| 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. We use 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 lease 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 and six months ended March 31, 2023 and 2022 were as follows, dollars in thousands:
Three months ended
Six months ended
March 31,
March 31,
Lease cost
Classification
2023
2022
2023
2022
Operating lease cost:
Cost of goods sold and occupancy costs $ 10,968 10,720 21,871 21,450
Store expenses 80 98 178 178
Administrative expenses 82 71 159 147
Pre-opening expenses 14 — 94 —
Finance lease cost:
Depreciation of right-of-use asset Store expenses 945 973 1,852 1,947
Pre-opening expenses 73 40 186 40
Interest on lease liabilities Interest expense, net 473 482 916 972
Pre-opening expenses 86 39 210 39
Short-term lease cost Store expenses 770 601 1,441 1,210
Variable lease cost Cost of goods sold and occupancy costs (1) 1,601 1,470 3,105 2,868
Sublease income Store expenses (72
) (46
) (146
) (154
)
Total lease cost $ 15,020 14,448 29,866 28,697 1 Additional information related to the Company’s leases for the three and six months ended March 31, 2023 and 2022 were as follows, dollars in thousands:
Three months ended
Six months ended
March 31,
March 31,
2023
2022
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 11,569 7,576 22,836 18,735
Operating cash flows from finance leases 559 521 1,127 1,011
Financing cash flows from finance leases 715 588 1,357 1,327
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases — 1,519 756 6,571
Finance leases (42 ) 4,129 1,652 4,129 Additional information related to the Company’s leases as of March 31, 2023 and 2022 was as follows:
March 31,
2023
2022
Weighted-average remaining lease term (in years):
Operating leases 10.4 10.8
Finance leases 14.2 12.8
Weighted-average discount rate:
Operating leases 3.7 % 3.6
Finance leases 4.8 % 4.9 In the three and six months ended March 31, 2023, the Company incurred an impairment charge of $0.9 million related to an operating lease asset associated with a planned store closure in June 2023. In the six months ended March 31, 2022, the Company incurred an impairment charge of $0.1 million related to an operating lease asset associated with an early store relocation. Future lease payments under non-cancellable leases as of March 31, 2023 were as follows, dollars in thousands:
Fiscal year
Operating leases
Finance leases
Total
Remainder of 2023 $ 23,166 2,597 25,763
2024 44,949 5,678 50,627
2025 43,307 5,688 48,995
2026 40,246 5,731 45,977
2027 37,934 5,775 43,709
Thereafter 191,391 40,942 232,333
Total future undiscounted lease payments 380,993 66,411 447,404
Less imputed interest (67,594
) (18,230
) (85,824
)
Total reported lease liability 313,399 48,181 361,580
Less current portion (34,917
) (3,365
) (38,282
)
Noncurrent lease liability $ 278,482 44,816 323,298 The table above excludes $19.0 million of legally binding minimum lease payments for leases that had been executed as of March 31, 2023 but whose terms had not yet commenced. |
