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Leases
 6 Months Ended
Dec. 28, 2019
Leases [Abstract]  
Leases LEASES
The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.
The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. ASU 2016-02 requires the use of the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term, currency, country, Company specific risk premium and adjustments for collateral.
For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.
The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.
ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.
The following table summarizes the ROU assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Location Recorded on Balance Sheet
 
 
(millions)
 
Assets:
 
 
 
Operating leases
 
$
1,996.5

Operating lease right-of-use assets
Finance leases
 
3.6

Property and equipment, net
Total lease assets
 
$
2,000.1

 
Liabilities:
 
 
 
Operating leases:
 
 
 
Current lease liabilities
 
$
329.8

Current lease liabilities
Long-term lease liabilities
 
1,901.2

Long-term lease liabilities
Total operating lease liabilities
 
$
2,231.0

 
Finance leases:
 
 
 
Current lease liabilities
 
$
0.8

Accrued liabilities
Long-term lease liabilities
 
4.9

Other liabilities
Total finance lease liabilities
 
$
5.7

 
 
 
 
 
Total lease liabilities
 
$
2,236.7

 

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Condensed Consolidated Statement of Operations for the three and six months ended December 28, 2019:
 
 
Three Months Ended
 
Six Month Ended
 
 
December 28, 2019
 
 
(millions)
Finance lease cost:
 
 
 
 
Amortization of right-of-use assets
 
$
0.2

 
$
0.4

Interest on lease liabilities(1)
 
0.1

 
0.3

Total finance lease cost
 
0.3

 
0.7

Operating lease cost
 
105.5

 
217.3

Short-term lease cost
 
1.9

 
3.6

Variable lease cost
 
61.1

 
112.1

Operating lease right-of-use impairment
 
—

 
35.8

Less: sublease income
 
(5.3
)
 
(10.7
)
Total net lease cost
 
$
163.5

 
$
358.8

 
(1) 
Interest on lease liabilities is recorded within Interest expense, net on the Company's Condensed Consolidated Statement of Operations.
The following table summarizes certain cash flow information related to the Company's leases for the six months ended December 28, 2019:
 
 
Six Months Ended
 
 
December 28, 2019
 
 
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
206.6

Operating cash flows from finance leases
 
0.3

Financing cash flows from finance leases
 
0.4

Non-cash transactions:
 
 
Right-of-use assets obtained in exchange for operating lease liabilities
 
86.1

Right-of-use assets obtained in exchange for finance lease liabilities
 
—


The following table provides a maturity analysis of the Company's lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Total
 
 
(millions)
Remainder of Fiscal 2020
 
$
193.6

 
$
0.7

 
$
194.3

Fiscal 2021
 
398.5

 
1.4

 
399.9

Fiscal 2022
 
357.7

 
1.4

 
359.1

Fiscal 2023
 
312.3

 
1.4

 
313.7

Fiscal 2024
 
263.9

 
1.4

 
265.3

Fiscal 2025 and thereafter
 
1,156.2

 
1.3

 
1,157.5

Total lease payments
 
2,682.2

 
7.6

 
2,689.8

Less: imputed interest
 
451.2

 
1.9

 
453.1

Total lease liabilities
 
$
2,231.0

 
$
5.7

 
$
2,236.7


The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of December 28, 2019 are as follows:
 
 
December 28, 2019
 
 
(millions)
Remainder of Fiscal 2020
 
$
10.6

Fiscal 2021
 
21.1

Fiscal 2022
 
20.1

Fiscal 2023
 
16.0

Fiscal 2024
 
15.5

Fiscal 2025 and thereafter
 
187.5

Total sublease income
 
$
270.8


The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Weighted average remaining lease term (years):
 
 
Operating leases
 
8.81

Finance leases
 
5.42

Weighted average discount rate:
 
 
Operating leases
 
3.6
%
Finance leases
 
11.3
%

Additionally, the Company had approximately $25 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of December 28, 2019.
As reported under the previous accounting standard, the following table provides a summary of future minimum rental payments under non-cancelable operating leases, as of June 29, 2019:
 
 
June 29, 2019
 
 
(millions)
2020
 
$
399.0

2021
 
341.5

2022
 
308.2

2023
 
270.4

2024
 
226.5

Subsequent to 2024
 
1,065.7

Total minimum future rental payments
 
$
2,611.3
Leases LEASES
The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.
The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. ASU 2016-02 requires the use of the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term, currency, country, Company specific risk premium and adjustments for collateral.
For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.
The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.
ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.
The following table summarizes the ROU assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Location Recorded on Balance Sheet
 
 
(millions)
 
Assets:
 
 
 
Operating leases
 
$
1,996.5

Operating lease right-of-use assets
Finance leases
 
3.6

Property and equipment, net
Total lease assets
 
$
2,000.1

 
Liabilities:
 
 
 
Operating leases:
 
 
 
Current lease liabilities
 
$
329.8

Current lease liabilities
Long-term lease liabilities
 
1,901.2

Long-term lease liabilities
Total operating lease liabilities
 
$
2,231.0

 
Finance leases:
 
 
 
Current lease liabilities
 
$
0.8

Accrued liabilities
Long-term lease liabilities
 
4.9

Other liabilities
Total finance lease liabilities
 
$
5.7

 
 
 
 
 
Total lease liabilities
 
$
2,236.7

 

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Condensed Consolidated Statement of Operations for the three and six months ended December 28, 2019:
 
 
Three Months Ended
 
Six Month Ended
 
 
December 28, 2019
 
 
(millions)
Finance lease cost:
 
 
 
 
Amortization of right-of-use assets
 
$
0.2

 
$
0.4

Interest on lease liabilities(1)
 
0.1

 
0.3

Total finance lease cost
 
0.3

 
0.7

Operating lease cost
 
105.5

 
217.3

Short-term lease cost
 
1.9

 
3.6

Variable lease cost
 
61.1

 
112.1

Operating lease right-of-use impairment
 
—

 
35.8

Less: sublease income
 
(5.3
)
 
(10.7
)
Total net lease cost
 
$
163.5

 
$
358.8

 
(1) 
Interest on lease liabilities is recorded within Interest expense, net on the Company's Condensed Consolidated Statement of Operations.
The following table summarizes certain cash flow information related to the Company's leases for the six months ended December 28, 2019:
 
 
Six Months Ended
 
 
December 28, 2019
 
 
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
206.6

Operating cash flows from finance leases
 
0.3

Financing cash flows from finance leases
 
0.4

Non-cash transactions:
 
 
Right-of-use assets obtained in exchange for operating lease liabilities
 
86.1

Right-of-use assets obtained in exchange for finance lease liabilities
 
—


The following table provides a maturity analysis of the Company's lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Total
 
 
(millions)
Remainder of Fiscal 2020
 
$
193.6

 
$
0.7

 
$
194.3

Fiscal 2021
 
398.5

 
1.4

 
399.9

Fiscal 2022
 
357.7

 
1.4

 
359.1

Fiscal 2023
 
312.3

 
1.4

 
313.7

Fiscal 2024
 
263.9

 
1.4

 
265.3

Fiscal 2025 and thereafter
 
1,156.2

 
1.3

 
1,157.5

Total lease payments
 
2,682.2

 
7.6

 
2,689.8

Less: imputed interest
 
451.2

 
1.9

 
453.1

Total lease liabilities
 
$
2,231.0

 
$
5.7

 
$
2,236.7


The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of December 28, 2019 are as follows:
 
 
December 28, 2019
 
 
(millions)
Remainder of Fiscal 2020
 
$
10.6

Fiscal 2021
 
21.1

Fiscal 2022
 
20.1

Fiscal 2023
 
16.0

Fiscal 2024
 
15.5

Fiscal 2025 and thereafter
 
187.5

Total sublease income
 
$
270.8


The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Weighted average remaining lease term (years):
 
 
Operating leases
 
8.81

Finance leases
 
5.42

Weighted average discount rate:
 
 
Operating leases
 
3.6
%
Finance leases
 
11.3
%

Additionally, the Company had approximately $25 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of December 28, 2019.
As reported under the previous accounting standard, the following table provides a summary of future minimum rental payments under non-cancelable operating leases, as of June 29, 2019:
 
 
June 29, 2019
 
 
(millions)
2020
 
$
399.0

2021
 
341.5

2022
 
308.2

2023
 
270.4

2024
 
226.5

Subsequent to 2024
 
1,065.7

Total minimum future rental payments
 
$
2,611.3
Leases LEASES
The Company leases retail space, office space, warehouse facilities, distribution centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.
The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. ASU 2016-02 requires the use of the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the lease term, currency, country, Company specific risk premium and adjustments for collateral.
For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.
The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.
ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.
The following table summarizes the ROU assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Location Recorded on Balance Sheet
 
 
(millions)
 
Assets:
 
 
 
Operating leases
 
$
1,996.5

Operating lease right-of-use assets
Finance leases
 
3.6

Property and equipment, net
Total lease assets
 
$
2,000.1

 
Liabilities:
 
 
 
Operating leases:
 
 
 
Current lease liabilities
 
$
329.8

Current lease liabilities
Long-term lease liabilities
 
1,901.2

Long-term lease liabilities
Total operating lease liabilities
 
$
2,231.0

 
Finance leases:
 
 
 
Current lease liabilities
 
$
0.8

Accrued liabilities
Long-term lease liabilities
 
4.9

Other liabilities
Total finance lease liabilities
 
$
5.7

 
 
 
 
 
Total lease liabilities
 
$
2,236.7

 

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Condensed Consolidated Statement of Operations for the three and six months ended December 28, 2019:
 
 
Three Months Ended
 
Six Month Ended
 
 
December 28, 2019
 
 
(millions)
Finance lease cost:
 
 
 
 
Amortization of right-of-use assets
 
$
0.2

 
$
0.4

Interest on lease liabilities(1)
 
0.1

 
0.3

Total finance lease cost
 
0.3

 
0.7

Operating lease cost
 
105.5

 
217.3

Short-term lease cost
 
1.9

 
3.6

Variable lease cost
 
61.1

 
112.1

Operating lease right-of-use impairment
 
—

 
35.8

Less: sublease income
 
(5.3
)
 
(10.7
)
Total net lease cost
 
$
163.5

 
$
358.8

 
(1) 
Interest on lease liabilities is recorded within Interest expense, net on the Company's Condensed Consolidated Statement of Operations.
The following table summarizes certain cash flow information related to the Company's leases for the six months ended December 28, 2019:
 
 
Six Months Ended
 
 
December 28, 2019
 
 
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows from operating leases
 
$
206.6

Operating cash flows from finance leases
 
0.3

Financing cash flows from finance leases
 
0.4

Non-cash transactions:
 
 
Right-of-use assets obtained in exchange for operating lease liabilities
 
86.1

Right-of-use assets obtained in exchange for finance lease liabilities
 
—


The following table provides a maturity analysis of the Company's lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Total
 
 
(millions)
Remainder of Fiscal 2020
 
$
193.6

 
$
0.7

 
$
194.3

Fiscal 2021
 
398.5

 
1.4

 
399.9

Fiscal 2022
 
357.7

 
1.4

 
359.1

Fiscal 2023
 
312.3

 
1.4

 
313.7

Fiscal 2024
 
263.9

 
1.4

 
265.3

Fiscal 2025 and thereafter
 
1,156.2

 
1.3

 
1,157.5

Total lease payments
 
2,682.2

 
7.6

 
2,689.8

Less: imputed interest
 
451.2

 
1.9

 
453.1

Total lease liabilities
 
$
2,231.0

 
$
5.7

 
$
2,236.7


The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of December 28, 2019 are as follows:
 
 
December 28, 2019
 
 
(millions)
Remainder of Fiscal 2020
 
$
10.6

Fiscal 2021
 
21.1

Fiscal 2022
 
20.1

Fiscal 2023
 
16.0

Fiscal 2024
 
15.5

Fiscal 2025 and thereafter
 
187.5

Total sublease income
 
$
270.8


The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Condensed Consolidated Balance Sheet as of December 28, 2019:
 
 
December 28, 2019
Weighted average remaining lease term (years):
 
 
Operating leases
 
8.81

Finance leases
 
5.42

Weighted average discount rate:
 
 
Operating leases
 
3.6
%
Finance leases
 
11.3
%

Additionally, the Company had approximately $25 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of December 28, 2019.
As reported under the previous accounting standard, the following table provides a summary of future minimum rental payments under non-cancelable operating leases, as of June 29, 2019:
 
 
June 29, 2019
 
 
(millions)
2020
 
$
399.0

2021
 
341.5

2022
 
308.2

2023
 
270.4

2024
 
226.5

Subsequent to 2024
 
1,065.7

Total minimum future rental payments
 
$
2,611.3