Leases

6 Months Ended

Jun. 30, 2020

Note 9: Leases

The Company leases its retail stores, certain distribution space, and office space. Leases generally have a term of ten to fifteen years, and contain renewal options. Assets acquired under operating leases are included in the Company’s right of use assets in the accompanying Consolidated Balance Sheet. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants. The depreciable life of assets and leasehold improvements is limited by the expected lease term.

In accordance with the FASB’s recent Staff Q&A regarding rent concessions related to the effects of the COVID-19 pandemic, the Company has elected to account for the concessions verbally agreed to by landlords that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not re-measure the related lease liabilities and right-of-use assets. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief. During the three months ended June 30, 2020, the Company recognized less than $0.1 million of negative lease expense related to rent abatement concessions. For qualifying deferrals of rental payments, the Company has recognized a non-interest bearing payable classified as a Current portion of lease liability in the Consolidated Balance Sheet in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement. The deferred rent payment balance will be reduced in future periods as amounts due are repaid. Rental payments deferred during the three-month period ending June 30, 2020 totaled $4.9 million. The majority of the repayments are expected to occur between the third quarter of 2020 and the third quarter of 2021.


Leases (in thousands)	Classification		June 30, 2020		December 31, 2019
Assets
Operating lease assets	Right of use asset	$	130,397	$	137,737
Financing lease assets	Property, plant and equipment, net of accumulated depreciation		89		113
Total leased assets		$	130,486	$	137,850

Liabilities
Current
Operating	Current portion of lease liability	$	32,270	$	26,993
Financing	Other accrued liabilities		174		162
Noncurrent
Operating	Long-term lease liability, net		122,682		131,451
Financing	Financing lease obligation, net		184		274
Total lease liabilities		$	155,310	$	158,880

		Three Months Ended
Lease cost (in thousands)	Classification		June 30, 2020		June 30, 2019
Operating lease cost	SG&A expenses	$	8,236	$	7,998
Financing lease cost
Amortization of leased assets	Depreciation and amortization		12		12
Interest on lease liabilities	Interest expense		14		19
Variable lease cost⁽¹⁾	SG&A expenses		3,507		3,333
Short term lease cost	SG&A expenses		153		218
Net lease cost		$	11,922	$	11,580


		Six Months Ended
Lease cost (in thousands)	Classification		June 30, 2020		June 30, 2019
Operating lease cost	SG&A expenses	$	16,457	$	16,010
Financing lease cost
Amortization of leased assets	Depreciation and amortization		24		24
Interest on lease liabilities	Interest expense		30		40
Variable lease cost⁽¹⁾	SG&A expenses		6,905		6,558
Short term lease cost	SG&A expenses		401		482
Net lease cost		$	23,817	$	23,114

(1)Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for the Company’s leased facilities.



	Six Months Ended
Other Information (in thousands)		June 30, 2020		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	13,205	$	17,311
Operating cash flows from financing leases	$	44	$	35
Financing cash flows from financing leases	$	122	$	(102)