XML 41 R21.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Sep. 30, 2023

NOTE 12: LEASES

The table below presents balances of our lease assets and liabilities and their balance sheet locations for both operating and financing leases:


(in thousands)		September 30, 2023		September 30, 2022

Lease assets:
Operating lease right-of-use assets	Right-of-use assets, net	$	234,388	$	221,405
Financing lease assets	Other assets, net	2,178		181
Total lease assets		$	236,566	$	221,586

Lease liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current	$	57,182	$	52,334
Financing lease liabilities	Accounts payable, accrued expenses and other current liabilities	530		37
Total current lease liabilities		$	57,712	$	52,371

Non-current:
Operating Lease liabilities	Operating lease liabilities	$	193,187	$	180,756
Financing lease liabilities	Other long-term liabilities	1,715		148
Total non-current lease liabilities		$	194,902	$	180,904
Total lease liabilities		$	252,614	$	233,275

The table below provides major components of our lease costs:


	Fiscal Year Ended September 30,
(in thousands)	2023		2022		2021

Operating lease cost:
Operating lease cost *	$	74,086	$	67,414	$	61,980
Variable lease cost	16,315		15,229		13,000
Total operating lease cost	$	90,401	$	82,643	$	74,980

Financing lease cost:
Amortization of financing lease assets	$	327	$	3	$	—
Interest on financing lease liabilities	145		1		—
Total financing lease cost	$	472	$	4	$	—
Total lease cost	$	90,873	$	82,647	$	74,980

* Includes a reduction for sublease rental income of $3.7 million, $3.6 million and $3.4 million for fiscal years ending September 2023, 2022 and 2021, respectively.

Lease expense is recognized on a straight-line basis over the lease term with variable lease expense recognized in the period in which the costs are incurred. The components of lease expense are included in “Store expenses” and “General and administrative” expense, based on the underlying lease use. Cash paid for operating leases was $76.7 million and $72.3 million for the fiscal years ended September 30, 2023 and 2022, respectively. Cash paid for principal and interest on finance leases was $0.3 million and $0.1 million, respectively, for the fiscal year ended September 30, 2023. There was no cash paid for finance leases for the fiscal years ended September 30, 2022 and 2021.

The weighted- average term and discount rates for leases are as follows:


	Fiscal Year Ended September 30,
	2023		2022
Weighted-average remaining lease term (years):
Operating leases	4.97		5.12
Financing leases	3.67		4.10

Weighted-average discount rate:
Operating leases	8.51	%	8.32	%
Financing leases	11.14	%	11.14	%

As of September 30, 2023, maturities of lease liabilities under ASC 842 by fiscal year were as follows (in thousands):


	Operating Leases		Financing Leases
Fiscal 2024	$	75,510	$	780
Fiscal 2025	66,798		751
Fiscal 2026	55,735		751
Fiscal 2027	41,903		450
Fiscal 2028	27,005		—
Thereafter	40,592		—
Total lease liabilities	$	307,543	$	2,732
Less: portion representing Imputed interest	57,174		487
Total net lease liabilities	$	250,369	$	2,245
Less: current portion	57,182		530
Total long term net lease liabilities	$	193,187	$	1,715

In December 2014, we entered into a non-cancelable 13-year operating lease for our corporate offices, with rent payments beginning February 2016 and ending March 2029. Annual rent, net of square footage subsequently terminated as a result of negotiations with the landlord, escalate from $2.5 million at lease inception to $3.9 million in the terminal year of the lease.

The lease includes two five-year extension options at the end of the initial lease term. The estimated minimum future rental payments under the lease are approximately $24.4 million as of September 30, 2023. As of September 30, 2023, we have subleases in place for a portion of our corporate operating office lease for estimated minimum future sublease payments of approximately $6.3 million.

We assessed the recoverability of the right-of-use asset for our corporate office, primarily due to the termination of a significant sublease. We determined the undiscounted cash flows of the relative corporate lease and sublease did not exceed the net book value of the right-of-use asset. We then determined the fair value of the corporate lease and sublease did not exceed the book value of the right-of-use asset, and an impairment charge of $4.3 million was recorded in fiscal year 2023 to “Impairment of other assets” in the Consolidated Statements of Operations.

The following table presents our corporate office lease measured at fair value as a result of the aforementioned impairment charges aggregated by the level in the fair value hierarchy within which measurements fall on a non-recurring basis at September 30, 2023, and the related impairment charge recorded (in thousands):


	Fair Value as of September 30, 2023								Fiscal Year Ended 2023
	Level 1		Level 2		Level 3		Total		Impairment Charges
Corporate office	$	—	$	—	$	6,233	$	6,233	$	4,343

During the second quarter of fiscal 2015, we entered into cancellable subleases for our Miami office for an estimated minimum future sublease payment of approximately $2.9 million. During the fourth quarter of fiscal 2022, the Miami office lease and sublease were terminated with no fees, and the deposit to the subtenant was returned.

We recorded $66.5 million and $69.4 million in non-cash additions to our operating right-of-use assets and lease liabilities for the fiscal year ended September 30, 2023 and 2022, respectively. We recorded $2.5 million in non-cash additions to our finance right-of-use assets and lease liabilities for the year ended September 30, 2023.

Leases