LEASES

12 Months Ended

Dec. 30, 2023

The Company has operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. The Company’s leases generally have initial terms ranging from 3 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to early terminate the lease.

As of the periods presented, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or statement of cash flows.

The following components of lease expense are included in Selling, general, and administrative expenses on the Company’s consolidated statements of operations for the fiscal periods indicated:


	For the fiscal year ended
(dollars in thousands)	December 30, 2023		December 31, 2022		January 1, 2022
Operating lease cost	$	171,072	$	160,210	$	166,481
Variable lease cost(*)	56,089		66,400		64,410
Net lease cost	$	227,161	$	226,610	$	230,891

(*)Includes short-term leases, which are not material, and any operating lease impairment charges.

Supplemental balance sheet information related to leases was as follows:



	December 30, 2023	December 31, 2022
Weighted average remaining operating lease term (years)	5.8	4.7
Weighted average discount rate for operating leases	4.63%	3.72%

Cash paid for amounts included in the measurement of operating lease liabilities in fiscal 2023 and fiscal 2022 was $177.8 million and $172.9 million, respectively.

Operating lease assets obtained in exchange for operating lease liabilities in fiscal 2023 and fiscal 2022 were $184.6 million and $144.9 million, respectively. Operating lease assets obtained primarily consist of new or modified leases. In December 2023, the Company determined that it was reasonably certain to exercise the lease renewal options associated with the Braselton distribution center. As a result, the Company remeasured the operating lease to include the impact of renewal lease options, which increased both the operation lease liability and operating lease assets by approximately $21.5 million.

As of December 30, 2023, the maturities of lease liabilities were as follows:


(dollars in thousands)	Operating leases
2024	$	151,446
2025	140,412
2026	103,389
2027	75,562
2028	55,867
After 2028	155,003
Total lease payments	$	681,679
Less: Interest	(97,500)
Present value of lease liabilities(*)	$	584,179

(*)As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments.

As of December 30, 2023, the minimum rental commitments for additional operating lease contracts, primarily for retail stores, that have not yet commenced are $15.5 million. These operating leases will commence in fiscal year 2024 with lease terms of 10 years