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Leases
 12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
Leases Leases
During the first quarter of fiscal 2022, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. Prior to the adoption of Topic 842, for certain operating and capital leases, we qualified as the deemed owner of the construction project due to our significant involvement during the construction period under build-to-suit lease accounting requirements within ASC 840. As part of our adoption of ASC 842, we derecognized the cost of these construction projects of $31.0 million, which were previously recorded in property, furniture and equipment, net with an offsetting obligation in accrued other expenses on our consolidated balance sheets at December 31, 2021.
The Company leases real estate and equipment under operating and finance leases, some of which are from related parties as discussed in Note 12 — Related Party Transactions. The most significant obligations under these lease agreements require the payments of periodic rentals, real estate taxes, insurance and maintenance costs. Depending on particular Showroom leases, the Company can also owe a percentage rent payment if particular Showrooms meet certain sales figures.
The following table summarizes the amounts recognized in our consolidated balance sheets related to leases (amounts in thousands):
December 31,
Consolidated Balance Sheets Classification20242023
Assets
Operating lease assetsOperating right-of-use assets$322,302 $302,157 
Finance lease assetsFinancing right-of-use assets36,105 38,835 
Total leased assets$358,407 $340,992 
Liabilities
Current operating leasesCurrent portion of operating lease liabilities$42,247 $33,051 
Non-current operating leasesOperating lease liabilities, long-term402,916 362,598 
Total operating lease liabilities445,163 395,649 
Current finance leasesCurrent portion of financing lease liabilities1,024 904 
Non-current finance leasesFinancing lease liabilities, long-term53,312 53,870 
Total finance lease liabilities54,336 54,774 
Total lease liabilities$499,499 $450,423 
The components of lease cost recognized within our consolidated statements of comprehensive income are as follows (amounts in thousands):
Year Ended
December 31,
Consolidated Statements of Comprehensive Income Classification202420232022
Lease costs
Operating lease costsCost of goods sold$50,079 $42,836 $34,421 
Operating lease costsSelling, general and administrative expenses10,395 9,879 6,930 
Finance lease costs
Amortization of right-of-use assetsSelling, general and administrative expenses2,527 2,513 2,056 
Interest expense on lease liabilitiesInterest (income) expense, net5,197 5,154 5,027 
Variable lease costs(1)
Cost of goods sold34,441 38,381 38,276 
Short term lease costsSelling, general and administrative expenses183 184 677 
Total lease costs$102,822 $98,947 $87,387 
(1) Includes $0.4 million and $0.4 million of month-to-month lease costs for the years ended December 31, 2023 and 2022 respectively. There was no month-to-month lease costs for the year ended December 31, 2024.
We often have options to renew lease terms for Showrooms and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are
reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease terms are as follows:
Year Ended
December 31,
Weighted Average Remaining Lease Term (In Years)20242023
Operating leases8.819.14
Finance leases20.0820.84
When readily determinable, we use the discount rate implicit within the lease as determined at the time of lease commencement. However, the discount rate implicit within many of our leases is generally not determinable at the time of lease commencement and therefore the Company determines the discount rate based on its IBR. For leases in which the discount rate was not explicit, the Company utilized a market-based approach to estimate the IBR, which required significant judgment. The Company estimated the base IBR based on an analysis of (i) yields on the Company’s 2021 Credit Facility, as well as comparable companies and (ii) unsecured yields and discount rates. The Company applied adjustments to the base IBRs to account for full collateralization and lease term. The weighted average discount rates used to measure our lease liabilities are as follows:
Year Ended
December 31,
Weighted Average Discount Rate20242023
Operating leases6.05 %6.03 %
Finance leases9.65 %9.64 %
Future lease liabilities at December 31, 2024 are as follows (amounts in thousands):
Year Ending December 31,
Operating Lease Liabilities (1)
Finance Lease LiabilitiesTotal Lease Liabilities
2025$66,323 $5,851 $72,174 
202673,033 6,309 79,342 
202768,979 6,110 75,089 
202863,462 5,635 69,097 
202960,488 5,224 65,712 
Thereafter254,517 104,770 359,287 
Total lease payments586,802 133,899 720,701 
Less: Amounts representing interest(141,639)(79,563)(221,202)
Total$445,163 $54,336 $499,499 
(1) Includes leases with related parties. See Note 12 — Related Party Transactions for amounts leased from related parties.
At December 31, 2024, the Company has entered into leases for Showrooms and equipment which have not yet commenced with expected lease terms ranging from 2 to 16 years. The aggregate minimum rental payments over the term of the leases of approximately $199.0 million are not included in the above table.
Supplemental cash flow information related to leases is as follows (amounts in thousands):
Year Ended
December 31,
202420232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$68,912 $57,070 $47,722 
Operating cash flows for finance leases4,902 4,875 4,785 
Financing cash flows for finance leases927 763 419 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$58,478 $79,721 $82,543 
Finance leases185 2,843 2,018 
Leases Leases
During the first quarter of fiscal 2022, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. Prior to the adoption of Topic 842, for certain operating and capital leases, we qualified as the deemed owner of the construction project due to our significant involvement during the construction period under build-to-suit lease accounting requirements within ASC 840. As part of our adoption of ASC 842, we derecognized the cost of these construction projects of $31.0 million, which were previously recorded in property, furniture and equipment, net with an offsetting obligation in accrued other expenses on our consolidated balance sheets at December 31, 2021.
The Company leases real estate and equipment under operating and finance leases, some of which are from related parties as discussed in Note 12 — Related Party Transactions. The most significant obligations under these lease agreements require the payments of periodic rentals, real estate taxes, insurance and maintenance costs. Depending on particular Showroom leases, the Company can also owe a percentage rent payment if particular Showrooms meet certain sales figures.
The following table summarizes the amounts recognized in our consolidated balance sheets related to leases (amounts in thousands):
December 31,
Consolidated Balance Sheets Classification20242023
Assets
Operating lease assetsOperating right-of-use assets$322,302 $302,157 
Finance lease assetsFinancing right-of-use assets36,105 38,835 
Total leased assets$358,407 $340,992 
Liabilities
Current operating leasesCurrent portion of operating lease liabilities$42,247 $33,051 
Non-current operating leasesOperating lease liabilities, long-term402,916 362,598 
Total operating lease liabilities445,163 395,649 
Current finance leasesCurrent portion of financing lease liabilities1,024 904 
Non-current finance leasesFinancing lease liabilities, long-term53,312 53,870 
Total finance lease liabilities54,336 54,774 
Total lease liabilities$499,499 $450,423 
The components of lease cost recognized within our consolidated statements of comprehensive income are as follows (amounts in thousands):
Year Ended
December 31,
Consolidated Statements of Comprehensive Income Classification202420232022
Lease costs
Operating lease costsCost of goods sold$50,079 $42,836 $34,421 
Operating lease costsSelling, general and administrative expenses10,395 9,879 6,930 
Finance lease costs
Amortization of right-of-use assetsSelling, general and administrative expenses2,527 2,513 2,056 
Interest expense on lease liabilitiesInterest (income) expense, net5,197 5,154 5,027 
Variable lease costs(1)
Cost of goods sold34,441 38,381 38,276 
Short term lease costsSelling, general and administrative expenses183 184 677 
Total lease costs$102,822 $98,947 $87,387 
(1) Includes $0.4 million and $0.4 million of month-to-month lease costs for the years ended December 31, 2023 and 2022 respectively. There was no month-to-month lease costs for the year ended December 31, 2024.
We often have options to renew lease terms for Showrooms and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are
reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease terms are as follows:
Year Ended
December 31,
Weighted Average Remaining Lease Term (In Years)20242023
Operating leases8.819.14
Finance leases20.0820.84
When readily determinable, we use the discount rate implicit within the lease as determined at the time of lease commencement. However, the discount rate implicit within many of our leases is generally not determinable at the time of lease commencement and therefore the Company determines the discount rate based on its IBR. For leases in which the discount rate was not explicit, the Company utilized a market-based approach to estimate the IBR, which required significant judgment. The Company estimated the base IBR based on an analysis of (i) yields on the Company’s 2021 Credit Facility, as well as comparable companies and (ii) unsecured yields and discount rates. The Company applied adjustments to the base IBRs to account for full collateralization and lease term. The weighted average discount rates used to measure our lease liabilities are as follows:
Year Ended
December 31,
Weighted Average Discount Rate20242023
Operating leases6.05 %6.03 %
Finance leases9.65 %9.64 %
Future lease liabilities at December 31, 2024 are as follows (amounts in thousands):
Year Ending December 31,
Operating Lease Liabilities (1)
Finance Lease LiabilitiesTotal Lease Liabilities
2025$66,323 $5,851 $72,174 
202673,033 6,309 79,342 
202768,979 6,110 75,089 
202863,462 5,635 69,097 
202960,488 5,224 65,712 
Thereafter254,517 104,770 359,287 
Total lease payments586,802 133,899 720,701 
Less: Amounts representing interest(141,639)(79,563)(221,202)
Total$445,163 $54,336 $499,499 
(1) Includes leases with related parties. See Note 12 — Related Party Transactions for amounts leased from related parties.
At December 31, 2024, the Company has entered into leases for Showrooms and equipment which have not yet commenced with expected lease terms ranging from 2 to 16 years. The aggregate minimum rental payments over the term of the leases of approximately $199.0 million are not included in the above table.
Supplemental cash flow information related to leases is as follows (amounts in thousands):
Year Ended
December 31,
202420232022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$68,912 $57,070 $47,722 
Operating cash flows for finance leases4,902 4,875 4,785 
Financing cash flows for finance leases927 763 419 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$58,478 $79,721 $82,543 
Finance leases185 2,843 2,018