Leases

12 Months Ended

Sep. 02, 2023

Leases [Abstract]

Leases

LEASES

The Company’s lease portfolio includes certain real estate (customer fulfillment centers, regional inventory centers, warehouses and manufacturing locations), automobiles and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Operating leases are recorded on the balance sheet with operating lease assets representing the right to use the underlying asset for the lease term and operating lease liabilities representing the obligation to make lease payments arising from the lease. For real estate leases, the Company has elected the practical expedient which allows lease components and non-lease components, such as common area maintenance, to be grouped as a single lease component. The Company has also elected the practical expedient which allows leases with an initial term of 12 months or less to be excluded from the balance sheet.

The Company does not guarantee any residual value in its lease agreements, there are no material restrictions or covenants imposed by lease arrangements, and there are no lease transactions with related parties. Real estate leases typically include one or more options to extend the lease. The Company regularly evaluates the renewal options, and when it is reasonably certain of exercise, the Company includes the renewal period in its lease term. The automobile leases contain variable lease payments based on inception and subsequent interest rate fluctuations. When readily determinable, the Company uses the interest rate implicit in its leases to discount lease payments. When the implicit rate is not readily determinable, as is the case with substantially all of the real estate leases, the Company utilizes the incremental borrowing rate. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The rate for each lease was determined using primarily the Company’s credit spread, the lease term and currency.

The components of lease cost for fiscal years 2023 and 2022 were as follows:

	For the Fiscal Years Ended
	September 2, 2023		September 3, 2022
Operating lease cost	$	22,935	$	19,995
Variable lease cost (benefit)	339		(355)
Short-term lease cost	3,236		4,496
Finance lease cost:
Amortization of leased assets	957		1,265
Interest on leased liabilities	18		48
Total Lease Cost	$	27,485	$	25,449

Supplemental balance sheet information relating to operating and finance leases is as follows:

	Classification	September 2, 2023		September 3, 2022
Assets
Operating lease assets	Operating lease assets	$	65,909	$	64,780
Finance lease assets (1)	Property, plant and equipment, net	473		1,118
Total leased assets		$	66,382	$	65,898
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	21,168	$	18,560
Finance	Current portion of debt including obligations under finance leases	249		996
Noncurrent
Operating	Noncurrent operating lease liabilities	45,924		47,616
Finance	Long-term debt including obligations under finance leases	226		184
Total lease liabilities		$	67,567	$	67,356

(1)Finance lease assets are net of accumulated amortization of $2,952 and $3,447 as of September 2, 2023 and September 3, 2022, respectively.

	September 2, 2023		September 3, 2022
Weighted-average remaining lease term (in years)
Operating Leases	4.0		4.7
Finance Leases	2.1		1.2
Weighted-average discount rate
Operating Leases	3.8	%	3.1	%
Finance Leases	4.5	%	2.7	%

The following table sets forth supplemental cash flow information related to operating and finance leases:

	For the Fiscal Years Ended
	September 2, 2023		September 3, 2022
Operating Cash Outflows from Operating Leases	$	22,779	$	19,535
Operating Cash Outflows from Finance Leases	18		48
Financing Cash Outflows from Finance Leases	1,019		1,305
Leased assets obtained in exchange for new lease liabilities:
Operating Leases	$	21,060	$	33,608
Finance Leases	317		17

As of September 2, 2023, future lease payments were as follows:

Fiscal Year (1)	Operating Leases		Finance Leases		Total
2024	$	23,422	$	275	$	23,697
2025	19,093		126		19,219
2026	12,555		111		12,666
2027	8,226		—		8,226
2028	4,133		—		4,133
Thereafter	5,522		—		5,522
Total Lease Payments	72,951		512		73,463
Less: Imputed Interest	5,859		37		5,896
Present Value of Lease Liabilities (2)	$	67,092	$	475	$	67,567

(1)Future lease payments by fiscal year are based on contractual lease obligations.

(2)Includes the current portion of $21,168 for operating leases and $249 for finance leases.

As of September 2, 2023, the Company’s future lease obligations which had not yet commenced were immaterial. The Company has various arrangements for certain property it owns under which it is the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is immaterial.

Leases

LEASES

The Company’s lease portfolio includes certain real estate (customer fulfillment centers, regional inventory centers, warehouses and manufacturing locations), automobiles and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Operating leases are recorded on the balance sheet with operating lease assets representing the right to use the underlying asset for the lease term and operating lease liabilities representing the obligation to make lease payments arising from the lease. For real estate leases, the Company has elected the practical expedient which allows lease components and non-lease components, such as common area maintenance, to be grouped as a single lease component. The Company has also elected the practical expedient which allows leases with an initial term of 12 months or less to be excluded from the balance sheet.

The Company does not guarantee any residual value in its lease agreements, there are no material restrictions or covenants imposed by lease arrangements, and there are no lease transactions with related parties. Real estate leases typically include one or more options to extend the lease. The Company regularly evaluates the renewal options, and when it is reasonably certain of exercise, the Company includes the renewal period in its lease term. The automobile leases contain variable lease payments based on inception and subsequent interest rate fluctuations. When readily determinable, the Company uses the interest rate implicit in its leases to discount lease payments. When the implicit rate is not readily determinable, as is the case with substantially all of the real estate leases, the Company utilizes the incremental borrowing rate. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The rate for each lease was determined using primarily the Company’s credit spread, the lease term and currency.

The components of lease cost for fiscal years 2023 and 2022 were as follows:

	For the Fiscal Years Ended
	September 2, 2023		September 3, 2022
Operating lease cost	$	22,935	$	19,995
Variable lease cost (benefit)	339		(355)
Short-term lease cost	3,236		4,496
Finance lease cost:
Amortization of leased assets	957		1,265
Interest on leased liabilities	18		48
Total Lease Cost	$	27,485	$	25,449

Supplemental balance sheet information relating to operating and finance leases is as follows:

	Classification	September 2, 2023		September 3, 2022
Assets
Operating lease assets	Operating lease assets	$	65,909	$	64,780
Finance lease assets (1)	Property, plant and equipment, net	473		1,118
Total leased assets		$	66,382	$	65,898
Liabilities
Current
Operating	Current portion of operating lease liabilities	$	21,168	$	18,560
Finance	Current portion of debt including obligations under finance leases	249		996
Noncurrent
Operating	Noncurrent operating lease liabilities	45,924		47,616
Finance	Long-term debt including obligations under finance leases	226		184
Total lease liabilities		$	67,567	$	67,356

(1)Finance lease assets are net of accumulated amortization of $2,952 and $3,447 as of September 2, 2023 and September 3, 2022, respectively.

	September 2, 2023		September 3, 2022
Weighted-average remaining lease term (in years)
Operating Leases	4.0		4.7
Finance Leases	2.1		1.2
Weighted-average discount rate
Operating Leases	3.8	%	3.1	%
Finance Leases	4.5	%	2.7	%

The following table sets forth supplemental cash flow information related to operating and finance leases:

	For the Fiscal Years Ended
	September 2, 2023		September 3, 2022
Operating Cash Outflows from Operating Leases	$	22,779	$	19,535
Operating Cash Outflows from Finance Leases	18		48
Financing Cash Outflows from Finance Leases	1,019		1,305
Leased assets obtained in exchange for new lease liabilities:
Operating Leases	$	21,060	$	33,608
Finance Leases	317		17

As of September 2, 2023, future lease payments were as follows:

Fiscal Year (1)	Operating Leases		Finance Leases		Total
2024	$	23,422	$	275	$	23,697
2025	19,093		126		19,219
2026	12,555		111		12,666
2027	8,226		—		8,226
2028	4,133		—		4,133
Thereafter	5,522		—		5,522
Total Lease Payments	72,951		512		73,463
Less: Imputed Interest	5,859		37		5,896
Present Value of Lease Liabilities (2)	$	67,092	$	475	$	67,567

(1)Future lease payments by fiscal year are based on contractual lease obligations.

(2)Includes the current portion of $21,168 for operating leases and $249 for finance leases.

As of September 2, 2023, the Company’s future lease obligations which had not yet commenced were immaterial. The Company has various arrangements for certain property it owns under which it is the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is immaterial.