| Properties and Leases |
Property and Equipment, net
The major classes of property and equipment, net as of January 29, 2022 and January 30, 2021 are as follows:
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January 29,
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January 30,
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2022
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2021
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(millions)
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Land
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$
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1,353
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$
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1,390
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Buildings on owned land
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3,635
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3,650
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Buildings on leased land and leasehold improvements
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1,303
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1,268
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Fixtures and equipment
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3,922
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4,032
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10,213
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10,340
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Less accumulated depreciation and amortization
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4,548
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4,400
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$
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5,665
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$
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5,940
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In connection with various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to fifteen years. Some of these agreements require that the stores be operated under a particular name.
Leases
The Company leases a portion of the real estate and personal property used in its operations. Most leases require the Company to pay real estate taxes, maintenance, insurance, and other similar costs; some also require additional payments based on percentages of sales and some contain purchase options. Certain of the Company's leases contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions (including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial tests.
ROU assets and lease liabilities consist of:
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January 29,
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January 30,
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2022
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2021
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Classification
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(millions)
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Assets
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Finance lease assets (a)
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Right of Use Assets
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$
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10
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$
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12
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Operating lease assets (b)
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Right of Use Assets
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2,798
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2,866
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Total lease assets
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$
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2,808
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$
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2,878
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Liabilities
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Current
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Finance (a)
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Accounts payable and accrued liabilities
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$
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2
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$
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2
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Operating (b)
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Accounts payable and accrued liabilities
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328
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198
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Noncurrent
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Finance (a)
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Long-Term Lease Liabilities
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17
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19
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Operating (b)
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Long-Term Lease Liabilities
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3,081
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3,166
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Total lease liabilities
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$
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3,428
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$
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3,385
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(a)
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Finance lease assets are recorded net of accumulated amortization of $13 million as of January 29, 2022 and January 30, 2021. As of January 29, 2022 and January 30, 2021, finance lease assets included $1 million and $2 million, respectively, and noncurrent lease liabilities each included $2 million of non-lease components.
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(b)
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As of January 29, 2022, operating lease assets included $377 million of non-lease components and current and noncurrent lease liabilities included $36 million and $386 million, respectively, of non-lease components. As of January 30, 2021, operating lease assets included $383 million of non-lease components and current and noncurrent lease liabilities included $35 million and $384 million, respectively, of non-lease components.
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The components of net lease expense, recognized primarily within selling, general and administrative expenses are disclosed below. For 2021, 2020 and 2019, lease expense included $80 million, $87 million and $83 million, respectively, related to non-lease components.
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2021
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2020
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2019
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(millions)
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Real estate
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Operating leases (c) –
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Minimum rents
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$
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359
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$
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376
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$
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364
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Variable rents
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48
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45
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54
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407
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421
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418
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Less income from subleases –
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Operating leases
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(1
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)
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(1
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)
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(2
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)
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$
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406
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$
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420
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$
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416
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Personal property – Operating leases
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$
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7
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$
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7
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$
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8
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(c)
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Certain supply chain operating lease expense amounts are included in cost of sales.
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As of January 29, 2022, the maturity of lease liabilities is as follows:
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Operating
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Finance
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Leases
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Leases
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(d and e)
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Total
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(millions)
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Fiscal year
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2022
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$
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3
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$
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358
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$
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361
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2023
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3
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352
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355
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2024
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3
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346
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349
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2025
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3
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342
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345
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2026
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2
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326
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328
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After 2026
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13
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5,181
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5,194
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Total undiscounted lease payments
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27
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6,905
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6,932
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Less amount representing interest
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8
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3,496
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3,504
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Total lease liabilities
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$
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19
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$
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3,409
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$
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3,428
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(d)
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Operating lease payments include $2,959 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $63 million of legally binding minimum lease payments for leases signed but not yet commenced.
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(e)
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Operating lease payments include $1,114 million related to non-lease component payments, with $829 million of such payments related to options to extend lease terms that are reasonably certain of being exercised.
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Additional supplemental information regarding assumptions and cash flows for operating and finance leases is as follows:
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January 29,
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January 30,
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Lease Term and Discount Rate
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2022
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2021
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Weighted-average remaining lease term (years)
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Finance leases
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11.9
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12.1
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Operating leases
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21.7
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22.4
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Weighted-average discount rate
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Finance leases
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6.73
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%
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6.70
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%
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Operating leases
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6.54
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%
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6.32
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%
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52 Weeks Ended
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52 Weeks Ended
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Other Information
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January 29, 2022
|
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January 30, 2021
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(millions)
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Cash paid for amounts included in the measurement of lease liabilities:
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Operating cash flows used from operating leases
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$
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322
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$
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521
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Financing cash flows used from financing leases
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3
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4
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Leased assets obtained in exchange for new operating lease liabilities
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15
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430
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The Company is a guarantor with respect to certain lease obligations associated with The May Department Stores Company and previously disposed subsidiaries or businesses. The leases, one of which includes potential extensions to 2070, have future minimum lease payments aggregating $197 million and are offset by payments from existing tenants and subtenants. In addition, the Company is contingently liable for other expenses related to the above leases, such as property taxes and common area maintenance, which are also payable by existing tenants and subtenants. Potential liabilities related to these guarantees are subject to certain defenses by the Company. The Company believes that the risk of significant loss from the guarantees of these lease obligations is remote.
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