| Lessee, Operating and Finance Leases [Text Block] | 7. Lease Obligations The Company leases most of its stores, a bulk food repackaging facility and distribution center, and its administrative offices. The Company determines if an arrangement is a lease or contains a lease at inception. Lease terms generally range from 10 to 25 years, with scheduled increases in minimum rent payments. Operating and finance lease liabilities represent the present value of lease payments not yet paid. Operating and finance lease assets represent the Company’s right to use an underlying asset and are based upon the operating and finance lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives and impairment of operating and finance lease assets. Most leases include one or more options to renew, with renewal terms normally expressed in periods of five ten Variable payments related to pass-through costs for maintenance, taxes and insurance or adjustments based on an index such as Consumer Price Index are not included in the measurement of the lease liability or asset and are expensed as incurred. As most of the Company’s lease agreements do not provide an implicit discount rate, the Company uses an estimated incremental borrowing rate, which is derived from third-party lenders, to determine the present value of lease payments. The Company uses other observable market data to evaluate the appropriateness of the rate derived from the lenders. The estimated incremental borrowing rate is based on the borrowing rate for a secured loan with a term similar to the expected term of the lease. Leases are recorded at the commencement date (the date the underlying asset becomes available for use) for the present value of lease payments, less tenant improvement allowances received or receivable. Leases with a term of 12 months or less (short-term leases) are not presented on the balance sheet. The Company has elected to account for the lease and non-lease components as a single lease component for all current classes of leases. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company subleases certain real estate or portions thereof to third parties. Such subleases have all been classified as operating leases. Remaining sublease terms extend through fiscal year 2030. Although some sublease arrangements provide renewal options, the exercise of sublease renewal options is at the sole discretion of the subtenant. The Company recognizes sublease income on a straight-line basis. The Company has four one one The components of total lease cost for the three months ended December 31, 2023 and 2022 were as follows, dollars in thousands:
Three months ended
December 31,
Lease cost
Classification
2023
2022
Operating lease cost:
Cost of goods sold and occupancy costs $ 11,027 10,903
Store expenses 115 98
Administrative expenses 98 77
Pre-opening expense 59 80
Finance lease cost:
Depreciation of lease assets
Store expenses 1,009 907
Pre-opening expenses 70 113
Interest on lease liabilities
Interest expense, net 502 443
Pre-opening expenses 84 124
Short-term lease cost
Store expenses 754 671
Variable lease cost
Cost of goods sold and occupancy costs (1) 1,582 1,504
Sublease income
Store expenses (88
) (74
)
Total lease cost $ 15,212 14,846 (1) Additional information related to the Company’s leases for the three months ended December 31, 2023 and 2022 was as follows, dollars in thousands:
Three months ended
December 31,
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 11,380 11,267
Operating cash flows from finance leases 585 568
Financing cash flows from finance leases 815 642
Lease assets obtained in exchange for new lease liabilities:
Operating leases 4,680 756
Finance leases (52 ) 1,694 Additional information related to the Company’s leases as of December 31, 2023 and 2022 was as follows:
December 31,
2023
2022
Weighted-average remaining lease term (in years):
Operating leases 10.1 10.6
Finance leases 14.0 14.3
Weighted-average discount rate:
Operating leases 3.9
% 3.7
Finance leases 4.9
% 4.8 In the three months ended December 31, 2023, the Company incurred additional impairment charges of $0.1 million related to operating lease assets associated with store closures that occurred in June 2023. Future lease payments under non-cancellable leases as of December 31, 2023 were as follows, dollars in thousands:
Fiscal year
Operating leases
Finance leases
Total
Remainder of 2024 $ 35,238 4,480 39,718
2025 45,764 6,051 51,815
2026 42,914 6,093 49,007
2027 41,119 6,138 47,257
2028 38,287 5,053 43,340
Thereafter 171,203 40,931 212,134
Total future undiscounted lease payments 374,525 68,746 443,271
Less imputed interest (66,853
) (18,781
) (85,634
)
Total reported lease liability 307,672 49,965 357,637
Less current portion (35,840
) (3,762
) (39,602
)
Noncurrent lease liability $ 271,832 46,203 318,035 The table above excludes $5.8 million of legally binding minimum lease payments for leases that had been executed as of December 31, 2023 but whose terms had not yet commenced. |
