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LEASES
 6 Months Ended
Jul. 04, 2020
Leases [Abstract]  
LEASES LEASES
The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments.
Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain leases agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.
As a result of the COVID-19 pandemic, the Company received lease concessions from landlords in the form of rent deferrals and rent foregiveness in the Second Quarter. The Company chose the policy election provided by the FASB in April 2020 to record rent concessions as if no modifications to leases contracts were made, and thus no changes to the ROU assets and ROU liabilities were recorded in respect to these concessions. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. As of July 4, 2020, the Company had outstanding deferred rent payments of $17.4 million, and the Company received rent foregiveness of $3.6 million in the Second Quarter.

The components of lease expense were as follows (in thousands):
Lease Cost
 
Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location
 
For the 13 Weeks Ended July 4, 2020
 
For the 13 Weeks Ended June 29, 2019
 
For the 27 Weeks Ended July 4, 2020
 
For the 26 Weeks Ended June 29, 2019
Operating lease cost(1)(2)
 
SG&A
 
$
26,303

 
$
29,385

 
$
54,509

 
$
60,244

Finance lease cost:
 
 
 
 
 
 
 
 
 
 
Amortization of ROU assets
 
SG&A
 
$
135

 
$
114

 
$
236

 
$
240

Interest on lease liabilities
 
Interest expense
 
$
7

 
$
11

 
$
18

 
$
20

Short-term lease cost
 
SG&A
 
$
138

 
$
429

 
$
339

 
$
813

Variable lease cost
 
SG&A
 
$
3,485

 
$
8,549

 
$
11,178

 
$
17,341

_______________________________________________
(1)Includes sublease income, which was immaterial.
(2)Excludes the impact of deferred or abated rent amounts
The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):
Leases
 
Condensed
Consolidated
Balance Sheets
Location
 
July 4, 2020
 
December 28, 2019
Assets
 
 
 
 
 
 
Operating
 
Operating lease ROU assets
 
$
253,884

 
$
288,166

Finance
 
Property, plant and equipment - net of accumulated depreciation of $4,284 and $4,015, respectively
 
$
5,767

 
$
5,918

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Current operating lease liabilities
 
$
67,755

 
$
68,838

Finance
 
Short-term and current portion of long-term debt
 
$
1,017

 
$
1,011

Noncurrent:
 
 
 
 
 
 
Operating
 
Long-term operating lease liabilities
 
$
270,056

 
$
288,689

Finance
 
Long-term debt
 
$
1,023

 
$
1,468


The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:
Lease Term and Discount Rate
 
July 4, 2020
 
December 28, 2019
Weighted-average remaining lease term:
 
 
 
 
Operating leases
 
6.1 years

 
6.1 years

Finance leases
 
1.7 years

 
2.3 years

Weighted-average discount rate:
 
 
 
 
Operating leases
 
14.0
%
 
13.9
%
Finance leases
 
1.2
%
 
1.2
%


Future minimum lease payments by year as of July 4, 2020 were as follows (in thousands):
Fiscal Year
 
Operating Leases (1)
 
Finance Leases
2020 (remaining)
 
$
58,270

 
$
577

2021
 
98,476

 
986

2022
 
85,490

 
493

2023
 
68,109

 
—

2024
 
49,442

 
—

2025
 
35,650

 
—

Thereafter
 
128,836

 
—

Total lease payments
 
$
524,273

 
$
2,056

Less: Interest
 
186,462

 
16

Total lease obligations
 
$
337,811

 
$
2,040


________________________________________________________________________
(1) Future minimum lease payments exclude the impact of deferred or abated rent amounts


Future minimum lease payments by year as of December 28, 2019 were as follows (in thousands):

Fiscal Year
 
Operating Leases
 
Finance Leases
2020
 
$
116,778

 
$
1,042

2021
 
94,795

 
978

2022
 
81,536

 
488

2023
 
64,582

 
—

2024
 
45,846

 
—

Thereafter
 
153,255

 
—

Total lease payments
 
$
556,792

 
$
2,508

Less: Interest
 
199,265

 
30

Finance lease obligations
 
$
357,527

 
$
2,478



Supplemental cash flow information related to leases was as follows (in thousands):
 
For the 27 Weeks Ended July 4, 2020
 
For the 26 Weeks Ended June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows from operating leases(1)
$
62,654

 
$
52,934

Operating cash flows from finance leases
18

 
20

Financing cash flows from finance leases
482

 
478

Leased assets obtained in exchange for new operating lease liabilities
19,177

 
16,939


_______________________________________________________________________________
(1) Cash flows for the 27 weeks ended July 4, 2020 exclude the impact of deferred or abated rent amounts

As of July 4, 2020, the Company did not have any material operating or finance leases that have been signed but not commenced.
LEASES LEASES
The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments.
Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain leases agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.
As a result of the COVID-19 pandemic, the Company received lease concessions from landlords in the form of rent deferrals and rent foregiveness in the Second Quarter. The Company chose the policy election provided by the FASB in April 2020 to record rent concessions as if no modifications to leases contracts were made, and thus no changes to the ROU assets and ROU liabilities were recorded in respect to these concessions. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. As of July 4, 2020, the Company had outstanding deferred rent payments of $17.4 million, and the Company received rent foregiveness of $3.6 million in the Second Quarter.

The components of lease expense were as follows (in thousands):
Lease Cost
 
Condensed Consolidated
Statements of Income (Loss)
and Comprehensive
Income (Loss) Location
 
For the 13 Weeks Ended July 4, 2020
 
For the 13 Weeks Ended June 29, 2019
 
For the 27 Weeks Ended July 4, 2020
 
For the 26 Weeks Ended June 29, 2019
Operating lease cost(1)(2)
 
SG&A
 
$
26,303

 
$
29,385

 
$
54,509

 
$
60,244

Finance lease cost:
 
 
 
 
 
 
 
 
 
 
Amortization of ROU assets
 
SG&A
 
$
135

 
$
114

 
$
236

 
$
240

Interest on lease liabilities
 
Interest expense
 
$
7

 
$
11

 
$
18

 
$
20

Short-term lease cost
 
SG&A
 
$
138

 
$
429

 
$
339

 
$
813

Variable lease cost
 
SG&A
 
$
3,485

 
$
8,549

 
$
11,178

 
$
17,341

_______________________________________________
(1)Includes sublease income, which was immaterial.
(2)Excludes the impact of deferred or abated rent amounts
The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):
Leases
 
Condensed
Consolidated
Balance Sheets
Location
 
July 4, 2020
 
December 28, 2019
Assets
 
 
 
 
 
 
Operating
 
Operating lease ROU assets
 
$
253,884

 
$
288,166

Finance
 
Property, plant and equipment - net of accumulated depreciation of $4,284 and $4,015, respectively
 
$
5,767

 
$
5,918

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Current operating lease liabilities
 
$
67,755

 
$
68,838

Finance
 
Short-term and current portion of long-term debt
 
$
1,017

 
$
1,011

Noncurrent:
 
 
 
 
 
 
Operating
 
Long-term operating lease liabilities
 
$
270,056

 
$
288,689

Finance
 
Long-term debt
 
$
1,023

 
$
1,468


The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:
Lease Term and Discount Rate
 
July 4, 2020
 
December 28, 2019
Weighted-average remaining lease term:
 
 
 
 
Operating leases
 
6.1 years

 
6.1 years

Finance leases
 
1.7 years

 
2.3 years

Weighted-average discount rate:
 
 
 
 
Operating leases
 
14.0
%
 
13.9
%
Finance leases
 
1.2
%
 
1.2
%


Future minimum lease payments by year as of July 4, 2020 were as follows (in thousands):
Fiscal Year
 
Operating Leases (1)
 
Finance Leases
2020 (remaining)
 
$
58,270

 
$
577

2021
 
98,476

 
986

2022
 
85,490

 
493

2023
 
68,109

 
—

2024
 
49,442

 
—

2025
 
35,650

 
—

Thereafter
 
128,836

 
—

Total lease payments
 
$
524,273

 
$
2,056

Less: Interest
 
186,462

 
16

Total lease obligations
 
$
337,811

 
$
2,040


________________________________________________________________________
(1) Future minimum lease payments exclude the impact of deferred or abated rent amounts


Future minimum lease payments by year as of December 28, 2019 were as follows (in thousands):

Fiscal Year
 
Operating Leases
 
Finance Leases
2020
 
$
116,778

 
$
1,042

2021
 
94,795

 
978

2022
 
81,536

 
488

2023
 
64,582

 
—

2024
 
45,846

 
—

Thereafter
 
153,255

 
—

Total lease payments
 
$
556,792

 
$
2,508

Less: Interest
 
199,265

 
30

Finance lease obligations
 
$
357,527

 
$
2,478



Supplemental cash flow information related to leases was as follows (in thousands):
 
For the 27 Weeks Ended July 4, 2020
 
For the 26 Weeks Ended June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows from operating leases(1)
$
62,654

 
$
52,934

Operating cash flows from finance leases
18

 
20

Financing cash flows from finance leases
482

 
478

Leased assets obtained in exchange for new operating lease liabilities
19,177

 
16,939


_______________________________________________________________________________
(1) Cash flows for the 27 weeks ended July 4, 2020 exclude the impact of deferred or abated rent amounts

As of July 4, 2020, the Company did not have any material operating or finance leases that have been signed but not commenced.