Leases

12 Months Ended

Nov. 26, 2023

Lease expense is primarily recognized in SG&A expenses within the Company's consolidated statements of income, based on the underlying nature of the leased asset. For the years ended November 26, 2023 and November 27, 2022, lease expense primarily consisted of operating lease costs of $378.0 million and $354.7 million, respectively, including $96.3 million and $83.1 million primarily related to variable lease costs and $7.6 million and $9.4 million of short-term lease costs. As of and for the year ended November 26, 2023, finance leases were not a material component of the Company's lease portfolio.

In the second quarter of 2021, the Company entered into an agreement for the construction and lease of a distribution facility in Germany. The facility was handed over and lease commenced in the fourth quarter of fiscal year 2023. The Company recognized a right-of-use ("ROU") asset of $80.8 million and corresponding lease liability of $91.6 million. The Company has capitalized approximately $57.4 million for Company-owned equipment to be installed in the leased facility.

The Company reviews its ROU assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may be impaired. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows and other quantitative and qualitative factors. During the year ended November 27, 2022, as a result of the Russia-Ukraine crisis, the Company reviewed the ROU assets assigned to its Russia business for impairment and recorded $33.3 million of non-cash impairment charges. During the year ended November 28, 2021, due to the anticipated COVID-19 related impact on foot traffic and consumer spending trends, expected future cash flows decreased, the Company recorded $11.3 million related to the impairment of certain store ROU assets. The impairment charges are included in SG&A expenses in the Company's accompanying consolidated statements of income.

Amounts of future undiscounted cash flows related to operating lease payments over the lease term are as follows and are reconciled to the present value of the operating lease liabilities as recorded in the Company's consolidated balance sheets.


	November 26, 2023

	(Dollars in millions)
2024	$	278.7
2025	228.3
2026	186.5
2027	148.1
2028	114.3
Thereafter	388.8
Total undiscounted future cash flows related to lease payments	1,344.7
Less: Interest	186.1
Present value of lease liabilities	$	1,158.6

The following table includes the weighted average remaining lease terms, in years, and the weighted average discount rate used to calculate the present value of operating lease liabilities:


	November 26, 2023		November 27, 2022
Weighted-average remaining lease term (years)	7.2		6.3
Weighted-average discount rate	3.81	%	2.88	%

The table below includes supplemental cash and non-cash information related to operating leases:


	November 26, 2023		November 27, 2022

	(Dollars in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	272.9	$	260.3
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	334.4	$	213.9