Leases
The Company has leases for retail stores, showrooms, manufacturing facilities, warehouses and vehicles, which expire at various dates through 2042. Certain lease agreements include contingent rental payments based on per unit usage over a contractual amount and others include rental payments adjusted periodically for inflationary indexes.
The Company's lease costs recognized in the Consolidated Statements of Comprehensive Income consist of the following:
| | | | | | | | | | | |
| Year Ended | | Year Ended |
| (In millions) | May 31, 2025 | | June 1, 2024 |
| Operating lease costs | $ | 90.7 | | | $ | 94.1 | |
| Short-term lease costs | 5.2 | | | 7.1 | |
| Variable lease costs | 16.7 | | | 15.9 | |
| Total | $ | 112.6 | | | $ | 117.1 | |
The Company has financing lease agreements that expire in fiscal 2026 to fiscal 2030. The leases have initial lease terms that range from 3 to 6 years with some containing renewal options.
The undiscounted annual future minimum lease payments related to the Company's right-of-use assets are summarized by fiscal year in the following table:
| | | | | |
| (In millions) | |
| 2026 | $ | 88.0 | |
| 2027 | 95.4 | |
| 2028 | 88.0 | |
| 2029 | 78.6 | |
| 2030 | 67.8 | |
| Thereafter | 179.7 | |
| Total lease payments* | $ | 597.5 | |
| Less interest | 112.1 | |
| Present value of lease liabilities | $ | 485.4 | |
*Lease payments exclude $49.1 million of legally binding minimum lease payments for leases signed but not yet commenced.
Supplemental cash flow and other lease information as of and for periods indicated, includes (dollars in millions):
| | | | | | | | | | | | | | |
| | Year Ended | | Year Ended |
| | May 31, 2025 | | June 1, 2024 |
| Weighted-average remaining lease term (in years) | | | | |
| Operating leases | | 6.6 | | 6.6 |
Finance Leases | | 3.8 | | 4.6 |
| Weighted-average discount rate | | | | |
| Operating leases | | 3.6 | % | | 2.7 | % |
| Finance Leases | | 3.3 | % | | 3.2 | % |
| | | | |
| Cash paid for amounts included in the measurement of lease liabilities | | | | |
| Operating cash flows from operating leases | | $ | 148.5 | | | $ | 99.4 | |
| Operating cash flows from finance leases | | 0.1 | | | 0.1 | |
| Financing cash flows from finance leases | | 0.3 | | | 0.3 | |
| ROU assets obtained in exchange for new operating lease liabilities | | | | |
| Operating leases | | $ | 124.3 | | | $ | 48.1 | |
| Finance leases | | — | | | 1.0 | |
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.