Leases
The Company has obligations under operating leases for its store and other retail locations, distribution centers, offices, and equipment. As of February 1, 2026, the initial lease terms of the various leases generally range from two to 15 years. The majority of the Company's leases include renewal options at the sole discretion of the Company. The lease term includes options to extend or terminate the lease when it is reasonably certain those options will be exercised.
The following table details the Company's net lease expense. Certain of the Company's leases include rent escalation clauses, rent holidays, and leasehold rental incentives. The majority of the Company's leases for store premises also include contingent rental payments based on sales volume. The variable lease expenses disclosed below include contingent rent payments and other non-fixed lease-related costs, including common area maintenance, property taxes, and landlord's insurance.
| | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2024 | | 2023 |
| | (In thousands) |
| Net lease expense: | | | | | | |
| Operating lease expense | | $ | 405,987 | | | $ | 338,756 | | | $ | 282,888 | |
| Short-term lease expense | | 13,172 | | | 13,588 | | | 15,289 | |
| Variable lease expense | | 196,869 | | | 188,358 | | | 152,791 | |
| Sublease income | | (9,803) | | | (2,805) | | | — | |
| | $ | 606,225 | | | $ | 537,897 | | | $ | 450,968 | |
The following table presents future minimum lease payments by fiscal year and the impact of discounting.
| | | | | | | | |
| | February 1, 2026 |
| | (In thousands) |
| 2026 | | $ | 370,705 | |
| 2027 | | 391,976 | |
| 2028 | | 334,124 | |
| 2029 | | 287,375 | |
| 2030 | | 182,005 | |
| Thereafter | | 537,635 | |
| Future minimum lease payments | | $ | 2,103,820 | |
| Impact of discounting | | (305,379) | |
| Present value of lease liabilities | | $ | 1,798,441 | |
| | |
| Balance sheet classification: | | |
| Current lease liabilities | | $ | 298,724 | |
| Non-current lease liabilities | | 1,499,717 | |
| | $ | 1,798,441 | |
As of February 1, 2026, the Company's minimum lease commitment for distribution center operating leases which have been committed to, but not yet commenced, was $278.5 million, which is not reflected in the table above.
The weighted-average remaining lease terms and weighted-average discount rates were as follows:
| | | | | | | | | | | | | | |
| | February 1, 2026 | | February 2, 2025 |
| Weighted-average remaining lease term | | 6.59 years | | 6.68 years |
| Weighted-average discount rate | | 4.4 | % | | 4.3 | % |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.