5. Leases
Wayfair has lease arrangements for warehouses, physical retail locations, WDN facilities, which includes consolidation centers, cross docks and last mile delivery facilities and office spaces. These leases expire at various dates through 2046. Operating lease expense was $236 million, $217 million and $190 million for the years ended December 31, 2025, 2024 and 2023, respectively. Sublease income was $22 million, $6 million and $2 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table presents other information related to leases: | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 | | |
| | | | | | | | |
| | (in millions) |
| Supplemental cash flow information: | | | | | | | | |
| Cash payments included in operating cash flows from lease arrangements | | $ | 235 | | | $ | 236 | | | $ | 195 | | | |
| Right-of-use assets obtained in exchange for lease obligations | | $ | 97 | | | $ | 290 | | | $ | 100 | | | |
| Right-of-use asset amortization | | $ | 156 | | | $ | 140 | | | $ | 130 | | | |
| | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | December 31, 2025 | | December 31, 2024 |
| Additional lease information: | | | | |
| Weighted average remaining lease term | | 7 years | | 7 years |
| Weighted average discount rate | | 7.96 | % | | 7.01 | % |
Future minimum lease payments under non-cancellable leases as of December 31, 2025 were as follows: | | | | | | | | |
| | | Amount |
| | (in millions) |
| 2026 | | $ | 226 | |
| 2027 | | 241 | |
| 2028 | | 190 | |
| 2029 | | 142 | |
| 2030 | | 115 | |
| Thereafter | | 477 | |
| Total future minimum lease payments | | 1,391 | |
| Less: Imputed interest | | (366) | |
| Total | | $ | 1,025 | |
The following table presents total operating leases liabilities: | | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| | | | |
| | (in millions) |
| Balance sheet line item: | | | | |
| Other current liabilities | | $ | 190 | | | $ | 174 | |
| Operating lease liabilities, net of current | | 835 | | | 929 | |
| Total operating leases liabilities | | $ | 1,025 | | | $ | 1,103 | |
As of December 31, 2025, Wayfair has entered into a $45 million operating lease related to a retail lease that has not yet commenced. As there is no control of the underlying assets during the construction period, Wayfair is not considered the owner of the construction project for accounting purposes. This operating lease will commence during 2026 with a lease term of 16 years.
Impairment and other related net charges
During the year ended December 31, 2025, Wayfair recorded charges of $12 million for lease impairment. This is inclusive of $9 million associated with the Germany Restructuring and weakened macroeconomic conditions in connection with our German operations and $3 million related to changes in sublease market conditions for identified U.S. office locations.
During the years ended December 31, 2024 and 2023, Wayfair recorded net charges of $23 million and $5 million, respectively, primarily related to changes in sublease market conditions for identified U.S. office locations.