Leases

12 Months Ended

Dec. 31, 2023

Leases:

We have operating leases for retail stores, offices, warehouses, and certain equipment. Our leases have remaining lease terms of between 1 year and 12 years, some of which include options to extend the leases for up to 20 years. We determine if an arrangement is or contains a lease at lease inception. Our leases do not have any residual value guarantees or any restrictions or covenants imposed by lessors. We have lease agreements for real estate with lease and non-lease components, which are accounted for separately.

As of December 31, 2023, there were no leases for retail locations which had not yet commenced.

The table below presents the operating lease assets and liabilities recognized on the consolidated balance sheets as of December 31:


(in thousands)	2023		2022
Operating Lease Assets:
Right-of use lease assets	$	202,306	$	207,390
Operating Lease Liabilities:
Current lease liabilities	$	37,357	$	34,442
Non-current lease liabilities	180,397		186,845
Total operating lease liabilities	$	217,754	$	221,287

Our leases generally do not provide an implicit rate, and therefore we use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

The weighted-average remaining lease term and weighted-average discount rate for operating leases as of December 31 are:


	2023		2022
Weighted-average remaining lease term	6.7 years		7.6 years
Weighted-average discount rate	6.07	%	5.52	%

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheet as of December 31, 2023:


(in thousands)	Operating Leases
2024	$	49,177
2025	45,848
2026	39,904
2027	33,279
2028	28,198
Thereafter	70,454
Total undiscounted future minimum lease payments	266,860
Less: difference between undiscounted lease payments and discounted operating lease liabilities	(49,106)
Total operating lease liabilities	$	217,754

Certain of our lease agreements for retail stores include variable lease payments, generally based on sales volume. The variable portion of payments are not included in the initial measurement of the right‑of-use asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred. Certain of our equipment lease agreements include variable lease costs, generally based on usage of the underlying asset (mileage, fuel, etc.). The variable portion of payments are not included in the initial measurement of the right-of-use asset or lease liability due to uncertainty of the payment amount and are recorded as lease expense in the period incurred.

Components of lease expense which are included in selling, general, and administrative expenses within our consolidated statements of comprehensive income were as follows:


	Year Ended December 31,
(in thousands)	2023		2022		2021
Operating lease cost	$	49,148	$	46,449	$	46,774

Variable lease cost	6,170		6,969		6,680
Total lease expense	$	55,318	$	53,418	$	53,454

Supplemental cash flow information related to leases is as follows:


	Year Ended December 31,
(In thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	46,622	$	40,513
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	53,419	$	25,419