XML 36 R19.htm IDEA: XBRL DOCUMENT v3.23.3
Leases
6 Months Ended
Sep. 02, 2023
Leases  
Leases

11. Leases

​

The Company leases most of its retail stores and certain distribution facilities under noncancelable operating and finance leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancelable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases.

​

The following table is a summary of the Company’s components of net lease cost for the thirteen and twenty-six week periods ended September 2, 2023 and August 27, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Thirteen Week Period Ended

​

Twenty-Six Week Period Ended

​

​

September 2, 2023

​

August 27, 2022

​

September 2, 2023

​

August 27, 2022

Operating lease cost

 

$

148,896

 

$

157,956

 

$

301,568

 

$

317,801

Financing lease cost:

​

​

​

​

​

​

​

​

​

​

​

​

Amortization of right-of-use asset

​

 

775

​

 

863

​

 

1,594

​

 

1,672

Interest on long-term finance lease liabilities

​

 

454

​

 

503

​

 

921

​

 

1,004

Total finance lease costs

 

$

1,229

 

$

1,366

 

$

2,515

 

$

2,676

Short-term lease costs

​

 

2,086

​

 

585

​

 

1,310

​

 

1,042

Variable lease costs

​

 

44,646

​

 

43,652

​

 

90,879

​

 

86,297

Less: sublease income

​

 

(3,104)

​

 

(3,393)

​

 

(5,841)

​

 

(6,616)

Net lease cost

 

$

193,753

 

$

200,166

 

$

390,431

 

$

401,200

​

Supplemental cash flow information related to leases for the twenty-six week periods ended September 2, 2023 and August 27, 2022:

​

​

​

​

​

​

​

​

​

​

Twenty-Six Week Period Ended

​

    

September 2, 2023

    

August 27, 2022

Cash paid for amounts included in the measurement of lease liabilities:

​

​

​

​

​

​

Operating cash flows paid for operating leases

 

$

330,492

 

$

350,177

Operating cash flows paid for interest portion of finance leases

​

 

921

​

 

1,004

Financing cash flows paid for principal portion of finance leases

​

 

1,969

​

 

1,940

Right-of-use assets obtained in exchange for lease obligations:

​

​

​

​

​

​

Operating leases

​

 

163,569

​

 

155,710

Finance leases

​

 

—

​

 

—

​

Supplemental balance sheet information related to leases as of September 2, 2023 and March 4, 2023 (in thousands, except lease term and discount rate):

​

​

​

​

​

​

​

​

​

​

​

September 2,

 

March 4,

 

​

    

2023

 

2023

 

Operating leases:

​

​

​

​

​

​

​

Operating lease right-of-use asset

 

$

2,239,043

​

$

2,497,206

​

​

​

​

​

​

​

​

​

Short-term operating lease liabilities

 

$

422,233

​

$

502,403

​

Long-term operating lease liabilities

​

 

2,373,953

​

 

2,372,943

​

Total operating lease liabilities

 

$

2,796,186

​

$

2,875,346

​

​

​

​

​

​

​

​

​

Finance leases:

​

​

​

​

​

​

​

Property, plant and equipment, net

 

$

12,674

​

$

13,576

​

​

​

​

​

​

​

​

​

Current maturities of lease financing obligations

 

$

6,006

​

$

6,332

​

Lease financing obligations, less current maturities

​

 

11,718

​

 

12,580

​

Total finance lease liabilities

 

$

17,724

​

$

18,912

​

Weighted average remaining lease term

​

​

​

​

​

​

​

Operating leases

​

 

7.3

​

 

7.5

​

Finance leases

​

 

8.0

​

 

8.0

​

​

​

​

​

​

​

​

​

Weighted average discount rate

​

​

​

​

​

​

​

Operating leases

​

 

7.5

%

 

6.5

%

Finance leases

​

 

10.5

%

 

9.0

%

​

The following table summarizes the maturity of lease liabilities under finance and operating leases as of September 2, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

September 2, 2023

​

​

Finance

​

Operating

​

​

Fiscal year

    

Leases

    

 Leases(1)

    

Total

2024 (remaining twenty-six weeks)

 

$

5,301

 

$

335,247

 

$

340,548

2025

​

 

5,048

​

 

622,993

​

 

628,041

2026

​

 

1,883

​

 

500,523

​

 

502,406

2027

​

 

1,500

​

 

472,118

​

 

473,618

2028

​

 

1,500

​

 

399,881

​

 

401,381

Thereafter

​

 

10,174

​

 

1,280,351

​

 

1,290,525

Total lease payments

​

 

25,406

​

 

3,611,113

​

 

3,636,519

Less: imputed interest

​

 

(7,682)

​

 

(814,927)

​

 

(822,609)

Total lease liabilities

 

$

17,724

 

$

2,796,186

 

$

2,813,910

(1)– Future operating lease payments have not been reduced by minimum sublease rentals of $23 million due in the future under noncancelable leases.

​

During the thirteen and twenty-six week periods ended September 2, 2023, the Company sold three owned and operated stores to independent third parties. Net proceeds from the sales were $5,454 for the thirteen and twenty-six week periods ended September 2, 2023. Concurrent with these sales, the Company entered into agreements to lease the properties back from the purchasers over a minimum lease term of 15 years. The Company accounted for these leases as operating lease right-of-use assets and corresponding operating lease liabilities in accordance with the Lease Standard. The transactions resulted in a loss of $706 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended September 2, 2023

​

During the thirteen and twenty-six week periods ended August 27, 2022, the Company sold three owned and operated properties, including the Pontiac, MI and Liverpool, NY distribution centers and one retail store to independent third parties. Net proceeds from the sales were $45,986 for the thirteen and twenty-six week periods ended August 27, 2022. Concurrent with these sales, the Company entered into agreements to lease the properties back from the purchasers over a minimum lease term of 15 years for the retail store and over a minimum lease term of three years for the distribution centers. The Company accounted for these leases as operating lease right-of-use assets and corresponding operating lease liabilities in accordance with the Lease Standard. The transactions resulted in a gain of $23,313 which is included in the gain on sale of assets, net for the thirteen and twenty-six week periods ended August 27, 2022.

​

Additionally, certain of the Company’s lease obligations and other outstanding contracts include events of default, cross default or cross acceleration provisions, which could result in rights to accelerate or terminate obligations, including upon the commencement of the Chapter 11 proceedings. However, the exercise or enforcement of any remedies have been automatically stayed as a result of such proceedings.