DULUTH HOLDINGS INC. Leases Disclosure
Based on the criteria set forth in ASC Topic 842, Leases (“ASC 842”), the Company recognizes ROU assets and lease liabilities related to leases on the Company’s Consolidated Balance Sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease. At any given time during the lease term, the lease liability represents the present value of the remaining lease payments and the ROU asset is measured at the amount of the lease liability, adjusted for pre-paid rent, unamortized initial direct costs and the remaining balance of lease incentives received. Both the lease ROU asset and liability are reduced to zero at the end of the lease.
The Company leases retail space under non-cancelable lease agreements, which expire on various dates through 2041. Substantially all of these arrangements are store leases. Store leases generally have initial lease terms ranging from five years to fifteen years with renewal options and rent escalation provisions. At the commencement of a lease, the Company includes only the initial lease term as the option to extend is not reasonably certain. The Company does not record leases with a lease term of 12 months or less on the Company’s Consolidated Balance Sheets.
When calculating the lease liability on a discounted basis, the Company applies its estimated discount rate. The Company bases this discount rate on a collateralized interest rate as well as publicly available data for instruments with similar characteristics.
In addition to rent payments, leases for retail space contain payments for real estate taxes, insurance costs, common area maintenance, and utilities that are not fixed. The Company accounts for these costs as variable lease expenses and does not include such costs as a lease component.
The expense components of the Company’s leases reflected on the Company’s Consolidated Statement of Operations were as follows:
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| Consolidated Statement of Operations |
| February 2, 2025 |
| January 28, 2024 | ||
(in thousands) |
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Finance lease expense |
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Amortization of right-of-use |
| Selling, general and administrative expenses |
| $ | 3,097 |
| $ | 3,361 |
Interest on lease liabilities |
| Interest expense |
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| 1,564 |
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| 1,709 |
Total finance lease expense |
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| $ | 4,661 |
| $ | 5,070 |
Operating lease expense |
| Selling, general and administrative expenses |
| $ | 22,255 |
| $ | 20,267 |
Amortization of build-to-suit leases capital contribution |
| Selling, general and administrative expenses |
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| 1,284 |
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| 1,284 |
Variable lease expense |
| Selling, general and administrative expenses |
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| 11,961 |
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| 10,927 |
Total lease expense |
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| $ | 40,161 |
| $ | 37,548 |
Other information related to leases were as follows:
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| February 2, 2025 |
| January 28, 2024 | ||
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Cash paid for amounts included in the measurement of lease liabilities: |
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Financing cash flows from finance leases |
| $ | 2,721 |
| $ | 2,842 |
Operating cash flows from finance leases |
| $ | 1,564 |
| $ | 1,709 |
Operating cash flows from operating leases |
| $ | 21,030 |
| $ | 20,842 |
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Right-of-use assets obtained in exchange for lease liabilities: |
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Operating leases |
| $ | 4,748 |
| $ | 5,468 |
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Weighted-average remaining lease term (in years): |
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Finance leases |
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| 10 |
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| 10 |
Operating leases |
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| 7 |
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| 7 |
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Weighted-average discount rate: |
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Finance leases |
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| 4.5% |
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| 4.5% |
Operating leases |
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| 4.4% |
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| 4.2% |
Future minimum lease payments under the non-cancellable leases are as follows as of February 2, 2025:
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| Finance |
| Operating | |
Fiscal year |
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| Leases |
| Leases | |
(in thousands) |
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2025 |
| $ | 3,971 |
| $ | 19,720 |
2026 |
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| 3,993 |
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| 19,419 |
2027 |
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| 3,993 |
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| 18,179 |
2028 |
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| 4,017 |
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| 16,384 |
2029 |
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| 4,217 |
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| 13,898 |
Thereafter |
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| 20,997 |
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| 33,297 |
Total future minimum lease payments |
| $ | 41,188 |
| $ | 120,897 |
Less - Discount |
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| 8,026 |
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| 16,141 |
Lease liability |
| $ | 33,162 |
| $ | 104,756 |
Total rent expense under non-cancellable leases was $21.9 million and $21.8 million for fiscal 2024 and fiscal 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
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| 2025 | Mar 24, 2025 | Showing above |
| 2023 | Mar 17, 2023 | |
| 2022 | Mar 25, 2022 | |
| 2018 | Mar 21, 2018 | |
| 2016 | Apr 8, 2016 | |
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.