Leases
 3 Months Ended
May 30, 2020
Leases [Abstract]  
Leases Leases

The Company leases retail stores, distribution facilities, offices and equipment under agreements expiring at various dates through 2041. The leases provide for original lease terms that generally range from 10 to 15 years and most leases provide for a series of five year renewal options, often at increased rents, the exercise of which is at the Company’s sole discretion. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts and are immaterial for the three months ended May 30, 2020 and June 1, 2019), scheduled rent increases and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and common area maintenance charges.

Similar to other retailers, during the three months ended May 30, 2020, the Company has withheld portions of and/or delayed payments to certain of its landlords as the Company seeks to renegotiate payment terms, in order to further maintain liquidity given the temporary store closures. In some instances, the renegotiations have led to agreements with landlords for rent abatements or rental deferrals. Total payments withheld and/or delayed or deferred as of May 30, 2020 were approximately $83.4 million and are included in current lease liabilities. Additional negotiations of payment terms are still in process.

In accordance with the Financial Accounting Standards Board’s recent Staff Q&A regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and right-of-use assets. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a non-interest bearing payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future. During the three months ended May 30, 2020, the Company did not recognize a material amount of negative lease expense related to rent abatement concessions.

The components of total lease cost for the three months ended May 30, 2020, were as follows.
(in thousands)
Statement of Operations Location
 
Three Months Ended May 30, 2020
 
Three Months Ended June 1, 2019
Operating lease cost
Cost of sales and SG&A
 
$
148,383

 
$
143,900

Finance lease cost:

 

 
 
     Depreciation of property
SG&A
 
648

 
648

     Interest on lease liabilities
Interest expense, net
 
2,233

 
2,222

Variable lease cost
Cost of sales and SG&A
 
50,458

 
47,895

Sublease income
SG&A
 
(278
)
 
(278
)
     Total lease cost

 
$
201,444

 
$
194,387



As of May 30, 2020, assets and liabilities related to the Company’s operating and finance leases are as follows:
(in thousands)
Consolidated Balance Sheet Location
 
May 30, 2020
 
February 29, 2020
Assets
 
 
 
 
 
Operating leases
Operating lease assets
 
$
1,903,380

 
2,006,966

Finance leases
Property and equipment, net
 
68,639

 
69,287

     Total lease assets
 
 
$
1,972,019

 
2,076,253

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Current:
 
 
 
 
 
     Operating leases
Current operating lease liabilities
 
$
545,547

 
463,005

     Finance leases
Accrued expenses and other current liabilities
 
2,418

 
1,541

Noncurrent:
 
 
 
 
 
     Operating leases
Operating lease liabilities
 
1,792,187

 
1,818,783

     Finance leases
Other liabilities
 
102,041

 
102,412

Total lease liabilities
 
 
$
2,442,193

 
2,385,741



As of May 30, 2020, the Company’s lease liabilities mature as follows:
(in thousands)
 
Operating Leases
 
Finance Leases
Fiscal Year:
 
 
 
 
Remainder of 2020
 
$
534,959

 
$
7,954

2021
 
527,508

 
10,434

2022
 
434,859

 
10,407

2023
 
344,536

 
10,524

2024
 
270,139

 
10,702

2025
 
195,533

 
10,503

Thereafter
 
581,665

 
238,378

Total lease payments
 
$
2,889,199

 
$
298,902

Less imputed interest
 
(551,465
)
 
(194,443
)
Present value of lease liabilities
 
$
2,337,734

 
$
104,459


At May 30, 2020, the Company has entered into leases that have not commenced at 7 new or relocated locations planned for opening in fiscal 2020, for which aggregate minimum rental payments over the term of the leases were approximately $35.0 million.
The Company’s lease terms and discount rates were as follows:
 
 
May 30, 2020
 
February 29, 2020
Weighted-average remaining lease term (in years)
 
 
 
 
     Operating leases
 
6.6

 
6.6

     Finance leases
 
25.5

 
25.7

Weighted-average discount rate
 
 
 
 
     Operating leases
 
6.5
%
 
6.2
%
     Finance leases
 
9.0
%
 
9.0
%

Other information with respect to the Company’s leases is as follows:
(in thousands)
 
Three Months Ended May 30, 2020
 
Three Months Ended June 1, 2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
 
 
     Operating cash flows from operating leases
 
$
140,977

 
166,514

     Operating cash flows from finance leases
 
2,515

 
2,580

Operating lease assets obtained in exchange for new operating lease liabilities
 
76,462

 
109,647
Leases Leases

The Company leases retail stores, distribution facilities, offices and equipment under agreements expiring at various dates through 2041. The leases provide for original lease terms that generally range from 10 to 15 years and most leases provide for a series of five year renewal options, often at increased rents, the exercise of which is at the Company’s sole discretion. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts and are immaterial for the three months ended May 30, 2020 and June 1, 2019), scheduled rent increases and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and common area maintenance charges.

Similar to other retailers, during the three months ended May 30, 2020, the Company has withheld portions of and/or delayed payments to certain of its landlords as the Company seeks to renegotiate payment terms, in order to further maintain liquidity given the temporary store closures. In some instances, the renegotiations have led to agreements with landlords for rent abatements or rental deferrals. Total payments withheld and/or delayed or deferred as of May 30, 2020 were approximately $83.4 million and are included in current lease liabilities. Additional negotiations of payment terms are still in process.

In accordance with the Financial Accounting Standards Board’s recent Staff Q&A regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and right-of-use assets. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a non-interest bearing payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future. During the three months ended May 30, 2020, the Company did not recognize a material amount of negative lease expense related to rent abatement concessions.

The components of total lease cost for the three months ended May 30, 2020, were as follows.
(in thousands)
Statement of Operations Location
 
Three Months Ended May 30, 2020
 
Three Months Ended June 1, 2019
Operating lease cost
Cost of sales and SG&A
 
$
148,383

 
$
143,900

Finance lease cost:

 

 
 
     Depreciation of property
SG&A
 
648

 
648

     Interest on lease liabilities
Interest expense, net
 
2,233

 
2,222

Variable lease cost
Cost of sales and SG&A
 
50,458

 
47,895

Sublease income
SG&A
 
(278
)
 
(278
)
     Total lease cost

 
$
201,444

 
$
194,387



As of May 30, 2020, assets and liabilities related to the Company’s operating and finance leases are as follows:
(in thousands)
Consolidated Balance Sheet Location
 
May 30, 2020
 
February 29, 2020
Assets
 
 
 
 
 
Operating leases
Operating lease assets
 
$
1,903,380

 
2,006,966

Finance leases
Property and equipment, net
 
68,639

 
69,287

     Total lease assets
 
 
$
1,972,019

 
2,076,253

 
 
 
 
 
 
Liabilities
 
 
 
 
 
Current:
 
 
 
 
 
     Operating leases
Current operating lease liabilities
 
$
545,547

 
463,005

     Finance leases
Accrued expenses and other current liabilities
 
2,418

 
1,541

Noncurrent:
 
 
 
 
 
     Operating leases
Operating lease liabilities
 
1,792,187

 
1,818,783

     Finance leases
Other liabilities
 
102,041

 
102,412

Total lease liabilities
 
 
$
2,442,193

 
2,385,741



As of May 30, 2020, the Company’s lease liabilities mature as follows:
(in thousands)
 
Operating Leases
 
Finance Leases
Fiscal Year:
 
 
 
 
Remainder of 2020
 
$
534,959

 
$
7,954

2021
 
527,508

 
10,434

2022
 
434,859

 
10,407

2023
 
344,536

 
10,524

2024
 
270,139

 
10,702

2025
 
195,533

 
10,503

Thereafter
 
581,665

 
238,378

Total lease payments
 
$
2,889,199

 
$
298,902

Less imputed interest
 
(551,465
)
 
(194,443
)
Present value of lease liabilities
 
$
2,337,734

 
$
104,459


At May 30, 2020, the Company has entered into leases that have not commenced at 7 new or relocated locations planned for opening in fiscal 2020, for which aggregate minimum rental payments over the term of the leases were approximately $35.0 million.
The Company’s lease terms and discount rates were as follows:
 
 
May 30, 2020
 
February 29, 2020
Weighted-average remaining lease term (in years)
 
 
 
 
     Operating leases
 
6.6

 
6.6

     Finance leases
 
25.5

 
25.7

Weighted-average discount rate
 
 
 
 
     Operating leases
 
6.5
%
 
6.2
%
     Finance leases
 
9.0
%
 
9.0
%

Other information with respect to the Company’s leases is as follows:
(in thousands)
 
Three Months Ended May 30, 2020
 
Three Months Ended June 1, 2019
Cash paid for amounts included in the measurement of lease liabilities
 
 
 
 
     Operating cash flows from operating leases
 
$
140,977

 
166,514

     Operating cash flows from finance leases
 
2,515

 
2,580

Operating lease assets obtained in exchange for new operating lease liabilities
 
76,462

 
109,647