(4)

Leases

The Company generally leases its stores, offices, and distribution facilities under operating leases that expire at various dates through the year 2043.  These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus contingent rentals based on a percentage of annual sales.  A majority of the Company’s leases also require a payment for all or a portion of common-area maintenance, insurance, real estate taxes, water and sewer costs, and repairs, on a fixed or variable payment basis.  Many of the Company’s lease agreements provide options to extend the lease term beyond the initial non-cancelable period. Most of the leases contain options to renew for three to five successive five-year periods. At lease commencement, the Company generally includes only the initial term in the lease liability and right-of-use asset, as it has determined that renewal options are not reasonably certain to be exercised.  Renewal decisions are generally at the Company’s sole discretion. Upon renewal of an expiring lease, the Company reassesses the terms and includes in the lease term any extension periods that are reasonably certain to be exercised. For leases acquired through bankruptcy proceedings, the Company typically includes option periods in the lease term, as the economic penalty associated with the acquisition cost makes renewal reasonably certain. The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

 

The Company determines if an arrangement contains a lease at the inception of a contract. All of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

 

Store and office lease costs are classified in selling, general, and administrative expenses (“SG&A”) and distribution center lease costs are classified in cost of sales on the condensed consolidated statements of income.

The following table summarizes the maturity of the Company’s operating lease liabilities by fiscal year as of May 2, 2026:

 

		May 2, 2026
		(in thousands)
Remainder of 2026		$	91,376
2027			145,069
2028			130,176
2029			109,408
2030			86,307
Thereafter			300,602
Total undiscounted lease payments (1)			862,938
Less:  Imputed interest			(154,999	)
Total lease obligations			707,939
Less:  Current obligations under leases			(111,764	)
Long-term lease obligations		$	596,175

The following table summarizes other information related to the Company’s operating leases as of and for the respective periods:

 

		Thirteen weeks ended
		May 2, 2026				May 3, 2025
		(dollars in thousands)
Cash paid for operating leases		$	51,100			$	33,543
Operating lease cost			36,452				32,157
Variable lease cost			5,707				4,504
Non-cash right-of-use assets obtained in exchange for lease obligations			22,351				94,952
Weighted-average remaining lease term		8.15 years				8.6 years
Weighted-average discount rate			4.5	%			4.4	%