Lease Commitments

6 Months Ended

Aug. 02, 2025

3. Lease Commitments

The Company’s leases primarily consist of stores, distribution facilities and office space under operating and finance leases that will expire principally during the next 30 years. The leases typically include renewal options at five-year intervals and escalation clauses. Lease renewals are only included in the lease liability to the extent that they are reasonably assured of being exercised. The Company’s leases typically provide for contingent rentals based on a percentage of gross sales. Contingent rentals are not included in the lease liability, and they are recognized as variable lease cost when incurred.

The following is a schedule of the Company’s future lease payments:


	(in thousands)
Fiscal Year	Operating Leases			Finance Leases
2025 (remainder)	$	268,304			1,781
2026		694,516			3,640
2027		671,457			3,640
2028		630,456			3,447
2029		563,471			2,104
Thereafter		2,050,984			18,683
Total future minimum lease payments		4,879,188			33,295
Amount representing interest		(1,079,780	)		(9,395	)
Total lease liabilities		3,799,408			23,900
Less: current portion of lease liabilities		(392,865	)		(2,371	)
Total long term lease liabilities	$	3,406,543		$	21,529

Weighted average discount rate		6.2	%		5.5	%
Weighted average remaining lease term (years)		7.9			11.9

The above schedule excludes approximately $485.4 million for 74 stores the Company has committed to open or relocate but has not yet taken possession of the space. The discount rates used in valuing the Company’s leases are not readily determinable, and are based on the Company’s incremental borrowing rate on a fully collateralized basis.

The following is a schedule of net lease costs for the periods indicated:


	(in thousands)
	Three Months Ended						Six Months Ended
	August 2, 2025			August 3, 2024			August 2, 2025			August 3, 2024
Finance lease cost:
Amortization of finance lease asset (a)	$	566		$	643		$	1,132		$	1,442
Interest on lease liabilities (b)		330			362			666			745
Operating lease cost (c)		168,666			156,848			333,471			308,028
Variable lease cost (c)		68,705			61,596			136,365			122,552
Total lease cost		238,267			219,449			471,634			432,767
(Gain) impairment on sale and leaseback transaction (d)		—			—			(1,039	)		8,210
Less all rental income (e)		(1,097	)		(1,334	)		(2,402	)		(2,713	)
Total net rent expense (f)	$	237,170		$	218,115		$	468,193		$	438,264

(a)

Included in the line item “Depreciation and amortization” in the Company’s Condensed Consolidated Statements of Income.

(b)

Included in the line item “Interest expense” in the Company’s Condensed Consolidated Statements of Income.

(c)

Included in the line item “Selling, general and administrative expenses” in the Company’s Condensed Consolidated Statements of Income. Variable lease cost is primarily comprised of real estate taxes, common area maintenance, insurance and percentage rent.

(d)

Gain included in line item “Other income - net” in the Company’s Condensed Consolidated Statements of Income and impairment included in the line item "Impairment charges - long-lived assets."

(e)

Included in the line item “Other revenue” in the Company’s Condensed Consolidated Statements of Income.

(f)

Excludes an immaterial amount of short-term lease cost.

Supplemental cash flow disclosures related to leases are as follows:


	(in thousands)
	Six Months Ended
	August 2, 2025		August 3, 2024
Cash paid for amounts included in the measurement of lease liabilities:
Cash payments arising from operating lease liabilities (a)	$	336,005	$	311,147
Cash payments for the principal portion of finance lease liabilities (b)	$	1,080	$	1,523
Cash payments for the interest portion of finance lease liabilities (a)	$	666	$	745
Supplemental non-cash information:
Operating lease liabilities arising from obtaining right-of-use assets	$	389,743	$	263,941

(a)

Included within operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

(b)

Included within financing activities in the Company’s Condensed Consolidated Statements of Cash Flows.

Burlington Stores, Inc. 10-Q