Rent the Runway Inc

5. Leases - Lessee Accounting

As a lessee, the Company has operating real estate leases for its operational facilities, retail locations and corporate headquarters. The Company has operating and finance leases for its computers and equipment. Additionally, the Company procures a portion of its rental product from brand partners under revenue share arrangements, which are considered operating leases. All revenue share payments are recognized as variable lease costs and recorded in Rental product depreciation and revenue share in the Consolidated Statements of Operations.

The Company’s real estate and equipment lease terms generally range from less thanone year to 14 years and certain agreements include renewal options. To the extent that the Company is reasonably certain to exercise a lease renewal option, the assumption is included in the calculation of ROU assets and lease liabilities.

Duringthe year ended January 31, 2023, the Company amended the operating lease for its corporate headquarters in Brooklyn, NY, the terms of which terminatedone floor of the leased space. The partial lease termination of the corporate headquarters leased space resulted in a reduction of $10.6 million in the Company’s future minimum fixed lease obligations as of the lease modification date. The Company treated the partial lease termination amendment as a lease modification as of the effective date which resulted in an adjustment of $3.7 million and $1.4 million to the related lease liabilities and right-of-use assets, respectively. The Company recorded a gain on the partial termination of $1.8 million and a loss on surrender of the related fixed assets, primarily leasehold improvements, of $1.9 million, both of which are recordedon the Consolidated Statements of Operations within General and administrative expenses.

During the year ended January 31, 2024, the Company amended the operating lease for its fulfillment center at 100 Metro Way in Secaucus, NJ, the terms of which extended the lease for an additional five years to August 31, 2029. The lease modification resulted in an adjustment of $9.9 million to lease liabilities and right-of-use assets. The Company did not exercise its renewal option with respect to its lease for 55 Metro Way in Secaucus, NJ, which is anticipated to expire in accordance with its terms on August 31, 2024.

As of January 31, 2024 and 2023, the weighted-average remaining lease term for operating leases was 7.50 years and 8.38 years, respectively, and the weighted-average discount rate was 16.12% and 16.26%, respectively. As of January 31, 2024 and 2023, the weighted-average remaining lease term for financing leases was 4.73 years and 2.18 years, respectively, and weighted-average discount rate was 16.44% and 16.41%, respectively.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

The following table summarizes the components of lease costs incurred by the Company during the years ended January 31, 2024, 2023 and 2022:

The following table summarizes the Company’s minimum fixed lease obligations under existing agreements as a lessee, excluding variable payments and short-term lease payments, as of January 31, 2024: