Leases

3 Months Ended

Mar. 30, 2025

Leases

Leases

6.Leases

The Company is a lessee under various lease agreements. The determination of whether an arrangement contains a lease and the lease classification is made at lease commencement (date on which a lessor makes an underlying asset available for use by the lessee). At lease commencement, the Company also measures and recognizes a right-of-use asset, representing the Company’s right to use the underlying asset, and a lease liability, representing the Company’s obligation to make lease payments under the terms of the arrangement. The lease term is defined as the noncancelable portion of the lease term plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised. For the purposes of recognizing right-of-use assets and lease liabilities associated with the Company’s leases, the Company has elected the practical expedient of not recognizing a right-of-use asset or lease liability for short-term leases, which are leases with a term of 12 months or less. The Company has multiple finance leases and operating leases that are combined and included in the lease right-of-use assets, lease liabilities, current, and lease liabilities, noncurrent on the Company’s condensed consolidated balance sheets.

The Company primarily leases its distribution facilities, corporate offices and retail stores under operating lease agreements expiring on various dates through December 2031, most of which contain options to extend. In addition to payment of base rent, the Company is also required to pay property taxes, insurance, and common area maintenance expenses. The Company records lease expense on a straight-line basis over the term of the lease. In early 2025 the Company consolidated two of its distribution facilities by moving operations from its former distribution facility in Chico, California to its existing distribution facility in Ontario, California. During the thirteen weeks ended March 30, 2025, the Company modified the terms and discount rate of two of its operating leases. As a result of the modification, the Company derecognized the related right-of-use asset and lease liability of $3.1 million and $3.2 million, respectively. The modification resulted in the recognition of a gain of $0.1 million. The Company had no remaining obligations for the base rent related to the short-term leases as of March 30, 2025 and immaterial remaining obligations as of March 31, 2024.  

The Company also leases equipment under finance lease agreements expiring on various dates through April 2029.

As of March 30, 2025, the future minimum lease payments for the Company’s operating and finance leases for each of the fiscal years were as follows (in thousands):

Fiscal Year:		Operating Leases	Finance Leases		Total
2025 remaining 9 months	$	4,648	$	1,434	$	6,082
2026		5,164		340		5,504
2027		4,868		84		4,952
2028		4,375		13		4,388
2029		1,835		2		1,837
Thereafter		1,835		—		1,835
Total undiscounted lease payment		22,725		1,873		24,598
Present value adjustment		(2,952)		(50)		(3,002)
Total lease liabilities		19,773		1,823		21,596
Less: lease liabilities, current		(4,889)		(1,537)		(6,426)
Lease liabilities, noncurrent	$	14,884	$	286	$	15,170

Under the terms of the remaining lease agreements, the Company is also responsible for certain variable lease payments that are not included in the measurement of the lease liability, including non-lease components such as common area maintenance fees, taxes, and insurance.