lease right-of-use assets$720,924 $667,031 
FinanceProperty and equipment, net13,507 15,132 
Total lease assets$734,431 $682,163 
LiabilitiesBalance Sheet Location
Current:
OperatingCurrent portion of operating lease liabilities$181,702 $166,451 
FinanceCurrent portion of borrowings and finance lease obligations5,171 5,573 
Noncurrent:
OperatingLong-term operating lease liabilities600,286 542,392 
FinanceLong-term debt and finance lease obligations8,830 9,857 
Total lease liabilities$795,989 $724,273 
The components of lease costs are (in thousands):
Three Months Ended
Income Statement LocationMay 4, 2024Apr 29, 2023
Operating lease costsCost of product sales$48,450 $46,052 
Operating lease costsSelling, general and administrative expenses7,832 6,597 
Finance lease costs
Amortization of leased assetsCost of product sales4 23 
Amortization of leased assetsSelling, general and administrative expenses1,540 1,529 
Interest on lease liabilitiesInterest expense188 209 
Variable lease costs1
Cost of product sales24,571 24,491 
Variable lease costs1
Selling, general and administrative expenses1,099 661 
Short-term lease costsCost of product sales123 70 
Short-term lease costsSelling, general and administrative expenses2,060 1,639 
Total lease costs$85,867 $81,271 
______________________________________________________________________
Notes:
1During the three months ended May 4, 2024 and April 29, 2023, variable lease costs included certain rent concessions of approximately $0.2 million and $0.4 million, respectively, received by the Company, primarily in Europe.
Maturities of the Company’s operating and finance lease liabilities as of May 4, 2024 are (in thousands):
Operating Leases
Maturity of Lease Liabilities Non-Related PartiesRelated PartiesFinance LeasesTotal
Fiscal 2025$163,348 $6,024 $4,643 $174,015 
Fiscal 2026158,445 7,220 5,635 171,300 
Fiscal 2027140,722 7,779 3,162 151,663 
Fiscal 2028107,409 7,697 1,339 116,445 
Fiscal 202987,595 8,463 285 96,343 
After fiscal 2029201,234 12,323 — 213,557 
Total lease payments858,753 49,506 15,064 923,323 
Less: Interest116,444 9,827 1,063 127,334 
Present value of lease liabilities$742,309 $39,679 $14,001 $795,989 
Other supplemental information is (in thousands):
Lease Term and Discount RateMay 4, 2024
Weighted-average remaining lease term
Operating leases6.1 years
Finance leases3.0 years
Weighted-average discount rate
Operating leases5.1%
Finance leases4.9%
Three Months Ended
Supplemental Cash Flow InformationMay 4, 2024Apr 29, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$51,173 $51,225 
New operating ROU assets obtained in exchange for lease liabilities$46,567 $36,068 
Lease Accounting Lease Accounting
The Company primarily leases its showrooms, advertising, licensing, sales and merchandising offices, remote distribution and warehousing facilities and retail and factory outlet store locations under operating lease agreements expiring on various dates through March 2039. The Company also leases some of its equipment, as well as computer hardware and software, under operating and finance lease agreements expiring on various dates through April 2029.
The Company’s lease agreements primarily provide for lease payments based on a minimum annual rental amount, a percentage of annual sales volume, periodic adjustments related to inflation or a combination of such lease payments. Certain retail store leases provide for lease payments based upon the minimum annual rental amount and a percentage of annual sales volume, generally ranging from 3% to 26%, when specific sales volumes are exceeded. The Company’s retail concession leases also provide for lease payments primarily based upon a percentage of annual sales volume, which averages approximately 25%.
In addition to the amounts as disclosed below, the Company has estimated additional operating lease commitments of approximately $17.1 million for leases where the Company has not yet taken possession of the underlying asset as of May 4, 2024. As such, the related operating lease ROU assets and operating lease liabilities have not been recognized in the Company’s condensed consolidated balance sheet as of May 4, 2024.
The components of leases are (in thousands):
May 4, 2024Feb 3, 2024
AssetsBalance Sheet Location
OperatingOperating lease right-of-use assets$720,924 $667,031 
FinanceProperty and equipment, net13,507 15,132 
Total lease assets$734,431 $682,163 
LiabilitiesBalance Sheet Location
Current:
OperatingCurrent portion of operating lease liabilities$181,702 $166,451 
FinanceCurrent portion of borrowings and finance lease obligations5,171 5,573 
Noncurrent:
OperatingLong-term operating lease liabilities600,286 542,392 
FinanceLong-term debt and finance lease obligations8,830 9,857 
Total lease liabilities$795,989 $724,273 
The components of lease costs are (in thousands):
Three Months Ended
Income Statement LocationMay 4, 2024Apr 29, 2023
Operating lease costsCost of product sales$48,450 $46,052 
Operating lease costsSelling, general and administrative expenses7,832 6,597 
Finance lease costs
Amortization of leased assetsCost of product sales4 23 
Amortization of leased assetsSelling, general and administrative expenses1,540 1,529 
Interest on lease liabilitiesInterest expense188 209 
Variable lease costs1
Cost of product sales24,571 24,491 
Variable lease costs1
Selling, general and administrative expenses1,099 661 
Short-term lease costsCost of product sales123 70 
Short-term lease costsSelling, general and administrative expenses2,060 1,639 
Total lease costs$85,867 $81,271 
______________________________________________________________________
Notes:
1During the three months ended May 4, 2024 and April 29, 2023, variable lease costs included certain rent concessions of approximately $0.2 million and $0.4 million, respectively, received by the Company, primarily in Europe.
Maturities of the Company’s operating and finance lease liabilities as of May 4, 2024 are (in thousands):
Operating Leases
Maturity of Lease Liabilities Non-Related PartiesRelated PartiesFinance LeasesTotal
Fiscal 2025$163,348 $6,024 $4,643 $174,015 
Fiscal 2026158,445 7,220 5,635 171,300 
Fiscal 2027140,722 7,779 3,162 151,663 
Fiscal 2028107,409 7,697 1,339 116,445 
Fiscal 202987,595 8,463 285 96,343 
After fiscal 2029201,234 12,323 — 213,557 
Total lease payments858,753 49,506 15,064 923,323 
Less: Interest116,444 9,827 1,063 127,334 
Present value of lease liabilities$742,309 $39,679 $14,001 $795,989 
Other supplemental information is (in thousands):
Lease Term and Discount RateMay 4, 2024
Weighted-average remaining lease term
Operating leases6.1 years
Finance leases3.0 years
Weighted-average discount rate
Operating leases5.1%
Finance leases4.9%
Three Months Ended
Supplemental Cash Flow InformationMay 4, 2024Apr 29, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$51,173 $51,225 
New operating ROU assets obtained in exchange for lease liabilities$46,567 $36,068