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Note 6 - Leases | 12 Months Ended
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Jun. 30, 2025
Notes to Financial Statements |
Lessee, Leases [Text Block] |
(6) | Leases
We recognize leases on our consolidated balance sheets as a ROU asset and a lease liability. We have operating leases for many of our design centers that expire at various dates through fiscal 2040. We also lease certain tangible assets, including computer equipment and vehicles with initial lease terms ranging from two to five years. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all of the economic benefits from the use of that identified asset. For purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by computing the rate of interest that we would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) at an amount equal to the total lease payments and (iv) in a similar economic environment. The Company's lease terms and discount rates are as follows:
|  | June 30, |
|  | 2025 |  |  | 2024 |
Weighted average remaining lease term (in years) |  |  |  |  |  |  |  |
Operating leases |  |  | 5.6 |  |  |  | 5.6 |
Financing leases |  |  | 1.8 |  |  |  | 2.8 |
Weighted average discount rate |  |  |  |  |  |  |  |
Operating leases |  |  | 6.0 | % |  |  | 5.8 | %
Financing leases |  |  | 5.6 | % |  |  | 5.6 | %
The following table discloses the location and amount of our operating and financing lease assets and liabilities within our consolidated balance sheets (in thousands):
|  |  | June 30, |
| Consolidated Balance Sheet Location |  | 2025 |  |  | 2024 |
Assets |  |  |  |  |  |  |  |  |
Operating leases | Operating lease right-of-use assets (non-current) |  | $ | 109,173 |  |  | $ | 114,242 |
Financing leases | Property, plant and equipment, net |  |  | 630 |  |  |  | 930 |
Total lease assets |  | $ | 109,803 |  |  | $ | 115,172 |
Liabilities |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |
Operating leases | Current operating lease liabilities |  | $ | 27,403 |  |  | $ | 27,387 |
Financing leases | Other current liabilities |  |  | 371 |  |  |  | 336 |
Noncurrent: |  |  |  |  |  |  |  |  |
Operating leases | Operating lease liabilities, long-term |  |  | 96,263 |  |  |  | 100,897 |
Financing leases | Other long-term liabilities |  |  | 319 |  |  |  | 658 |
Total lease liabilities |  | $ | 124,356 |  |  | $ | 129,278 |
The ROU assets by segment are as follows (in thousands):
|  | June 30, |
|  | 2025 |  |  | 2024 |
Retail |  | $ | 109,173 |  |  | $ | 114,242 |
Wholesale |  |  | 630 |  |  |  | 930 |
Total ROU assets |  | $ | 109,803 |  |  | $ | 115,172 |
The following table discloses the location and amount of our operating and financing lease costs within our consolidated statements of comprehensive income (in thousands):
|  |  | Fiscal Year Ended June 30, |
| Statements of Comprehensive Income Location |  | 2025 |  |  | 2024 |
Operating lease cost(1) | SG&A expenses |  | $ | 32,748 |  |  | $ | 31,959 |
Financing lease cost |  |  |  |  |  |  |  |  |
Depreciation of property | SG&A expenses |  |  | 346 |  |  |  | 453 |
Interest on lease liabilities | Interest expense and other financing costs |  |  | 47 |  |  |  | 33 |
Short-term lease cost(2) | SG&A expenses |  |  | 216 |  |  |  | 85 |
Variable lease cost(3) | SG&A expenses |  |  | 9,983 |  |  |  | 9,710 |
Less: Sublease income | SG&A expenses |  |  | (1,636 | ) |  |  | (1,371 | )
Total lease expense |  | $ | 41,704 |  |  | $ | 40,869 |
| (1) | Lease expense for operating leases consists of both fixed and variable components. Expenses related to fixed lease payments are recognized on a straight-line basis over the lease term.
| (2) | Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and instead expensed on a straight-line basis over the lease term.
| (3) | Variable lease payments are generally expensed as incurred, where applicable, and include certain index-based changes in rent, certain non-lease components such as maintenance, real estate taxes, insurance and other services provided by the lessor, and other charges included in the lease. In addition, certain of our equipment lease agreements include variable lease payments, which are based on the usage of the underlying asset. The variable portion of payments are not included in the initial measurement of the asset or liability due to uncertainty of the payment amount and recorded as expense in the period incurred.
The following table reconciles the undiscounted future minimum lease payments (by year and in the aggregate) under noncancelable leases with terms of more than one year to the total lease liabilities recognized on the consolidated balance sheets at June 30, 2025 (in thousands):
Fiscal Year |  | Operating Leases |  |  | Financing Leases |
2026 |  | $ | 33,917 |  |  | $ | 398 |
2027 |  |  | 28,218 |  |  |  | 326 |
2028 |  |  | 24,979 |  |  |  | - |
2029 |  |  | 20,363 |  |  |  | - |
2030 |  |  | 13,677 |  |  |  | - |
Thereafter |  |  | 25,098 |  |  |  | - |
Total undiscounted future minimum lease payments |  |  | 146,252 |  |  |  | 724 |
Less: imputed interest |  |  | (22,586 | ) |  |  | (34 | )
Total present value of lease obligations(1) |  | $ | 123,666 |  |  | $ | 690 |
| (1) | We had no future commitments under short-term operating lease agreements as of June 30, 2025.
At June 30, 2025, we had one retail design center operating lease which has not yet commenced and is therefore not part of the tables above nor included in the lease ROU assets and liabilities. This lease will commence when we obtain possession of the underlying leased asset, which is expected to be during the first quarter of fiscal 2026. The operating lease is for a period of five years and has aggregate undiscounted future lease payments of $1.0 million. At June 30, 2025, we did not have any financing leases that had not commenced. Other supplemental information for our leases is as follows (in thousands):
|  | Fiscal Year Ended June 30, |
|  | 2025 |  |  | 2024 |
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 34,450 |  |  | $ | 32,981 |
Operating cash flows from financing leases |  | $ | 351 |  |  | $ | 421 |
Operating lease assets obtained in exchange for new operating lease liabilities |  | $ | 22,618 |  |  | $ | 23,690 |
Financing lease obligations obtained in exchange for new financing lease assets |  | $ | 47 |  |  | $ | 780 |
We sublease a select number of our leased locations, which generally match those of the leases we have with the lessor. At June 30, 2025, future minimum leases payments due to us under those subleases were as follows (in thousands):
|  | Sublease |
Fiscal Year |  | Income |
2026 |  | $ | 1,504 |
2027 |  |  | 1,194 |
2028 |  |  | 791 |
2029 |  |  | 772 |
2030 |  |  | 633 |
Thereafter |  |  | 1,027 |
Total future minimum sublease income |  | $ | 5,921 |

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