Academy Sports & Outdoors, Inc.ASO

Academy Sports & Outdoors, Inc. Leases Disclosure

10-KFiled Mar 20, 20253 min read
Leases
With the exception of two retail stores which we own, we lease all of our retail stores, distribution centers and corporate offices. Our leases primarily relate to building leases, which generally include options to renew at our sole discretion for five years or more. We regularly extend options for our building leases, which constitutes a lease modification and such events require a re-measurement of the lease liability at current discount rates. The life of leasehold improvement assets are limited by the expected lease term. Additionally, we have certain agreements for equipment rentals, which are typically 12 months or less in duration. As of February 1, 2025, all of our leases are classified as operating leases. In addition, in certain situations, we may sublease real estate to third parties. Our sublease portfolio consists mainly of former store locations for which we are still under lease and existing store leases in which we have excess or unused space.

During the fourth quarter of 2024, we closed on a sale-leaseback agreement involving a store property in Cypress, Texas. We determined that the transaction met the accounting criteria for sale-leaseback treatment and we recognized a net gain of approximately $7.1 million in Selling, General, and Administrative expenses on the Consolidated Statements of Income.
The components of lease expense and sublease income included in SG&A expenses and cost of goods sold on our statement of income is as follows (amounts in thousands):
Fiscal Year Ended
February 1, 2025February 3, 2024January 28, 2023
Operating lease expense$222,709 $214,672 $201,398 
Short-term lease expense— — — 
Variable lease expense10,472 10,405 8,398 
Sublease income(498)(463)(442)
Net lease expense$232,683 $224,614 $209,354 

Information about our operating leases is as follows (dollar amounts in thousands):
Fiscal Year Ended
February 1, 2025February 3, 2024January 28, 2023
Right-of-use assets obtained in exchange for new operating lease liabilities$214,747$134,181$116,652 
Cash paid for amounts included in the measurement of operating lease liabilities$224,942$213,860$204,159 
February 1, 2025February 3, 2024
Weighted-average remaining lease term in years9.69.5
Weighted-average incremental borrowing rate8.6 %8.9 %

As most of our leases do not provide an implicit rate of interest, we use our incremental borrowing rate, which is based on the market lending rates for companies with comparable credit ratings, to determine the present value of lease payments on lease commencement or remeasurement.

The remaining maturities of lease liabilities by fiscal year as of February 1, 2025 are as follows (amounts in thousands):
2025$214,198 
2026226,215 
2027212,327 
2028194,668 
2029177,240 
After 2029820,640 
Total lease payments (1)
1,845,288 
Less: Interest(544,413)
Present value of lease liabilities$1,300,875 
(1) Minimum lease payments have not been reduced by sublease rentals of $2.0 million due in the future under non-cancelable subleases. The Company has entered into operating leases related to future store locations for which we have not yet taken possession of the location. As of February 1, 2025, the future minimum lease payments on these leases approximated $274.0 million.
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About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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