2. LEASES

Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes Right-of-use (ROU) assets and lease liabilities related to leases on the Company’s consolidated balance sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease.

The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2036. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from five years to fifteen years with renewal options and rent escalation provisions. At the commencement of a lease, the Company includes only the initial lease term as the option to extend is not reasonably certain. The Company does not record leases with a lease term of 12 months or less on the Company’s consolidated balance sheets.

When calculating the lease liability on a discounted basis, the Company applies its estimated discount. The Company bases this discount on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.

In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable payments and does not include such costs as a lease component.

The expense components of the Company’s leases reflected on the Company’s consolidated statement of operations were as follows:


	Consolidated Statement	Three Months Ended				Nine Months Ended
	of Operations	October 30, 2022		October 31, 2021		October 30, 2022		October 31, 2021
(in thousands)
Finance lease expenses
Amortization of right-of-use ‎assets	Selling, general and ‎administrative expenses	$	840	$	840	$	2,520	$	2,518
Interest on lease liabilities	Interest expense		452		479		1,377		1,460
Total finance lease expense		$	1,292	$	1,319	$	3,897	$	3,978
Operating lease expense	Selling, general and ‎administrative expenses	$	5,045	$	4,806	$	14,151	$	12,606
Amortization of build-to-suit ‎leases capital contribution	Selling, general and ‎administrative expenses		321		321		963		970
Variable lease expense	Selling, general and ‎administrative expenses		2,634		2,141		7,079		6,367
Total lease expense		$	9,292	$	8,587	$	26,090	$	23,921

‎


	Nine Months Ended
	October 30, 2022		October 31, 2021
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	$	2,015	$	1,894
Operating cash flows from finance leases	$	1,377	$	1,460
Operating cash flows from operating leases	$	13,577	$	11,774

Right-of-use assets obtained in exchange for lease liabilities:
Finance leases		—		—
Operating leases		24,028		12,547

Weighted-average remaining lease term (in years):
Finance leases		11		12
Operating leases		8		9

Weighted-average discount rate:
Finance leases		4.4%		4.4%
Operating leases		4.1%		4.1%

Future minimum lease payments under the non-cancellable leases are as follows as of October 30, 2022:


Fiscal year	Finance		Operating
(in thousands)
2022 (remainder of fiscal year)	$	1,132	$	4,899
2023		4,551		20,604
2024		4,736		20,070
2025		5,098		19,403
2026		3,993		18,546
Thereafter		33,224		78,180
Total future minimum lease payments	$	52,734	$	161,702
Less – Discount		(11,781)		(25,699)
Lease liability	$	40,953	$	136,003