LEASES
We lease certain retail stores, warehouses, distribution centers, office spaces and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We account for lease components including rent, real estate taxes and insurance costs separately from non-lease components, like common-area maintenance fees. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term for one or more years. The exercise of the lease option to renew is solely at our discretion.
Operating lease costs were approximately $5.3 million and $5.4 million for the years ended December 31, 2025 and 2024, respectively. Short-term lease costs were approximately $0.4 million and $1.1 million for the years ended December 31, 2025 and 2024, respectively. Operating lease costs were offset by sublease income of $0.3 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively. Short-term lease costs represent our costs with respect to leases with a duration of 12 months or less and are not reflected on our Consolidated Balance Sheets.
Information related to the Company’s operating right-of-use assets and related operating lease liabilities were as follows (dollar amounts in thousands, except lease term and discount rate): | | | | | | | | | | | | | | |
| As of December 31, | | 2025 | | 2024 |
| Assets: | | | | |
| Operating lease right-of-use assets | | $ | 17,600 | | | $ | 12,799 | |
| | | | |
| Liabilities: | | | | |
| Current | | 3,270 | | | 3,927 | |
| Long-term | | 15,630 | | | 10,277 | |
| Total operating lease liabilities | | $ | 18,900 | | | $ | 14,204 | |
| | | | | | | | | | | | | | |
| Weighted-average remaining lease term | | 6.7 | | 3.7 |
| Weighted-average discount rate | | 5.85 | % | | 5.01 | % |
| | | | | | | | | | | | | | |
| Year Ended December 31, | | 2025 | | 2024 |
| Cash paid for operating lease liabilities | | $ | 5,382 | | | $ | 5,671 | |
| Right-of-use assets obtained in exchange for new operating lease obligations | | 9,365 | | | 5,181 | |
| Cancellations or adjustments of leases that resulted in the reduction of lease assets in exchange for lease liabilities | | $ | (166) | | | $ | (103) | |
There were no material operating leases that we have entered into and that were yet to commence as of December 31, 2025.
The approximate aggregate commitments under non-cancelable operating leases in effect at December 31, 2025, were as follows (dollar amounts in thousands): | | | | | |
| Year Ending December 31, | |
| 2026 | $ | 3,963 | |
| 2027 | 4,307 | |
| 2028 | 3,229 | |
| 2029 | 2,149 | |
| 2030 | 1,395 | |
| Thereafter | 8,196 | |
| Total lease payments | $ | 23,239 | |
| Less: Imputed interest (1) | 4,339 | |
| Present value of lease liabilities | $ | 18,900 | |
(1) Calculated using our corporate borrowing rate based on the term of each lease ranging from 3.00 percent to 6.96 percent.
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.