Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases

(3)

Leases

The Company regularly enters into non-cancellable operating leases for retail stores, distribution facilities, offices, showrooms and automobiles. Retail stores typically have initial terms ranging from 5 to 10 years and other real estate or facility leases may have initial lease terms of up to 20 years. The Company’s leases are recorded as operating lease right-of-use (“ROU”) assets and operating leases liabilities. Operating lease liabilities are recognized based on the present value of the fixed portion of lease payments over the lease term at the commencement date. Net present value is calculated using an incremental borrowing rate based on a combination of market-based factors, such as market quoted forward yield curves and Company specific factors, such as lease size and duration. Many of the Company’s real estate leases include options to extend and are included in the lease obligations when considered reasonably certain. ROU assets are recognized based on operating lease liabilities reduced by lease incentives and initial direct costs incurred. Fixed lease cost is recognized on a straight-line basis over the lease term.

The Company’s real estate leases may require additional payments for percentage rent, real estate taxes, or other occupancy-related costs. Percentage rent, a variable cost, is recognized in the consolidated financial statements when incurred and is based on the specific terms in the lease agreement. Real estate taxes and other occupancy-related costs are non-lease components.

Operating lease cost and other information:

 

 

 

Year Ended December 31,

 

(in thousands)

 

2022

 

 

2021

 

Fixed lease cost

 

$

307,265

 

 

$

290,509

 

Variable lease cost

 

 

10,803

 

 

 

5,354

 

Operating cash flows used for leases

 

 

303,721

 

 

 

286,411

 

Weighted-average remaining lease term

 

5.52 years

 

 

5.95 years

 

Weighted-average discount rate

 

 

3.12

%

 

 

3.07

%

The following table presents future lease payments as of December 31, 2022:

 

Year (in thousands)

 

Operating Leases

 

2023

 

$

283,449

 

2024

 

 

261,098

 

2025

 

 

232,949

 

2026

 

 

191,370

 

2027

 

 

158,529

 

Thereafter

 

 

329,775

 

Total lease payments

 

 

1,457,170

 

      Less: Imputed interest

 

 

(154,804

)

Operating lease liabilities

 

$

1,302,366

 

 

As of December 31, 2022, the Company has operating leases, primarily for new retail stores, that have not yet commenced which will generate additional ROU assets of $35.0 million.