v3.26.3
LEASES
 12 Months Ended
Aug. 31, 2026
Leases [Abstract]  
LEASES LEASES
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a contract and classifies each lease as either an operating or a finance lease at commencement. The Company only reassesses lease classification subsequent to commencement upon a change to the expected lease term or the contract being modified. As of August 31, 2026, the Company has operating leases for its clubs, distribution centers, office space, and land. In addition, the Company has finance leases for certain land associated with club development projects. Operating leases, net of accumulated amortization, are included in operating lease right-of-use (“ROU”) assets, and current and non-current operating lease liabilities, while finance lease ROU assets and liabilities are included within other non-current assets and other current and long-term liabilities on the Company's consolidated balance sheets. Lease expense for operating leases is included in selling, general and administrative expense while lease expense for finance leases is included in selling, general and administrative expense and interest expense on the Company's consolidated statements of income. Leases with an initial term of twelve months or less are not recorded on the Company’s consolidated balance sheet.
During the twelve months ended August 31, 2026, the Company entered into finance leases for land to construct new clubs which resulted in the recognition of right-of-use assets and corresponding lease liabilities. As of August 31, 2026 the balances of our finance lease right-of-use assets and corresponding lease liabilities were approximately $21.7 million and $22.7 million, respectively. All of the lease liabilities are non-current liabilities because the payments over the next twelve months do not exceed the interest expense to be incurred over that time period.
The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which are often variable lease payments. Such costs are included in selling, general and administrative expense in the consolidated statements of income.
Certain of the Company's lease agreements provide for lease payments based on future sales volumes at the leased location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the inception of the lease. The Company expenses such variable amounts in the period incurred, which is the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option or if an economic penalty may be incurred if the option is not exercised. The initial lease terms of the Company’s operating and finance leases range from 2 to 41 years.
Where the Company's leases do not provide an implicit rate, a collateralized incremental borrowing rate ("IBR") is used to determine the present value of lease payments. The IBR is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the IBR for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets.
The following table is a summary of the Company’s components of total lease costs for fiscal year 2026 and 2025 (in thousands):
Years Ended August 31,
20262025
Operating lease cost$18,872 $15,375 
Short-term lease cost345 374 
Variable lease cost7,112 6,200 
Finance lease costs:
Amortization of right-of-use assets(1)
302 — 
Interest on lease liabilities(2)
960 — 
Sublease income(104)(111)
Total lease costs$27,487 $21,838 
(1)Amortization of right-of-use assets is included within Selling, general and administrative expenses on the consolidated statements of income.
(2)Interest on lease liabilities is included within Interest expense on the consolidated statements of income.
The weighted average remaining lease term and weighted average discount rate for operating leases as of August 31, 2026 and August 31, 2025 were as follows:
Years Ended August 31,
20262025
Weighted average remaining lease term in years16.617.5
Weighted average discount rate percentage7.4 %6.7 %
The weighted average remaining lease term and weighted average discount rate for finance leases as of August 31, 2026 and August 31, 2025 were as follows:
Years Ended August 31,
20262025
Weighted average remaining lease term in years40$— 
Weighted average discount rate percentage7.6 %— %
Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):
Years Ended August 31,
20262025
Operating cash flows paid for operating leases$17,851$14,834
Operating cash flows paid for finance leases(1)
$218$—
(1)For the year ended August 31, 2026, the Company did not have any financing cash flows relating to paying down the finance lease liabilities because the payments on the finance lease liabilities did not exceed the interest expense incurred during the year.
The Company is committed under non-cancelable operating leases for the rental of facilities and land. Future minimum lease commitments for facilities under these leases with an initial term in excess of one year are as follows (in thousands):
Years Ended August 31,Operating LeasesFinance Leases
2027$17,765$856
202816,1751,373
202914,5811,409
203014,7171,446
203114,9631,484
Thereafter182,20485,690
Total future lease payments260,40592,258
Less imputed interest (113,738)(69,560)
Total lease liabilities$146,667$22,698
LEASES LEASES
In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a contract and classifies each lease as either an operating or a finance lease at commencement. The Company only reassesses lease classification subsequent to commencement upon a change to the expected lease term or the contract being modified. As of August 31, 2026, the Company has operating leases for its clubs, distribution centers, office space, and land. In addition, the Company has finance leases for certain land associated with club development projects. Operating leases, net of accumulated amortization, are included in operating lease right-of-use (“ROU”) assets, and current and non-current operating lease liabilities, while finance lease ROU assets and liabilities are included within other non-current assets and other current and long-term liabilities on the Company's consolidated balance sheets. Lease expense for operating leases is included in selling, general and administrative expense while lease expense for finance leases is included in selling, general and administrative expense and interest expense on the Company's consolidated statements of income. Leases with an initial term of twelve months or less are not recorded on the Company’s consolidated balance sheet.
During the twelve months ended August 31, 2026, the Company entered into finance leases for land to construct new clubs which resulted in the recognition of right-of-use assets and corresponding lease liabilities. As of August 31, 2026 the balances of our finance lease right-of-use assets and corresponding lease liabilities were approximately $21.7 million and $22.7 million, respectively. All of the lease liabilities are non-current liabilities because the payments over the next twelve months do not exceed the interest expense to be incurred over that time period.
The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which are often variable lease payments. Such costs are included in selling, general and administrative expense in the consolidated statements of income.
Certain of the Company's lease agreements provide for lease payments based on future sales volumes at the leased location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the inception of the lease. The Company expenses such variable amounts in the period incurred, which is the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option or if an economic penalty may be incurred if the option is not exercised. The initial lease terms of the Company’s operating and finance leases range from 2 to 41 years.
Where the Company's leases do not provide an implicit rate, a collateralized incremental borrowing rate ("IBR") is used to determine the present value of lease payments. The IBR is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the IBR for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets.
The following table is a summary of the Company’s components of total lease costs for fiscal year 2026 and 2025 (in thousands):
Years Ended August 31,
20262025
Operating lease cost$18,872 $15,375 
Short-term lease cost345 374 
Variable lease cost7,112 6,200 
Finance lease costs:
Amortization of right-of-use assets(1)
302 — 
Interest on lease liabilities(2)
960 — 
Sublease income(104)(111)
Total lease costs$27,487 $21,838 
(1)Amortization of right-of-use assets is included within Selling, general and administrative expenses on the consolidated statements of income.
(2)Interest on lease liabilities is included within Interest expense on the consolidated statements of income.
The weighted average remaining lease term and weighted average discount rate for operating leases as of August 31, 2026 and August 31, 2025 were as follows:
Years Ended August 31,
20262025
Weighted average remaining lease term in years16.617.5
Weighted average discount rate percentage7.4 %6.7 %
The weighted average remaining lease term and weighted average discount rate for finance leases as of August 31, 2026 and August 31, 2025 were as follows:
Years Ended August 31,
20262025
Weighted average remaining lease term in years40$— 
Weighted average discount rate percentage7.6 %— %
Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):
Years Ended August 31,
20262025
Operating cash flows paid for operating leases$17,851$14,834
Operating cash flows paid for finance leases(1)
$218$—
(1)For the year ended August 31, 2026, the Company did not have any financing cash flows relating to paying down the finance lease liabilities because the payments on the finance lease liabilities did not exceed the interest expense incurred during the year.
The Company is committed under non-cancelable operating leases for the rental of facilities and land. Future minimum lease commitments for facilities under these leases with an initial term in excess of one year are as follows (in thousands):
Years Ended August 31,Operating LeasesFinance Leases
2027$17,765$856
202816,1751,373
202914,5811,409
203014,7171,446
203114,9631,484
Thereafter182,20485,690
Total future lease payments260,40592,258
Less imputed interest (113,738)(69,560)
Total lease liabilities$146,667$22,698