| Leases |
8. Leases
The Company leases retail stores, distribution centers, fast fulfillment centers, market fulfillment centers, corporate offices, and certain equipment under non-cancelable operating leases with various expiration dates through 2036. All leases are classified as operating leases and generally have initial lease terms of 10 years and, when determined applicable, include renewal options under substantially the same terms and conditions as the original leases. Leases do not contain any material residual value guarantees or material restrictive covenants.
The following table presents supplemental balance sheet information, the weighted-average remaining lease term, and discount rate for operating leases:
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February 3, |
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January 28, |
(In thousands) |
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Classification on the Balance Sheet |
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2024 |
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2023 |
Right-of-use assets |
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Operating lease assets |
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$ |
1,574,530 |
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$ |
1,561,263 |
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Current lease liabilities |
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Current operating lease liabilities |
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$ |
283,821 |
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$ |
283,293 |
Non-current lease liabilities |
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Non-current operating lease liabilities |
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|
1,627,271 |
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|
1,619,883 |
Total lease liabilities |
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$ |
1,911,092 |
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$ |
1,903,176 |
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Weighted-average remaining lease term |
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6.6 years |
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6.7 years |
Weighted-average discount rate |
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3.7% |
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3.2% |
Lease cost
The following table presents the components of lease cost for operating leases:
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Fiscal year ended |
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February 3, |
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January 28, |
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January 29, |
(In thousands) |
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Classification on the Statement of Income |
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2024 |
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2023 |
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2022 |
Operating lease cost |
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Cost of sales (1) |
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$ |
344,600 |
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$ |
322,195 |
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$ |
311,546 |
Variable lease cost |
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Cost of sales |
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88,381 |
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|
83,488 |
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|
77,431 |
Short-term lease cost |
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SG&A expenses |
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|
1,451 |
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|
685 |
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|
408 |
Sublease income |
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Net sales |
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(1,672) |
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(1,748) |
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(835) |
Total lease cost |
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$ |
432,760 |
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$ |
404,620 |
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$ |
388,550 |
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(1) |
The majority of operating lease cost relates to retail stores, distribution centers, fast fulfillment centers, and market fulfillment centers and is classified within cost of sales. Operating lease cost for corporate offices is classified within the SG&A expenses. Operating lease cost from the control date through store opening date is classified within pre-opening expenses. |
Other information
The following table presents supplemental disclosures of cash flow information related to operating leases:
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Fiscal year ended |
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February 3, |
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January 28, |
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January 29, |
(In thousands) |
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2024 |
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2023 |
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2022 |
Cash paid for operating lease liabilities (1) |
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$ |
396,573 |
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$ |
383,209 |
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$ |
368,498 |
Operating lease assets obtained in exchange for operating lease liabilities (non-cash) |
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346,021 |
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380,922 |
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|
253,870 |
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(1) |
Excludes $39,654, $30,927, and $28,591 related to cash received for tenant incentives as of February 3, 2024, January 28, 2023, and January 29, 2022, respectively.
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Maturity of lease liabilities
The following table presents maturities of operating lease liabilities:
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Fiscal year |
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(In thousands) |
2024 |
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$ |
347,558 |
2025 |
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385,859 |
2026 |
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346,833 |
2027 |
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297,232 |
2028 |
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225,358 |
2029 and thereafter |
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|
564,247 |
Total lease payments |
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$ |
2,167,087 |
Less: imputed interest |
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(255,995) |
Present value of operating lease liabilities |
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$ |
1,911,092 |
Operating lease payments exclude $122,203 of legally binding minimum lease payments for leases signed but not yet commenced.
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