LEASES

12 Months Ended

Feb. 26, 2022

Leases [Abstract]

LEASES

LEASES

The components of total lease cost, net consisted of the following (in millions):

	Classification	Fiscal  2021		Fiscal  2020		Fiscal  2019
Operating lease cost (1)	Cost of sales and Selling and administrative expenses (3)	$	1,046.9	$	1,016.2	$	1,011.6
Finance lease cost
Amortization of lease assets	Cost of sales and Selling and administrative expenses (3)	63.8		67.4		90.4
Interest on lease liabilities	Interest expense, net	61.6		70.5		79.8
Variable lease cost (2)	Cost of sales and Selling and administrative expenses (3)	428.6		423.8		402.9
Sublease income	Net sales and other revenue	(84.3)		(91.3)		(111.8)
Total lease cost, net		$	1,516.6	$	1,486.6	$	1,472.9

(1) Includes short-term lease cost, which is immaterial.

(2) Represents variable lease costs for both operating and finance leases. Includes contingent rent expense and other non-fixed lease related costs, including property taxes, common area maintenance and property insurance.

(3) Supply chain-related amounts are included in Cost of sales.

Balance sheet information related to leases as of February 26, 2022 and February 27, 2021 consisted of the following (in millions):

	Classification	February 26, 2022		February 27, 2021
Assets
Operating	Operating lease right-of-use assets	$	5,908.4	$	6,015.6
Finance	Property and equipment, net	373.4		384.9
Total lease assets		$	6,281.8	$	6,400.5
Liabilities
Current
Operating	Current operating lease obligations	$	640.6	$	605.3
Finance	Current maturities of long-term debt and finance lease obligations	78.0		81.5
Long-term
Operating	Long-term operating lease obligations	5,419.9		5,548.0
Finance	Long-term debt and finance lease obligations	501.4		531.2
Total lease liabilities		$	6,639.9	$	6,766.0

The following table presents cash flow information for leases (in millions):

	Fiscal  2021		Fiscal  2020		Fiscal  2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,001.6	$	973.7	$	995.8
Operating cash flows from finance leases	61.6		70.5		79.8
Financing cash flows from finance leases	78.0		79.9		109.3
Right-of-use assets obtained in exchange for operating lease obligations	606.2		763.1		1,195.2
Right-of-use assets obtained in exchange for finance lease obligations	75.4		35.8		—
Gains on sale leaseback transactions, net	—		—		487.1
Impairment of right-of-use operating lease assets	14.7		15.9		15.4
Impairment of right-of-use finance lease assets	1.5		6.3		6.1

The following table presents the weighted average lease term and discount rate for leases:

	February 26, 2022		February 27, 2021
Weighted average remaining lease term - operating leases	11.1 years		11.7 years
Weighted average remaining lease term - finance leases	9.0 years		8.8 years
Weighted average discount rate - operating leases	6.5	%	6.7	%
Weighted average discount rate - finance leases	11.2	%	12.3	%

Future minimum lease payments for operating and finance lease obligations as of February 26, 2022 consisted of the following (in millions):

	Lease Obligations
Fiscal year	Operating Leases		Finance Leases
2022	$	935.6	$	114.3
2023	962.3		118.8
2024	878.8		102.4
2025	791.6		89.1
2026	712.9		72.9
Thereafter	4,461.5		347.1
Total future minimum obligations	8,742.7		844.6
Less interest	(2,682.2)		(265.2)
Present value of net future minimum lease obligations	6,060.5		579.4
Less current portion	(640.6)		(78.0)
Long-term obligations	$	5,419.9	$	501.4

The Company subleases certain property to third parties. Future minimum tenant operating lease payments remaining under these non-cancelable operating leases as of February 26, 2022 was $239.7 million.

During the second quarter of fiscal 2019, the Company, through three separate transactions, completed the sale and leaseback of 53 store properties and one distribution center for an aggregate purchase price, net of closing costs, of $931.3 million. In connection with the sale leaseback transactions, the Company entered into lease agreements for each of the properties for initial terms ranging from 15 to 20 years. The aggregate initial annual rent payment for the properties is approximately $53 million and includes 1.50% to 1.75% annual rent increases over the initial lease terms. All of the properties qualified for sale leaseback and operating lease accounting, and the Company recorded total gains of $463.6 million, which is included as a component of Gain on property dispositions and impairment losses, net. The Company also recorded operating lease right-of-use assets and corresponding operating lease liabilities of $602.5 million.

LEASES

LEASES

The components of total lease cost, net consisted of the following (in millions):

	Classification	Fiscal  2021		Fiscal  2020		Fiscal  2019
Operating lease cost (1)	Cost of sales and Selling and administrative expenses (3)	$	1,046.9	$	1,016.2	$	1,011.6
Finance lease cost
Amortization of lease assets	Cost of sales and Selling and administrative expenses (3)	63.8		67.4		90.4
Interest on lease liabilities	Interest expense, net	61.6		70.5		79.8
Variable lease cost (2)	Cost of sales and Selling and administrative expenses (3)	428.6		423.8		402.9
Sublease income	Net sales and other revenue	(84.3)		(91.3)		(111.8)
Total lease cost, net		$	1,516.6	$	1,486.6	$	1,472.9

(1) Includes short-term lease cost, which is immaterial.

(2) Represents variable lease costs for both operating and finance leases. Includes contingent rent expense and other non-fixed lease related costs, including property taxes, common area maintenance and property insurance.

(3) Supply chain-related amounts are included in Cost of sales.

Balance sheet information related to leases as of February 26, 2022 and February 27, 2021 consisted of the following (in millions):

	Classification	February 26, 2022		February 27, 2021
Assets
Operating	Operating lease right-of-use assets	$	5,908.4	$	6,015.6
Finance	Property and equipment, net	373.4		384.9
Total lease assets		$	6,281.8	$	6,400.5
Liabilities
Current
Operating	Current operating lease obligations	$	640.6	$	605.3
Finance	Current maturities of long-term debt and finance lease obligations	78.0		81.5
Long-term
Operating	Long-term operating lease obligations	5,419.9		5,548.0
Finance	Long-term debt and finance lease obligations	501.4		531.2
Total lease liabilities		$	6,639.9	$	6,766.0

The following table presents cash flow information for leases (in millions):

	Fiscal  2021		Fiscal  2020		Fiscal  2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,001.6	$	973.7	$	995.8
Operating cash flows from finance leases	61.6		70.5		79.8
Financing cash flows from finance leases	78.0		79.9		109.3
Right-of-use assets obtained in exchange for operating lease obligations	606.2		763.1		1,195.2
Right-of-use assets obtained in exchange for finance lease obligations	75.4		35.8		—
Gains on sale leaseback transactions, net	—		—		487.1
Impairment of right-of-use operating lease assets	14.7		15.9		15.4
Impairment of right-of-use finance lease assets	1.5		6.3		6.1

The following table presents the weighted average lease term and discount rate for leases:

	February 26, 2022		February 27, 2021
Weighted average remaining lease term - operating leases	11.1 years		11.7 years
Weighted average remaining lease term - finance leases	9.0 years		8.8 years
Weighted average discount rate - operating leases	6.5	%	6.7	%
Weighted average discount rate - finance leases	11.2	%	12.3	%

Future minimum lease payments for operating and finance lease obligations as of February 26, 2022 consisted of the following (in millions):

	Lease Obligations
Fiscal year	Operating Leases		Finance Leases
2022	$	935.6	$	114.3
2023	962.3		118.8
2024	878.8		102.4
2025	791.6		89.1
2026	712.9		72.9
Thereafter	4,461.5		347.1
Total future minimum obligations	8,742.7		844.6
Less interest	(2,682.2)		(265.2)
Present value of net future minimum lease obligations	6,060.5		579.4
Less current portion	(640.6)		(78.0)
Long-term obligations	$	5,419.9	$	501.4

The Company subleases certain property to third parties. Future minimum tenant operating lease payments remaining under these non-cancelable operating leases as of February 26, 2022 was $239.7 million.

During the second quarter of fiscal 2019, the Company, through three separate transactions, completed the sale and leaseback of 53 store properties and one distribution center for an aggregate purchase price, net of closing costs, of $931.3 million. In connection with the sale leaseback transactions, the Company entered into lease agreements for each of the properties for initial terms ranging from 15 to 20 years. The aggregate initial annual rent payment for the properties is approximately $53 million and includes 1.50% to 1.75% annual rent increases over the initial lease terms. All of the properties qualified for sale leaseback and operating lease accounting, and the Company recorded total gains of $463.6 million, which is included as a component of Gain on property dispositions and impairment losses, net. The Company also recorded operating lease right-of-use assets and corresponding operating lease liabilities of $602.5 million.

LEASES

LEASES

The components of total lease cost, net consisted of the following (in millions):

	Classification	Fiscal  2021		Fiscal  2020		Fiscal  2019
Operating lease cost (1)	Cost of sales and Selling and administrative expenses (3)	$	1,046.9	$	1,016.2	$	1,011.6
Finance lease cost
Amortization of lease assets	Cost of sales and Selling and administrative expenses (3)	63.8		67.4		90.4
Interest on lease liabilities	Interest expense, net	61.6		70.5		79.8
Variable lease cost (2)	Cost of sales and Selling and administrative expenses (3)	428.6		423.8		402.9
Sublease income	Net sales and other revenue	(84.3)		(91.3)		(111.8)
Total lease cost, net		$	1,516.6	$	1,486.6	$	1,472.9

(1) Includes short-term lease cost, which is immaterial.

(2) Represents variable lease costs for both operating and finance leases. Includes contingent rent expense and other non-fixed lease related costs, including property taxes, common area maintenance and property insurance.

(3) Supply chain-related amounts are included in Cost of sales.

Balance sheet information related to leases as of February 26, 2022 and February 27, 2021 consisted of the following (in millions):

	Classification	February 26, 2022		February 27, 2021
Assets
Operating	Operating lease right-of-use assets	$	5,908.4	$	6,015.6
Finance	Property and equipment, net	373.4		384.9
Total lease assets		$	6,281.8	$	6,400.5
Liabilities
Current
Operating	Current operating lease obligations	$	640.6	$	605.3
Finance	Current maturities of long-term debt and finance lease obligations	78.0		81.5
Long-term
Operating	Long-term operating lease obligations	5,419.9		5,548.0
Finance	Long-term debt and finance lease obligations	501.4		531.2
Total lease liabilities		$	6,639.9	$	6,766.0

The following table presents cash flow information for leases (in millions):

	Fiscal  2021		Fiscal  2020		Fiscal  2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,001.6	$	973.7	$	995.8
Operating cash flows from finance leases	61.6		70.5		79.8
Financing cash flows from finance leases	78.0		79.9		109.3
Right-of-use assets obtained in exchange for operating lease obligations	606.2		763.1		1,195.2
Right-of-use assets obtained in exchange for finance lease obligations	75.4		35.8		—
Gains on sale leaseback transactions, net	—		—		487.1
Impairment of right-of-use operating lease assets	14.7		15.9		15.4
Impairment of right-of-use finance lease assets	1.5		6.3		6.1

The following table presents the weighted average lease term and discount rate for leases:

	February 26, 2022		February 27, 2021
Weighted average remaining lease term - operating leases	11.1 years		11.7 years
Weighted average remaining lease term - finance leases	9.0 years		8.8 years
Weighted average discount rate - operating leases	6.5	%	6.7	%
Weighted average discount rate - finance leases	11.2	%	12.3	%

Future minimum lease payments for operating and finance lease obligations as of February 26, 2022 consisted of the following (in millions):

	Lease Obligations
Fiscal year	Operating Leases		Finance Leases
2022	$	935.6	$	114.3
2023	962.3		118.8
2024	878.8		102.4
2025	791.6		89.1
2026	712.9		72.9
Thereafter	4,461.5		347.1
Total future minimum obligations	8,742.7		844.6
Less interest	(2,682.2)		(265.2)
Present value of net future minimum lease obligations	6,060.5		579.4
Less current portion	(640.6)		(78.0)
Long-term obligations	$	5,419.9	$	501.4

The Company subleases certain property to third parties. Future minimum tenant operating lease payments remaining under these non-cancelable operating leases as of February 26, 2022 was $239.7 million.

During the second quarter of fiscal 2019, the Company, through three separate transactions, completed the sale and leaseback of 53 store properties and one distribution center for an aggregate purchase price, net of closing costs, of $931.3 million. In connection with the sale leaseback transactions, the Company entered into lease agreements for each of the properties for initial terms ranging from 15 to 20 years. The aggregate initial annual rent payment for the properties is approximately $53 million and includes 1.50% to 1.75% annual rent increases over the initial lease terms. All of the properties qualified for sale leaseback and operating lease accounting, and the Company recorded total gains of $463.6 million, which is included as a component of Gain on property dispositions and impairment losses, net. The Company also recorded operating lease right-of-use assets and corresponding operating lease liabilities of $602.5 million.