XML 31 R14.htm IDEA: XBRL DOCUMENT v3.24.0.1

Leases

12 Months Ended

Dec. 30, 2023

Leases [Abstract]

Lessee, Operating Leases

Leases

The Company leases the majority of its retail store locations, certain distribution sites, its Merchandise Innovation Center, and certain equipment under various non-cancellable operating leases. The leases have varying terms and expire at various dates through 2045.  Store leases typically have initial terms of between 10 years and 20 years, with two to four optional renewal periods of five years each.  The exercise of lease renewal options is at our sole discretion. The Company has included lease renewal options in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes, and insurance costs) together with non-lease components (e.g., fixed payment common-area maintenance) as a single component for all classes of underlying assets. Certain lease agreements require variable payments based upon actual costs of common-area maintenance, real estate taxes, and insurance. Further, certain lease agreements require variable payments based upon store sales above agreed-upon sales levels for the year and others require payments adjusted periodically for inflation. Variable lease costs are expensed as incurred. As substantially all of our leases do not provide an implicit rate, we estimate our collateralized incremental borrowing rate based upon a Company specific credit rating and yield curve analysis at commencement or modification date in determining the present value of lease payments.

The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. Short-term lease cost during the periods presented was immaterial.

In addition to the operating lease right-of-use assets presented on the Consolidated Balance Sheets, assets, net of accumulated amortization, under finance leases of $29.2 million and $32.1 million are recorded within the Property and equipment, net line on the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022, respectively.

The following table summarizes the Company’s classification of lease cost (in thousands):

												Fiscal Year Ended
						Statement of Income Location						December 30, 2023						December 31, 2022
Finance lease cost:
Amortization of lease assets						Depreciation and amortization						$	3,379					$	3,351
Interest on lease liabilities						Interest expense, net						1,632						1,787
Operating lease cost						Selling, general and administrative expenses						465,850						434,313
Variable lease cost						Selling, general and administrative expenses						99,044						89,026
Net lease cost												$	569,905					$	528,477

The following table summarizes the future maturities of the Company’s lease liabilities (in thousands):

						Operating Leases (a)						Finance Leases						Total
2024						$	491,956					$	4,823					$	496,779
2025						476,632						4,750						481,382
2026						446,265						4,720						450,985
2027						414,955						4,802						419,757
2028						377,553						4,812						382,365
After 2028						1,803,385						18,510						1,821,895
Total lease payments						4,010,746						42,417						4,053,163
Less: Interest						(738,428)						(7,718)						(746,146)
Present value of lease liabilities						$	3,272,318					$	34,699					$	3,307,017

(a) Operating lease payments exclude $320.5 million of legally binding minimum lease payments for leases signed, but not yet commenced.

The following table summarizes the Company’s lease term and discount rate:

						December 30, 2023						December 31, 2022
Weighted-average remaining lease term (years):
Finance leases						9.6						10.1
Operating leases						10.1						10.1
Weighted-average discount rate:
Finance leases						4.7		%				4.6		%
Operating leases						4.1		%				3.8		%

The following table summarizes the other information related to the Company’s lease liabilities (in thousands):

						Fiscal Year Ended
						December 30, 2023						December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows used for finance leases						$	4,808					$	4,057
Operating cash flows used for finance leases						1,632						1,787
Operating cash flows for operating leases						466,748						430,396

Sale-leaseback Transactions

During fiscal 2023, the Company completed its strategically planned sale-leaseback of 15 Tractor Supply store locations, resulting in proceeds of $82.0 million and a gain of $41.7 million, which is included in Selling, general, and administrative expenses. The Company intends to lease those properties for 15 years, with renewal options thereafter. The transactions met the accounting criteria for sale-leaseback treatment, and the resulting leases were accounted for as operating leases.

Lessee, Finance Leases

Leases

The Company leases the majority of its retail store locations, certain distribution sites, its Merchandise Innovation Center, and certain equipment under various non-cancellable operating leases. The leases have varying terms and expire at various dates through 2045.  Store leases typically have initial terms of between 10 years and 20 years, with two to four optional renewal periods of five years each.  The exercise of lease renewal options is at our sole discretion. The Company has included lease renewal options in the lease term for calculations of its right-of-use assets and liabilities when it is reasonably certain that the Company plans to renew these leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes, and insurance costs) together with non-lease components (e.g., fixed payment common-area maintenance) as a single component for all classes of underlying assets. Certain lease agreements require variable payments based upon actual costs of common-area maintenance, real estate taxes, and insurance. Further, certain lease agreements require variable payments based upon store sales above agreed-upon sales levels for the year and others require payments adjusted periodically for inflation. Variable lease costs are expensed as incurred. As substantially all of our leases do not provide an implicit rate, we estimate our collateralized incremental borrowing rate based upon a Company specific credit rating and yield curve analysis at commencement or modification date in determining the present value of lease payments.

The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. Short-term lease cost during the periods presented was immaterial.

In addition to the operating lease right-of-use assets presented on the Consolidated Balance Sheets, assets, net of accumulated amortization, under finance leases of $29.2 million and $32.1 million are recorded within the Property and equipment, net line on the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022, respectively.

The following table summarizes the Company’s classification of lease cost (in thousands):

												Fiscal Year Ended
						Statement of Income Location						December 30, 2023						December 31, 2022
Finance lease cost:
Amortization of lease assets						Depreciation and amortization						$	3,379					$	3,351
Interest on lease liabilities						Interest expense, net						1,632						1,787
Operating lease cost						Selling, general and administrative expenses						465,850						434,313
Variable lease cost						Selling, general and administrative expenses						99,044						89,026
Net lease cost												$	569,905					$	528,477

The following table summarizes the future maturities of the Company’s lease liabilities (in thousands):

						Operating Leases (a)						Finance Leases						Total
2024						$	491,956					$	4,823					$	496,779
2025						476,632						4,750						481,382
2026						446,265						4,720						450,985
2027						414,955						4,802						419,757
2028						377,553						4,812						382,365
After 2028						1,803,385						18,510						1,821,895
Total lease payments						4,010,746						42,417						4,053,163
Less: Interest						(738,428)						(7,718)						(746,146)
Present value of lease liabilities						$	3,272,318					$	34,699					$	3,307,017

(a) Operating lease payments exclude $320.5 million of legally binding minimum lease payments for leases signed, but not yet commenced.

The following table summarizes the Company’s lease term and discount rate:

						December 30, 2023						December 31, 2022
Weighted-average remaining lease term (years):
Finance leases						9.6						10.1
Operating leases						10.1						10.1
Weighted-average discount rate:
Finance leases						4.7		%				4.6		%
Operating leases						4.1		%				3.8		%

The following table summarizes the other information related to the Company’s lease liabilities (in thousands):

						Fiscal Year Ended
						December 30, 2023						December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows used for finance leases						$	4,808					$	4,057
Operating cash flows used for finance leases						1,632						1,787
Operating cash flows for operating leases						466,748						430,396

Sale-leaseback Transactions

During fiscal 2023, the Company completed its strategically planned sale-leaseback of 15 Tractor Supply store locations, resulting in proceeds of $82.0 million and a gain of $41.7 million, which is included in Selling, general, and administrative expenses. The Company intends to lease those properties for 15 years, with renewal options thereafter. The transactions met the accounting criteria for sale-leaseback treatment, and the resulting leases were accounted for as operating leases.

X

- References

No definition available.

+ Details

Name:	us-gaap_LeasesAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

+ Details

Name:	us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

+ Details

Name:	us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix:	us-gaap_
Data Type:	dtr-types:textBlockItemType
Balance Type:	na
Period Type:	duration