Leases

12 Months Ended

Dec. 31, 2024

We lease space for all of our Rent-A-Center and Mexico stores under operating leases expiring at various times through 2034. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2032. Most of our store leases are five-year leases and contain renewal options for additional periods ranging from three years to five years at rental rates adjusted according to agreed upon formulas. We evaluate all leases to determine if it is likely that we will exercise future renewal options and in most cases we are not reasonably certain of exercise due to competing market rental rates and lack of significant penalty, or business disruption incurred by not exercising the renewal options.

In certain situations involving the sale of a Rent-A-Center corporate store to a franchisee, we enter into a lease assignment agreement with the buyer, but we remain the primary obligor under the original lease for the remaining active term. These assignments are therefore classified as subleases and the original lease is included in our operating lease right-of-use assets and operating lease liabilities in our Consolidated Balance Sheets.

We lease vehicles for all of our Rent-A-Center stores under operating leases with lease terms expiring twelve months after the start date of the lease. We classify these leases as short-term and have elected the short-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Consolidated Balance Sheets. We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2029 with rental rates adjusted periodically for inflation, which are included in our operating lease right-of-use assets and operating lease liabilities in our Consolidated Balance Sheets. Finally, we have a minimal number of equipment leases, primarily related to temporary storage containers and certain back office technology hardware assets, which are included in our operating lease right-of-use assets and operating lease liabilities in our Consolidated Balance Sheets, or classified as short-term leases and excluded under the short term lease exemption.

In our calculation of operating lease right-of-use assets and operating lease liabilities we have elected not to separate the lease and non-lease components. Furthermore, operating lease right-of-use assets and operating lease liabilities are discounted using our incremental borrowing rate, since the implicit rate is not readily determinable. We do not currently have any financing leases.

Operating lease costs are recorded on a straight-line basis within non-labor operating expenses in our Consolidated Statements of Operations.

Total operating lease costs by expense type:


	Year Ended
(in thousands)	December 31, 2024		December 31, 2023		December 31, 2022
Operating lease cost included in non-labor operating expenses(1)	$	129,667	$	124,593	$	124,376
Operating lease cost included in general and administrative expenses	5,567		5,725		6,297
Operating lease cost included in other gains and charges	5,308		—		303
Variable lease expense	37,540		37,660		36,216
Sublease receipts	(6,637)		(3,913)		(7,128)
Total operating lease charges	$	171,445	$	164,065	$	160,064

(1) Includes short-term lease costs, which are not significant.

Supplemental cash flow information related to leases:


	Year Ended
(in thousands)	December 31, 2024		December 31, 2023		December 31, 2022
Cash paid for amounts included in measurement of operating lease liabilities	$	102,013	$	105,438	$	104,281
Cash paid for short-term operating leases not included in operating lease liabilities	25,105		19,306		18,639
Right-of-use assets obtained in exchange for new operating lease liabilities	63,874		68,707		99,952

Weighted-average discount rate and weighted-average remaining lease term:


	December 31, 2024		December 31, 2023		December 31, 2022
Weighted-average discount rate(1)	8.0	%	7.8	%	7.0	%
Weighted-average remaining lease term (in years)	4		4		4

(1) January 1, 2019 incremental borrowing rate was used for leases in existence at the time of adoption of ASU 2016-02.

Reconciliation of undiscounted operating lease liabilities to the present value operating lease liabilities at December 31, 2024:


(in thousands)	Operating Leases
2025	$	101,418
2026	80,801
2027	59,026
2028	36,264
2029	22,181
Thereafter	20,484
Total undiscounted operating lease liabilities	320,174
Less: Interest	(47,191)
Total present value of operating lease liabilities	$	272,983