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LEASES

12 Months Ended

Aug. 03, 2024

Leases [Abstract]

LEASES

NOTE 11—LEASES

The Company leases certain of its distribution centers, retail stores, office facilities, transportation equipment and other operating equipment from third parties. Many of these leases include renewal options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease assets and liabilities, net, are as follows (in millions):

Lease Type						Consolidated Balance Sheets Location						August 3, 2024						July 29, 2023
Operating lease assets						Operating lease assets						$	1,370					$	1,228
Finance lease assets						Property and equipment, net						16						14
Total lease assets												$	1,386					$	1,242
Operating liabilities						Current portion of operating lease liabilities						$	181					$	180
Finance liabilities						Current portion of long-term debt and finance lease liabilities						7						11
Operating liabilities						Long-term operating lease liabilities						1,263						1,099
Finance liabilities						Long-term finance lease liabilities						12						12
Total lease liabilities												$	1,463					$	1,302

The Company’s lease cost under ASC 842 is as follows (in millions):

Lease Expense Type						Consolidated Statements of Operations Location						2024						2023						2022
Operating lease cost						Operating expenses						$	298					$	261					$	241
Short-term lease cost						Operating expenses						10						17						19
Variable lease cost						Operating expenses						87						73						73
Sublease income						Operating expenses						(5)						(8)						(8)
Sublease income						Net sales						(10)						(14)						(17)
Other sublease income, net						Restructuring, acquisition and integration related expenses(1)						—						(1)						(2)
Net operating lease cost												380						328						306
Amortization of leased assets						Operating expenses						6						7						10
Interest on lease liabilities						Interest expense, net						2						3						11
Finance lease cost												8						10						21
Total net lease cost												$	388					$	338					$	327

(1)Includes $28 million, $27 million and $29 million of lease expense in fiscal 2024, 2023 and 2022, respectively, and $(28) million, $(28) million, and $(31) million of lease income in fiscal 2024, 2023 and 2022, respectively, that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations.

During fiscal 2023, the Company entered into a lease agreement for a new distribution facility in Manchester, Pennsylvania, which commenced in the second quarter of fiscal 2024 resulting in the recognition of a $205 million right-of-use asset and operating lease liability in the Consolidated Balance Sheets.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center in Riverside, California, which was classified as a finance lease, for approximately $153 million. Immediately following this acquisition, the Company monetized this property through a sale-leaseback transaction, pursuant to which the Company received $225 million in aggregate proceeds for the sale of the property, which reflected the fair value of the property. Under the terms of the sale-leaseback agreement, the Company entered into a lease for the distribution center for a term of 15 years, which was classified as an operating lease. The Company recorded a pre-tax gain on sale of approximately $87 million in fiscal 2022 as a result of the transactions, which primarily represented the pre-tax net proceeds.

The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases, including assigned leases for which the Company has future minimum lease payment obligations. Future minimum lease payments (“Lease Liabilities”) include payments to be made by the Company or certain third parties in the case of assigned noncancellable operating leases and finance leases. Future minimum lease and subtenant rentals (“Lease Receipts”) include expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to third parties, which they operate. As of August 3, 2024, these Lease Liabilities and Lease Receipts consisted of the following (in millions):

						Lease Liabilities												Lease Receipts												Net Lease Obligations
Fiscal Year						Operating Leases(1)						Finance Leases (2)						Operating Leases						Finance Leases						Operating Leases						Finance Leases
2025						$	304					$	9					$	(33)					$	—					$	271					$	9
2026						261						5						(25)						—						236						5
2027						218						2						(18)						—						200						2
2028						208						2						(14)						—						194						2
2029						175						2						(8)						—						167						2
Thereafter						1,141						3						(19)						—						1,122						3
Total undiscounted lease liabilities and receipts						$	2,307					$	23					$	(117)					$	—					$	2,190					$	23
Less interest(3)						(863)						(4)
Present value of lease liabilities						1,444						19
Less current lease liabilities						(181)						(7)
Long-term lease liabilities						$	1,263					$	12

(1)Excludes $340 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced. There were no operating leases for which the extension options are reasonably certain of being exercised.

(2)There were no finance leases for which the extension options are reasonably certain of being exercised, nor were there any excluded legally binding minimum lease payments for leases signed but not yet commenced.

(3)Calculated using the interest rate for each lease.

The following tables provide other information required by ASC 842:

Lease Term and Discount Rate

August 3, 2024

July 29, 2023

Weighted-average remaining lease term (years)

Operating leases

9.9 years

9.7 years

Finance leases

4.1 years

2.9 years

Weighted-average discount rate

Operating leases

9.4

%

8.9

%

Finance leases

9.9

%

9.8

%

Other Information
(in millions)												2024						2023						2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases												$	284					$	249					$	224
Operating cash flows from finance leases												$	2					$	2					$	7
Financing cash flows from finance leases												$	12					$	10					$	160
Leased assets obtained in exchange for new finance lease liabilities												$	8					$	—					$	1
Leased assets obtained in exchange for new operating lease liabilities												$	361					$	237					$	292

LEASES

NOTE 11—LEASES

The Company leases certain of its distribution centers, retail stores, office facilities, transportation equipment and other operating equipment from third parties. Many of these leases include renewal options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease assets and liabilities, net, are as follows (in millions):

Lease Type						Consolidated Balance Sheets Location						August 3, 2024						July 29, 2023
Operating lease assets						Operating lease assets						$	1,370					$	1,228
Finance lease assets						Property and equipment, net						16						14
Total lease assets												$	1,386					$	1,242
Operating liabilities						Current portion of operating lease liabilities						$	181					$	180
Finance liabilities						Current portion of long-term debt and finance lease liabilities						7						11
Operating liabilities						Long-term operating lease liabilities						1,263						1,099
Finance liabilities						Long-term finance lease liabilities						12						12
Total lease liabilities												$	1,463					$	1,302

The Company’s lease cost under ASC 842 is as follows (in millions):

Lease Expense Type						Consolidated Statements of Operations Location						2024						2023						2022
Operating lease cost						Operating expenses						$	298					$	261					$	241
Short-term lease cost						Operating expenses						10						17						19
Variable lease cost						Operating expenses						87						73						73
Sublease income						Operating expenses						(5)						(8)						(8)
Sublease income						Net sales						(10)						(14)						(17)
Other sublease income, net						Restructuring, acquisition and integration related expenses(1)						—						(1)						(2)
Net operating lease cost												380						328						306
Amortization of leased assets						Operating expenses						6						7						10
Interest on lease liabilities						Interest expense, net						2						3						11
Finance lease cost												8						10						21
Total net lease cost												$	388					$	338					$	327

(1)Includes $28 million, $27 million and $29 million of lease expense in fiscal 2024, 2023 and 2022, respectively, and $(28) million, $(28) million, and $(31) million of lease income in fiscal 2024, 2023 and 2022, respectively, that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations.

During fiscal 2023, the Company entered into a lease agreement for a new distribution facility in Manchester, Pennsylvania, which commenced in the second quarter of fiscal 2024 resulting in the recognition of a $205 million right-of-use asset and operating lease liability in the Consolidated Balance Sheets.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center in Riverside, California, which was classified as a finance lease, for approximately $153 million. Immediately following this acquisition, the Company monetized this property through a sale-leaseback transaction, pursuant to which the Company received $225 million in aggregate proceeds for the sale of the property, which reflected the fair value of the property. Under the terms of the sale-leaseback agreement, the Company entered into a lease for the distribution center for a term of 15 years, which was classified as an operating lease. The Company recorded a pre-tax gain on sale of approximately $87 million in fiscal 2022 as a result of the transactions, which primarily represented the pre-tax net proceeds.

The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases, including assigned leases for which the Company has future minimum lease payment obligations. Future minimum lease payments (“Lease Liabilities”) include payments to be made by the Company or certain third parties in the case of assigned noncancellable operating leases and finance leases. Future minimum lease and subtenant rentals (“Lease Receipts”) include expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to third parties, which they operate. As of August 3, 2024, these Lease Liabilities and Lease Receipts consisted of the following (in millions):

						Lease Liabilities												Lease Receipts												Net Lease Obligations
Fiscal Year						Operating Leases(1)						Finance Leases (2)						Operating Leases						Finance Leases						Operating Leases						Finance Leases
2025						$	304					$	9					$	(33)					$	—					$	271					$	9
2026						261						5						(25)						—						236						5
2027						218						2						(18)						—						200						2
2028						208						2						(14)						—						194						2
2029						175						2						(8)						—						167						2
Thereafter						1,141						3						(19)						—						1,122						3
Total undiscounted lease liabilities and receipts						$	2,307					$	23					$	(117)					$	—					$	2,190					$	23
Less interest(3)						(863)						(4)
Present value of lease liabilities						1,444						19
Less current lease liabilities						(181)						(7)
Long-term lease liabilities						$	1,263					$	12

(1)Excludes $340 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced. There were no operating leases for which the extension options are reasonably certain of being exercised.

(2)There were no finance leases for which the extension options are reasonably certain of being exercised, nor were there any excluded legally binding minimum lease payments for leases signed but not yet commenced.

(3)Calculated using the interest rate for each lease.

The following tables provide other information required by ASC 842:

Lease Term and Discount Rate

August 3, 2024

July 29, 2023

Weighted-average remaining lease term (years)

Operating leases

9.9 years

9.7 years

Finance leases

4.1 years

2.9 years

Weighted-average discount rate

Operating leases

9.4

%

8.9

%

Finance leases

9.9

%

9.8

%

Other Information
(in millions)												2024						2023						2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases												$	284					$	249					$	224
Operating cash flows from finance leases												$	2					$	2					$	7
Financing cash flows from finance leases												$	12					$	10					$	160
Leased assets obtained in exchange for new finance lease liabilities												$	8					$	—					$	1
Leased assets obtained in exchange for new operating lease liabilities												$	361					$	237					$	292

LEASES

NOTE 11—LEASES

The Company leases certain of its distribution centers, retail stores, office facilities, transportation equipment and other operating equipment from third parties. Many of these leases include renewal options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease assets and liabilities, net, are as follows (in millions):

Lease Type						Consolidated Balance Sheets Location						August 3, 2024						July 29, 2023
Operating lease assets						Operating lease assets						$	1,370					$	1,228
Finance lease assets						Property and equipment, net						16						14
Total lease assets												$	1,386					$	1,242
Operating liabilities						Current portion of operating lease liabilities						$	181					$	180
Finance liabilities						Current portion of long-term debt and finance lease liabilities						7						11
Operating liabilities						Long-term operating lease liabilities						1,263						1,099
Finance liabilities						Long-term finance lease liabilities						12						12
Total lease liabilities												$	1,463					$	1,302

The Company’s lease cost under ASC 842 is as follows (in millions):

Lease Expense Type						Consolidated Statements of Operations Location						2024						2023						2022
Operating lease cost						Operating expenses						$	298					$	261					$	241
Short-term lease cost						Operating expenses						10						17						19
Variable lease cost						Operating expenses						87						73						73
Sublease income						Operating expenses						(5)						(8)						(8)
Sublease income						Net sales						(10)						(14)						(17)
Other sublease income, net						Restructuring, acquisition and integration related expenses(1)						—						(1)						(2)
Net operating lease cost												380						328						306
Amortization of leased assets						Operating expenses						6						7						10
Interest on lease liabilities						Interest expense, net						2						3						11
Finance lease cost												8						10						21
Total net lease cost												$	388					$	338					$	327

(1)Includes $28 million, $27 million and $29 million of lease expense in fiscal 2024, 2023 and 2022, respectively, and $(28) million, $(28) million, and $(31) million of lease income in fiscal 2024, 2023 and 2022, respectively, that is recorded within Restructuring, acquisition and integration related expenses for assigned leases related to previously sold locations and surplus, non-operating properties for which the Company is restructuring its obligations.

During fiscal 2023, the Company entered into a lease agreement for a new distribution facility in Manchester, Pennsylvania, which commenced in the second quarter of fiscal 2024 resulting in the recognition of a $205 million right-of-use asset and operating lease liability in the Consolidated Balance Sheets.

During fiscal 2022, the Company acquired the real property of a previously leased distribution center in Riverside, California, which was classified as a finance lease, for approximately $153 million. Immediately following this acquisition, the Company monetized this property through a sale-leaseback transaction, pursuant to which the Company received $225 million in aggregate proceeds for the sale of the property, which reflected the fair value of the property. Under the terms of the sale-leaseback agreement, the Company entered into a lease for the distribution center for a term of 15 years, which was classified as an operating lease. The Company recorded a pre-tax gain on sale of approximately $87 million in fiscal 2022 as a result of the transactions, which primarily represented the pre-tax net proceeds.

The Company leases certain property to third parties and receives lease and subtenant rental payments under operating leases, including assigned leases for which the Company has future minimum lease payment obligations. Future minimum lease payments (“Lease Liabilities”) include payments to be made by the Company or certain third parties in the case of assigned noncancellable operating leases and finance leases. Future minimum lease and subtenant rentals (“Lease Receipts”) include expected cash receipts from operating subleases, and in the case of assigned noncancellable leases receipts for stores sold to third parties, which they operate. As of August 3, 2024, these Lease Liabilities and Lease Receipts consisted of the following (in millions):

						Lease Liabilities												Lease Receipts												Net Lease Obligations
Fiscal Year						Operating Leases(1)						Finance Leases (2)						Operating Leases						Finance Leases						Operating Leases						Finance Leases
2025						$	304					$	9					$	(33)					$	—					$	271					$	9
2026						261						5						(25)						—						236						5
2027						218						2						(18)						—						200						2
2028						208						2						(14)						—						194						2
2029						175						2						(8)						—						167						2
Thereafter						1,141						3						(19)						—						1,122						3
Total undiscounted lease liabilities and receipts						$	2,307					$	23					$	(117)					$	—					$	2,190					$	23
Less interest(3)						(863)						(4)
Present value of lease liabilities						1,444						19
Less current lease liabilities						(181)						(7)
Long-term lease liabilities						$	1,263					$	12

(1)Excludes $340 million of legally binding undiscounted minimum lease payments for leases signed but not yet commenced. There were no operating leases for which the extension options are reasonably certain of being exercised.

(2)There were no finance leases for which the extension options are reasonably certain of being exercised, nor were there any excluded legally binding minimum lease payments for leases signed but not yet commenced.

(3)Calculated using the interest rate for each lease.

The following tables provide other information required by ASC 842:

Lease Term and Discount Rate

August 3, 2024

July 29, 2023

Weighted-average remaining lease term (years)

Operating leases

9.9 years

9.7 years

Finance leases

4.1 years

2.9 years

Weighted-average discount rate

Operating leases

9.4

%

8.9

%

Finance leases

9.9

%

9.8

%

Other Information
(in millions)												2024						2023						2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases												$	284					$	249					$	224
Operating cash flows from finance leases												$	2					$	2					$	7
Financing cash flows from finance leases												$	12					$	10					$	160
Leased assets obtained in exchange for new finance lease liabilities												$	8					$	—					$	1
Leased assets obtained in exchange for new operating lease liabilities												$	361					$	237					$	292

X

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- 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
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-URI https://asc.fasb.org/842-20/tableOfContent

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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
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-Publisher FASB
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-Topic 842
-SubTopic 30
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-URI https://asc.fasb.org/842-30/tableOfContent

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