Note 3 - Leases

6 Months Ended

Aug. 02, 2025

3. Leases

The majority of the Company's leases relate to retail stores and corporate offices. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Most new retail store leases have an original term of a five to ten-year base period and may include renewal options to extend the lease term beyond the initial base period. The extension periods are typically much shorter than the original lease term given the Company's strategic decision to maintain a high level of lease optionality. Some leases also include early termination options, which can be exercised under specific conditions. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.

The table below presents certain information related to the lease costs for operating leases for the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024 (in thousands).

	*Thirteen weeks ended*				*Twenty-six weeks ended*
	*August 2, 2025*		*August 3, 2024*		*August 2, 2025*		*August 3, 2024*

Operating lease costs	$	10,765	$	10,021	$	21,208	$	19,605
Variable lease costs⁽¹⁾		2,509		2,464		4,889		4,655
Short term lease costs		21		33		49		58
Total Operating Lease costs	$	13,295	$	12,518	$	26,146	$	24,318

(1)

Variable lease costs consist of leases with variable rent structures, which are intended to increase flexibility in an environment with expected high sales volatility and provide a natural hedge against potential sales declines.

Other information

The table below presents supplemental cash flow information related to leases for the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024 (in thousands).

	*Thirteen weeks ended*				*Twenty-six weeks ended*
	*August 2, 2025*		*August 3, 2024*		*August 2, 2025*		*August 3, 2024*
Operating cash flows for operating leases	$	10,633	$	10,301	$	20,848	$	20,115

As of August 2, 2025 and August 3, 2024, the weighted-average remaining operating lease term was 6.1 years and 5.6 years, respectively, and the weighted-average discount rate was 7.1% and 7.2%, respectively, for operating leases recognized on the Company's condensed consolidated balance sheets.

The value of our operating lease asset was $101.0 million and $94.2 million as of August 2, 2025 and August 3, 2024, respectively. The increase was driven by the Company entering into leases for new stores as well as securing longer-term extensions for existing stores resulting in contracts with more favorable terms.

For the thirteen and twenty-six weeks ended August 2, 2025 and the thirteen and twenty-six weeks ended August 3, 2024 the Company incurred no impairment charges against its right-of-use operating lease assets.

Undiscounted cash flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands).

Operating Leases
2025	$	14,814
2026		31,968
2027		21,287
2028		14,954
2029		12,179
Thereafter		41,278
Total minimum lease payments		136,480
Less: amount of lease payments representing interest		(29,119	)
Present value of future minimum lease payments		107,361
Less: current obligations under leases		(26,996	)
Long-term lease obligations	$	80,365

As of August 2, 2025, the Company had additional executed leases that had not yet commenced with operating lease liabilities of $32.8 million. These leases are expected to commence in fiscal 2025 and fiscal 2026 with lease terms of ten to twenty years.