Ollie's Bargain Outlet Holdings, Inc. Leases Disclosure

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Leases

The Company accounts for its leases under ASC 842, Leases (Topic 842). Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease, if available. The Company’s lessors do not provide an implicit rate, nor is one readily available, therefore the Company uses its incremental borrowing rate based on the portfolio approach, which applies one rate to leases within a given period. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.

 

In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the guidance as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.

 

Ollie’s generally leases its stores, offices, and distribution facilities under operating leases that expire at various dates through 2038.  These leases generally provide for fixed annual rentals.  A majority of the Company’s leases also require a payment for all or a portion of common-area maintenance, insurance, real estate taxes, water and sewer costs, and repairs, on a fixed or variable payment basis, the cost of which, for leases existing as of the adoption of ASC 842, is charged to the related expense category rather than being accounted for as rent expense.  For leases entered into after the adoption of ASC 842, the Company accounts for lease components together with non-lease components as a single component for all classes of underlying assets.  Most of the leases contain options to renew for three to five successive five-year periods.  The Company is generally not reasonably certain to exercise renewal options; therefore, the options are not considered in determining the lease term, and associated potential option payments are excluded from the lease payments.  Ollie’s lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

 

Store and office lease costs are classified in SG&A and distribution center lease costs are classified in cost of sales on the consolidated statements of income.

 

The following table summarizes the maturity of the Company’s operating lease liabilities by fiscal year as of February 1, 2025:

		February 1,
		2025
		(in thousands)
2025		$	108,249
2026			114,866
2027			102,888
2028			86,868
2029			66,691
Thereafter			188,025
Total undiscounted lease payments (1)			667,587
Less:  Imputed interest			(104,313	)
Total lease obligations			563,274
Less:  Current obligations under leases			(83,944	)
Long-term lease obligations		$	479,330

		Fiscal Year Ended
		February 1,				February 3,				January 28,
		2025				2024				2023
		(dollars in thousands)
Cash paid for operating leases		$	118,715			$	114,184			$	94,909
Operating lease cost			115,592				106,302				95,176
Variable lease cost			16,832				12,463				10,512
Non-cash right-of-use assets obtained in exchange for lease obligations			106,663				53,138				54,705
Weighted-average remaining lease term		7.38 years				6.52 years				6.4 years
Weighted-average discount rate			4.3	%			3.9	%			3.4	%