NOTE 5 – LEASES

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The Company leases retail stores, warehouses, distribution centers, office space and certain equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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Most leases are for a term of one to ten years. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one to ten years. Several of the Company’s retail store leases include an option to terminate the lease based on failure to achieve a specified sales volume. The exercise of lease renewal options is generally at the Company’s sole discretion. The exercise of lease termination options is generally by mutual agreement between the Company and the lessor.

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Certain of the Company’s lease agreements include contingent rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Contingent rent is accrued each period as the liabilities are incurred. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

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The Company’s operating lease assets and liabilities as of July 31, 2026, July 31, 2025 and January 31, 2026 consist of the following:

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The Company recorded lease costs of $19.5 million and $38.1 million during the three and six months ended July 31, 2026. The Company recorded lease costs of $17.8 million and $36.0 million during the three and six months ended July 31, 2025. Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of income and comprehensive income. The Company recorded variable lease costs and short-term lease costs of $3.3 million and $7.2 million for the three and six months ended July 31, 2026. The Company recorded variable lease costs and short-term lease costs of $4.4 million and $7.9 million for the three and six months ended July 31, 2025. Short-term lease costs are immaterial.

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As of July 31, 2026, the Company’s maturities of operating lease liabilities in the years ending up to January 31, 2031 and thereafter are as follows:

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As of July 31, 2026, there are no material leases that are legally binding but have not yet commenced.

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As of July 31, 2026, the weighted average remaining lease term related to operating leases is 7.3 years. The weighted average discount rate related to operating leases is 6.1%.

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Cash paid for amounts included in the measurement of operating lease liabilities was $29.9 million and $38.2 million during the six months ended July 31, 2026 and 2025, respectively. Right-of-use assets obtained in exchange for lease obligations were $92.2 million and $26.8 million during the six months ended July 31, 2026 and 2025, respectively.