The Lovesac Company Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Leases

Leases

12 Months Ended

Jan. 29, 2023

Leases

Certain balances herein reflect the restatements described in Note 2. Restatement and Other Corrections of Previously Issued Financial Statements.

During fiscal 2022, the Company adopted ASC No. 2016-02, Leases (Topic 842). Components of lease expense were as follows (in thousands):


	2023		2022
	(As Restated)		(As Revised)
Operating lease expense	$	24,173	$	18,902
Variable lease expense	16,082		10,489
Short term lease expense	721		336
Total lease expense	$	40,976	$	29,727

Variable lease expense includes index-based changes in rent, maintenance, real estate taxes, insurance and other variable charges included in the lease as well as rental expenses related to short term leases.

The Company’s weighted average lease term and weighted average discount rates are as follows:


	For the year ended
	2023		2022
Weighted average remaining lease term (in years)
Operating Leases	7.4		6.29
Weighted average discount rate
Operating Leases	4.10	%	3.44	%

During the fiscal year ended January 29, 2023, we did not recognize any impairment charges associated with showroom-level right-of-use assets. During the fiscal year ended January 30, 2022, we recognized impairment charges totaling $0.6 million associated with showroom-level ROU assets that were included as part of selling, general and administrative expenses. We did not recognize any impairment charges with showroom-level right-of-use assets during the fiscal year ended January 31, 2021 as we did not adopt ASC 842 until fiscal year 2022.

Future minimum lease payments under non-cancelable leases as of January 29, 2023 were as follows (in thousands):


	(As Restated)
2024	$	21,511
2025	26,759
2026	24,447
2027	22,083
2028	19,747
Thereafter	57,705
Total undiscounted future minimum lease payments	172,252
Less: imputed interest	(25,686)
Total present value of lease obligations	146,566
Less: current operating lease liability	(13,075)
Operating lease liability- long term	$	133,491

Supplemental cash flow information and non-cash activity related to our operating leases is as follows (in thousands):


	2023		2022
	(As Restated)
Operating cash flow information:
Cash paid for operating lease liabilities	$	23,724	$	14,400
Non-cash activities
Net additions to right-of-use assets obtained in exchange for lease obligations	$	53,239	$	116,048