Leases

12 Months Ended

Apr. 24, 2021

LeasesIn February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842), requiring lessees to record substantially all operating leases on their balance sheet. Under this standard, the lessee is required to record an asset for the right to use the underlying asset for the lease term and a corresponding liability for the contractual lease payments. We adopted this standard in the first quarter of fiscal 2020 using a modified retrospective approach.

The Company leases real estate for retail stores, distribution centers, warehouses, plants, showrooms and office space. We also have equipment leases for tractors/trailers, IT and office equipment, and vehicles. 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 the economic benefits from the use of that identified asset. Most of our real estate leases include options to renew or terminate early. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.

Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our right of use ("ROU") asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S. Treasury borrowing rates. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. Some of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability.

COVID-19 Impact

In response to the COVID-19 global pandemic, beginning in April of fiscal 2020, we secured rent relief from several of our lessors, most often in the form of the deferral of rent payments for one or more months. Under these agreements, certain rent payments were deferred without penalty and are to be paid back over varying periods. In accordance with FASB Staff Q&A - Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Staff Q&A") issued in April 2020, we elected to account for lease deferrals resulting directly from COVID-19 as if the enforceable rights and obligations for the deferrals existed in the respective contracts at lease inception and as such we did not account for the deferrals as lease modifications. Guidance from the FASB Staff Q&A provided methods to account for such rent deferrals which included the option to treat the lease as if no changes to the lease contract were made or to treat the deferred payments as variable lease payments. The FASB Staff Q&A allowed entities to select the most practical approach and did not require the same approach be applied consistently to all leases. For the majority of our leases, we elected to account for the deferrals as if no changes to the lease contract were made and continued to recognize lease expense, on a straight-line basis, during the deferral period. As of April 24, 2021, we have paid back the majority of our deferred rent.

Supplemental balance sheet information pertaining to our leases is as follows:


(Amounts in thousands)	4/24/2021		4/25/2020
Operating leases
ROU assets	$	343,207	$	318,634
Lease liabilities, short-term	67,493		64,363
Lease liabilities, long-term	294,550		270,162
Financing leases
ROU assets	$	593	$	13
Lease liabilities, short-term	121		13
Lease liabilities, long-term	473		—

The ROU assets by segment are as follows:


(Amounts in thousands)	4/24/2021		4/25/2020
Wholesale	$	76,899	$	69,665
Retail	253,910		236,719
Corporate & Other	12,991		12,263
Total ROU assets	$	343,800	$	318,647

The components of lease cost are as follows:


	Fiscal Year Ended (1)
	(52 weeks)		(52 weeks)
(Amounts in thousands)	4/24/2021		4/25/2020
Operating lease cost	$	79,072	$	76,223
Financing lease cost	53		166
Short-term lease cost	545		248
Variable lease cost (2)	(245)		(40)
Less: Sublease income	(1,546)		(2,504)
Total lease cost	$	77,879	$	74,093

(1)Rental expense for fiscal year ended 4/27/2019 was $77.2 million.

(2)Includes deferred payments on select leases in accordance with the FASB Staff Q&A.

The following tables present supplemental lease disclosures:


	Fiscal Year Ended
	(52 weeks)				(52 weeks)
	4/24/2021				4/25/2020
(Amounts in thousands)	Operating Leases		Financing Leases		Operating Leases		Financing Leases
Cash paid for amounts included in the measurement of lease liabilities	$	79,707	$	53	$	77,176	$	165
Lease liabilities arising from new ROU assets	93,399		631		72,061		—


	4/24/2021				4/25/2020
(Amounts in thousands)	Operating Leases		Financing Leases		Operating Leases		Financing Leases
Weighted-average remaining lease term (years)	6.8		4.8		7.0		0.3
Weighted-average discount rate	3.3	%	1.7	%	3.9	%	3.9	%

The following table presents our maturity of lease liabilities:


	4/24/2021
(Amounts in thousands)	Operating Leases (1)		Financing Leases
Within one year	$	78,079	$	130
After one year and within two years	68,593		130
After two years and within three years	59,561		130
After three years and within four years	48,304		130
After four years and within five years	38,122		98
After five years	110,735		—
Total lease payments	403,394		618
Less: Interest	41,351		24
Total lease obligations	$	362,043	$	594

(1)Excludes approximately $29.7 million in future lease payments for various operating leases commencing in a future period

Leases