Leases
The Company leases retail stores, manufacturing and distribution facilities, office space and equipment under operating and finance lease agreements. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to several years, with the longest renewal period extending through 2038. The exercise of lease renewal options are at the Company's sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
The following table summarizes the classification of operating and finance lease assets and obligations in the Company's Consolidated Balance Sheet as of December 31, 2025 and 2024:
| | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | | | December 31, 2025 | | December 31, 2024 | | |
| Assets | | | | | | | | |
| Operating lease assets | | Operating lease right-of-use assets | | $ | 1,878.8 | | | $ | 598.8 | | | |
| Finance lease assets | | Property, plant and equipment, net | | 96.0 | | | 75.9 | | | |
| Total leased assets | | | | $ | 1,974.8 | | | $ | 674.7 | | | |
| | | | | | | | |
| Liabilities | | | | | | | | |
| Short-term: | | | | | | | | |
| Operating lease obligations | | Short-term operating lease obligations | | $ | 399.6 | | | $ | 126.8 | | | |
| Finance lease obligations | | Current portion of long-term debt | | 25.5 | | | 16.9 | | | |
| Long-term: | | | | | | | | |
| Operating lease obligations | | Long-term operating lease obligations | | 1,589.8 | | | 532.1 | | | |
| Finance lease obligations | | Long-term debt, net | | 85.1 | | | 71.8 | | | |
| Total lease obligations | | | | $ | 2,100.0 | | | $ | 747.6 | | | |
The following table summarizes the classification of lease expense in the Company's Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | |
| | Twelve Months Ended |
| (in millions) | | December 31, 2025 | | December 31, 2024 | | December 31, 2023 |
| Operating lease expense: | | | | | | |
| Operating lease expense | | $ | 489.5 | | | $ | 164.5 | | | $ | 148.1 | |
| Short-term lease expense | | 21.9 | | | 8.8 | | | 13.5 | |
| Variable lease expense | | 126.4 | | | 40.0 | | | 36.3 | |
| Finance lease expense: | | | | | | |
| Amortization of right-of-use assets | | 22.1 | | | 18.1 | | | 14.4 | |
| Interest on lease obligations | | 6.4 | | | 5.4 | | | 3.9 | |
| Total lease expense | | $ | 666.3 | | | $ | 236.8 | | | $ | 216.2 | |
The following table sets forth the scheduled maturities of lease obligations as of December 31, 2025:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Operating Leases | | Finance Leases | | Total |
| Year Ended December 31, | | | | | | |
| 2026 | | $ | 499.8 | | | $ | 30.7 | | | $ | 530.5 | |
| 2027 | | 450.2 | | | 27.2 | | | 477.4 | |
| 2028 | | 380.5 | | | 23.4 | | | 403.9 | |
| 2029 | | 321.1 | | | 18.3 | | | 339.4 | |
| 2030 | | 225.8 | | | 13.5 | | | 239.3 | |
| Thereafter | | 473.4 | | | 14.3 | | | 487.7 | |
| Total lease payments | | 2,350.8 | | | 127.4 | | | 2,478.2 | |
| Less: Interest | | (361.4) | | | (16.8) | | | (378.2) | |
| Present value of lease obligations | | $ | 1,989.4 | | | $ | 110.6 | | | $ | 2,100.0 | |
The following table provides lease term and discount rate information related to operating and finance leases as of December 31, 2025:
| | | | | | | | |
| | December 31, 2025 |
| Weighted average remaining lease term (years): | | |
| Operating leases | | 5.93 |
| Finance leases | | 5.02 |
| | |
| Weighted average discount rate: | | |
| Operating leases | | 5.78 | % |
| Finance leases | | 5.66 | % |
The following table provides supplemental information related to the Company's Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | |
| | Twelve Months Ended December 31, |
| (in millions) | | 2025 | | 2024 | | 2023 | | |
| Cash paid for amounts included in the measurement of lease obligations: | | | | | | | | |
Operating cash flows paid for operating leases (a) | | $ | 477.9 | | | $ | 164.0 | | | $ | 146.8 | | | |
| Operating cash flows paid for finance leases | | $ | 6.4 | | | $ | 5.4 | | | $ | 3.9 | | | |
| Financing cash flows paid for finance leases | | $ | 22.1 | | | $ | 17.2 | | | $ | 14.0 | | | |
| | | | | | | | |
| Right-of-use assets obtained in exchange for new operating lease obligations | | $ | 146.4 | | | $ | 123.3 | | | $ | 273.0 | | | |
| Right-of-use assets obtained in exchange for new finance lease obligations | | $ | 32.5 | | | $ | 14.5 | | | $ | 26.3 | | | |
(a)Operating cash flows paid for operating leases are included within the change in other assets and liabilities within the Consolidated Statement of Cash Flows offset by non-cash right-of-use asset amortization and lease liability accretion.
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.