LEASES

12 Months Ended

Dec. 28, 2024

NOTE 10. LEASES

The Company leases retail stores and other facilities, vehicles, and equipment under operating lease agreements. Facility leases typically are for a fixed non-cancellable term with one or more renewal options. In addition to rent payments, the Company is required to pay certain variable lease costs such as real estate taxes, insurance and common-area maintenance on most of the facility leases. For leases beginning in 2019, the Company accounts for lease components (e.g., fixed payments including rent) and non-lease components (e.g., real estate taxes, insurance costs and common-area maintenance costs) as a single lease component. Certain leases contain provisions for additional rent to be paid if sales exceed a specified amount, though such payments have been immaterial during the periods presented and are recognized as variable lease cost. The Company subleases certain real estate to third-parties, consisting mainly of operating leases for retail stores.

The components of lease expense were as follows:


(In millions)	2024			2023			2022
Finance lease cost:
Amortization of right-of-use assets	$	10		$	10		$	14
Interest on lease liabilities		2			2			2
Operating lease cost		310			325			334
Short-term lease cost		5			9			6
Variable lease cost		98			94			94
Sublease income		(1	)		(1	)		(2	)
Total lease cost	$	424		$	439		$	448

Supplemental cash flow information related to leases was as follows:


(In millions)	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	2	$	2	$	2
Operating cash flows from operating leases		343		354		370
Financing cash flows from finance leases		11		15		18
Right-of-use assets obtained in exchange for new finance lease liabilities		9		7		4
Right-of-use assets obtained in exchange for new operating lease liabilities		250		375		228

Supplemental balance sheets information related to leases was as follows:


	December 28,			December 30,
(In millions, except lease term and discount rate)	2024			2023
Property and equipment, net	$	23		$	25
Operating lease right-of-use assets		954			983
Accrued expenses and other current liabilities		264			273
Short-term borrowings and current maturities of long-term debt		9			9
Long-term debt, net of current maturities		19			21
Operating lease liabilities, net of current portion		779			789
Weighted-average remaining lease term – finance leases	3			4
Weighted-average remaining lease term – operating leases	4			5
Weighted-average discount rate – finance leases		5.3	%		5.0	%
Weighted-average discount rate – operating leases		6.8	%		6.9	%

Maturities of lease liabilities as of December 28, 2024 were as follows:


	December 28, 2024
	Operating			Finance
(In millions)	Leases(1)			Leases(2)
2025	$	326		$	10
2026		284			9
2027		226			7
2028		160			3
2029		101			1
Thereafter		127			1
		1,224			31
Less imputed interest		(181	)		(3	)
Total	$	1,043		$	28

Reported as of December 28, 2024
Accrued expenses and other current liabilities	$	264		$	—
Short-term borrowings and current maturities of long-term debt		—			9
Long-term debt, net of current maturities		—			19
Operating lease liabilities, net of current portion		779			—
Total	$	1,043		$	28

(1)

Operating lease payments include $1 million related to options to extend lease terms that are reasonably certain of being exercised.

(2)

Finance lease payments include $1 million related to options to extend lease terms that are reasonably certain of being exercised. There were no legally binding minimum lease payments for leases signed but not yet commenced.