| Leases |
Leases The Company has entered into various lease agreements. For the years ended January 1, 2024 and January 2, 2023, rent expense was approximately $16.5 million and $16.2 million, respectively. The Company’s lease agreements expire on various dates through 2032 and have renewal options.
On January 1, 2022, the Company adopted ASU 2016-02. Results for reporting periods beginning on or after January 1, 2022 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 “Leases”, the accounting standard then in effect.
Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on the consolidated balance sheets:
|
|
|
|
|
|
| (in thousands) |
Adjustment as of January 2, 2022 |
| Prepaid expenses |
$ |
(773) |
|
| Operating right-of-use asset, net |
57,385 |
|
| Finance right-of-use asset, net |
855 |
|
| Deferred rent |
(900) |
|
| Short-term operating lease liability |
9,457 |
|
| Short-term finance lease liability |
143 |
|
| Long-term operating lease liability |
49,149 |
|
| Long-term finance lease liability |
712 |
|
A summary of finance and operating lease right-of-use assets and liabilities as of January 1, 2024 and January 2, 2023 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Classification |
|
January 1, 2024 |
|
January 2, 2023 |
| Operating Leases |
Operating right-of-use asset, net |
|
$ |
46,052 |
|
|
$ |
45,741 |
|
| Finance Leases |
Property and equipment, net |
|
1,116 |
|
|
852 |
|
| Total right-of-use assets |
|
|
$ |
47,168
|
|
|
$ |
46,593
|
|
|
|
|
|
|
|
| Operating leases: |
|
|
|
|
|
|
Short-term operating lease liability |
|
$ |
10,111 |
|
|
$ |
9,924 |
|
|
Long-term operating lease liability |
|
44,631 |
|
|
40,748 |
|
| Finance leases: |
|
|
|
|
|
|
Short-term borrowings, including finance |
|
226 |
|
|
150 |
|
|
Long-term borrowings, including finance |
|
1,350 |
|
|
783 |
|
| Total lease liabilities |
|
|
$ |
56,318
|
|
|
$ |
51,605
|
|
The components of lease expense for the periods shown is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Classification |
|
Year Ended January 1, 2024 |
|
Year Ended
January 2, 2023 |
| Operating lease cost |
Occupancy and related expenses |
|
$ |
13,051 |
|
|
$ |
12,969 |
|
|
Pre-opening costs |
|
93 |
|
|
— |
|
|
Store closure costs |
|
75 |
|
|
— |
|
|
|
|
|
|
|
| Lease asset impairment |
Asset impairment |
|
2,617 |
|
|
3,846 |
|
|
|
|
|
|
|
| Finance lease costs: |
|
|
|
|
|
| Amortization of right-of use assets |
Depreciation and amortization expense |
|
282 |
|
|
258 |
|
| Interest on lease liabilities |
Interest expense |
|
85 |
|
|
63 |
|
| Less: Sublease income |
Occupancy and related expenses |
|
(204) |
|
|
(194) |
|
| Total lease cost |
|
|
$ |
15,999
|
|
|
$ |
16,942
|
|
|
|
|
|
|
|
The maturity of the Company's operating and finance lease liabilities as of January 1, 2024 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Operating Leases |
|
Finance Leases |
| 2024 |
13,828 |
|
|
$ |
362 |
|
| 2025 |
13,270 |
|
|
348 |
|
| 2026 |
11,523 |
|
|
319 |
|
| 2027 |
9,881 |
|
|
287 |
|
| 2028 |
8,245 |
|
|
263 |
|
| 2029 and thereafter |
9,884 |
|
|
554 |
|
| Total undiscounted lease payments |
66,631 |
|
|
2,133 |
|
| Less: present value adjustment |
(11,889) |
|
|
(557) |
|
| Total net lease liabilities |
$ |
54,742 |
|
|
$ |
1,576 |
|
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates.
A summary of lease terms and discount rates for finance and operating leases is as follows:
|
|
|
|
|
|
|
Year Ended January 1, 2024 |
|
| Weighted-average remaining lease term (in years): |
|
| Operating Leases |
5.5 |
| Finance Leases |
6.6 |
| Weighted-average discount rate: |
|
| Operating Leases |
7.6 |
% |
| Finance Leases |
9.6 |
% |
|
| Leases |
Leases The Company has entered into various lease agreements. For the years ended January 1, 2024 and January 2, 2023, rent expense was approximately $16.5 million and $16.2 million, respectively. The Company’s lease agreements expire on various dates through 2032 and have renewal options.
On January 1, 2022, the Company adopted ASU 2016-02. Results for reporting periods beginning on or after January 1, 2022 are presented under ASC 842. Prior period amounts were not revised and continue to be reported in accordance with ASC Topic 840 “Leases”, the accounting standard then in effect.
Upon transition, on January 1, 2022, the Company recorded the following increases (decreases) to the respective line items on the consolidated balance sheets:
|
|
|
|
|
|
| (in thousands) |
Adjustment as of January 2, 2022 |
| Prepaid expenses |
$ |
(773) |
|
| Operating right-of-use asset, net |
57,385 |
|
| Finance right-of-use asset, net |
855 |
|
| Deferred rent |
(900) |
|
| Short-term operating lease liability |
9,457 |
|
| Short-term finance lease liability |
143 |
|
| Long-term operating lease liability |
49,149 |
|
| Long-term finance lease liability |
712 |
|
A summary of finance and operating lease right-of-use assets and liabilities as of January 1, 2024 and January 2, 2023 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Classification |
|
January 1, 2024 |
|
January 2, 2023 |
| Operating Leases |
Operating right-of-use asset, net |
|
$ |
46,052 |
|
|
$ |
45,741 |
|
| Finance Leases |
Property and equipment, net |
|
1,116 |
|
|
852 |
|
| Total right-of-use assets |
|
|
$ |
47,168
|
|
|
$ |
46,593
|
|
|
|
|
|
|
|
| Operating leases: |
|
|
|
|
|
|
Short-term operating lease liability |
|
$ |
10,111 |
|
|
$ |
9,924 |
|
|
Long-term operating lease liability |
|
44,631 |
|
|
40,748 |
|
| Finance leases: |
|
|
|
|
|
|
Short-term borrowings, including finance |
|
226 |
|
|
150 |
|
|
Long-term borrowings, including finance |
|
1,350 |
|
|
783 |
|
| Total lease liabilities |
|
|
$ |
56,318
|
|
|
$ |
51,605
|
|
The components of lease expense for the periods shown is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Classification |
|
Year Ended January 1, 2024 |
|
Year Ended
January 2, 2023 |
| Operating lease cost |
Occupancy and related expenses |
|
$ |
13,051 |
|
|
$ |
12,969 |
|
|
Pre-opening costs |
|
93 |
|
|
— |
|
|
Store closure costs |
|
75 |
|
|
— |
|
|
|
|
|
|
|
| Lease asset impairment |
Asset impairment |
|
2,617 |
|
|
3,846 |
|
|
|
|
|
|
|
| Finance lease costs: |
|
|
|
|
|
| Amortization of right-of use assets |
Depreciation and amortization expense |
|
282 |
|
|
258 |
|
| Interest on lease liabilities |
Interest expense |
|
85 |
|
|
63 |
|
| Less: Sublease income |
Occupancy and related expenses |
|
(204) |
|
|
(194) |
|
| Total lease cost |
|
|
$ |
15,999
|
|
|
$ |
16,942
|
|
|
|
|
|
|
|
The maturity of the Company's operating and finance lease liabilities as of January 1, 2024 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
Operating Leases |
|
Finance Leases |
| 2024 |
13,828 |
|
|
$ |
362 |
|
| 2025 |
13,270 |
|
|
348 |
|
| 2026 |
11,523 |
|
|
319 |
|
| 2027 |
9,881 |
|
|
287 |
|
| 2028 |
8,245 |
|
|
263 |
|
| 2029 and thereafter |
9,884 |
|
|
554 |
|
| Total undiscounted lease payments |
66,631 |
|
|
2,133 |
|
| Less: present value adjustment |
(11,889) |
|
|
(557) |
|
| Total net lease liabilities |
$ |
54,742 |
|
|
$ |
1,576 |
|
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates.
A summary of lease terms and discount rates for finance and operating leases is as follows:
|
|
|
|
|
|
|
Year Ended January 1, 2024 |
|
| Weighted-average remaining lease term (in years): |
|
| Operating Leases |
5.5 |
| Finance Leases |
6.6 |
| Weighted-average discount rate: |
|
| Operating Leases |
7.6 |
% |
| Finance Leases |
9.6 |
% |
|