Commitments and Contingencies

6 Months Ended

Jun. 25, 2026

Commitments and Contingencies Disclosure [Abstract]

Lease Commitments

The Company accounts for leases in accordance with ASC 842, Leases. The majority of the Company’s long-term operating lease agreements are for its retail locations, distribution centers, and corporate office, which expire in various years through 2055. Most of these agreements are retail leases wherein both the land and building are leased. The Company also has ground leases in which only the land is leased. The initial lease terms for the Company’s retail locations, distribution centers, and corporate office typically range from 10-20 years. The majority of the Company’s leases also include options to extend, which are factored into the recognition of their respective assets and liabilities when appropriate based on management’s assessment of the probability that the options will be exercised.

When readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. If the rate implicit in the lease is not readily determinable, the Company uses a third party to assist in the determination of a secured incremental borrowing rate, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. The secured incremental borrowing rate is estimated based on yields obtained from Bloomberg for U.S. consumers with a BB credit rating and is adjusted for collateralization as well as inflation. As of June 25, 2026 and June 26, 2025, the Company’s weighted average discount rate was 6.1% and 6.0%, respectively. As of both June 25, 2026 and June 26, 2025, the weighted average remaining lease term of the Company’s leases was approximately 12 years.

Lease Costs

The table below presents components of lease expense for operating leases within the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income:


		Thirteen Weeks Ended				Twenty-six Weeks Ended
in thousands	Classification	June 25, 2026		June 26, 2025		June 25, 2026		June 26, 2025
Fixed operating lease cost:	Selling, general and administrative expenses	$	54,443	$	50,183	$	107,873	$	100,120
	Cost of sales	13,804		12,818		27,348		22,290
Total fixed operating lease cost		68,247		63,001		135,221		122,410
Variable lease cost (1):	Selling, general and administrative expenses	20,963		21,408		42,778		43,509
	Cost of sales	1,316		2,076		3,548		3,727
Total variable lease cost		22,279		23,484		46,326		47,236
Total operating lease cost (2)		$	90,526	$	86,485	$	181,547	$	169,646

(1)Includes variable costs for common area maintenance, property taxes, and insurance on leased real estate.

(2)Excludes short-term lease costs, which were immaterial for the thirteen and twenty-six weeks ended June 25, 2026 and June 26, 2025.

Undiscounted Cash Flows

Future minimum lease payments under non-cancelable operating leases as of June 25, 2026 were as follows:


in thousands	Amount
Twenty-seven weeks ending December 31, 2026	$	130,869
2027	270,776
2028	252,051
2029	238,028
2030	217,785
Thereafter	1,516,886
Total minimum lease payments (1) (2)	2,626,395
Less: amount of lease payments representing interest	808,929
Present value of future minimum lease payments	1,817,466
Less: current obligations under leases	163,163
Long-term lease obligations	$	1,654,303

(1)Future lease payments exclude approximately $17.4 million of legally binding minimum lease payments for operating leases signed but not yet commenced.

(2)Operating lease payments include $288.7 million related to options to extend lease terms that are reasonably certain of being exercised.

For the twenty-six weeks ended June 25, 2026 and June 26, 2025, cash paid for amounts included in the measurement of operating lease liabilities was $132.4 million and $121.3 million, respectively.

Litigation

The Company is subject to various legal actions, claims, and proceedings arising in the ordinary course of business, which may include claims related to general liability, workers’ compensation, personal injury, product liability, intellectual property, and employment-related matters resulting from its business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company establishes reserves for specific legal proceedings when it determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. These various ordinary course proceedings are not expected to have a material impact on the Company’s consolidated financial position, cash flows, or results of operations. Regardless of the outcome, however, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

Tariffs

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under IEEPA. On March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to begin refunding all tariffs imposed under IEEPA. On April 20, 2026, CBP launched a formal process for submitting IEEPA refund claims, through which the Company filed its refund claims.

At the time of the Supreme Court ruling, the Company had paid approximately $87 million of IEEPA tariffs. The Company has concluded that the receipt of the refund of the previously paid IEEPA tariffs is probable and applied the loss recovery model. As of June 25, 2026, the Company had received approximately $7 million in tariff refund payments and recognized approximately $80 million in receivables, net. During the thirteen weeks ended June 25, 2026, the Company recognized a one-time benefit of approximately $56 million of the refund through cost of sales. The remaining amount was recognized as a reduction to inventories, net, related to previously capitalized IEEPA tariffs and will be recognized through cost of sales as the related inventory is sold.

Statutory interest associated with refunded IEEPA tariffs was recognized in interest (income) expense, net during the thirteen weeks ended June 25, 2026.

Subsequent to June 25, 2026, the Company received tariff refund payments of approximately $80 million.