| Leases |
Note 3 – LeasesDescription of Leases We lease warehouse space, equipment used in the transportation of goods in our warehouses, a limited number of automobiles and semi-trailers and a small office space. Our leases generally do not contain any explicit guarantees of residual value and, with the exception of the lease for our warehousing and distribution center in Huntley, IL, generally do not contain non-lease components. Our leases for warehouse transportation equipment generally require the equipment to be returned to the lessor in good working order. Through a review of our contracts, we determine if an arrangement is a lease at inception and analyze the lease to determine if it is operating or finance. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. With the exception of our warehouse leases, none of our other leases currently contain options to extend the term. In the event of an option to extend the term of a lease, the lease term used in measuring the liability would include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term. Our leases have remaining terms of up to 6.7 years. It is our accounting policy not to apply lease recognition requirements to short-term leases, defined as leases with an initial term of 12 months or less. As such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets. We have also made the policy election to not separate lease and non-lease components for all leases. The following table provides supplemental information related to operating lease right-of-use assets and liabilities:
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March 26,
2026 |
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June 26,
2025 |
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March 27,
2025 |
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Affected Line Item in Consolidated Balance Sheets |
Assets |
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Operating lease right-of-use assets |
$ |
25,768 |
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$ |
27,824 |
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$ |
28,871 |
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Operating lease right-of-use assets |
Total lease right-of-use assets |
$ |
25,768 |
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$ |
27,824 |
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$ |
28,871 |
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Liabilities |
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Current: |
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Operating leases |
$ |
5,189 |
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$ |
4,515 |
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$ |
4,537 |
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Other accrued expenses |
Noncurrent: |
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Operating leases |
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21,933 |
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24,224 |
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25,304 |
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Long-term operating lease liabilities |
Total lease liabilities |
$ |
27,122 |
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$ |
28,739 |
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$ |
29,841 |
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The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:
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For the Quarter Ended |
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For the Thirty-Nine Weeks Ended |
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March 26,
2026 |
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March 27,
2025 |
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March 26,
2026 |
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March 27,
2025 |
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Operating lease costs (a) |
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$ |
1,934 |
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$ |
1,833 |
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$ |
5,802 |
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$ |
5,546 |
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Variable lease costs (b) |
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15 |
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627 |
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713 |
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933 |
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Total lease cost |
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$ |
1,949 |
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$ |
2,460 |
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$ |
6,515 |
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$ |
6,479 |
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(a)Includes short-term leases, which are immaterial. (b)Variable lease costs consist of property taxes, sales tax and insurance. Supplemental cash flow and other information related to leases were as follows:
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For the Thirty-Nine Weeks Ended |
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March 26,
2026 |
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March 27,
2025 |
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Operating cash flows information: |
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Cash paid for amounts included in measurements for lease liabilities |
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$ |
4,743 |
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$ |
4,166 |
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Non-cash activity: |
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Right-of-use assets obtained in exchange for new operating lease obligations |
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$ |
1,725 |
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$ |
4,812 |
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March 26,
2026 |
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June 26,
2025 |
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March 27,
2025 |
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Weighted average remaining lease term (in years) |
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5.0 |
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5.7 |
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5.9 |
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Weighted average discount rate |
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6.7 |
% |
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6.7 |
% |
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6.7 |
% |
Maturities of operating lease liabilities as of March 26, 2026 are as follows:
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Fiscal Year Ending |
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June 25, 2026 (excluding the thirty-nine weeks ended March 26, 2026) |
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$ |
1,802 |
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June 24, 2027 |
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6,663 |
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June 29, 2028 |
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6,518 |
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June 28, 2029 |
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5,611 |
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June 27, 2030 |
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4,741 |
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June 26, 2031 |
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4,217 |
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Thereafter |
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2,446 |
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Total lease payments |
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31,998 |
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Less imputed interest |
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(4,876 |
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Present value of operating lease liabilities |
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$ |
27,122 |
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On January 15, 2026, the Company executed a 10 year lease for the additional warehouse space of approximately 285,000 square feet in Huntley, IL. The original warehouse space of approximately two thirds of the building was leased starting in fiscal 2024 near our largest facility in Elgin, IL (the “Elgin Site”), and the execution of this lease will result in us renting the entire building. The warehouse as a whole will be primarily utilized to store finished goods inventory and as a distribution center along with light manufacturing. Since the lease for the remaining space has not yet commenced, approximately $17,851 of additional operating leases are not reflected in the Consolidated Balance Sheet and tables above. The lease for the remaining space in Huntley is scheduled to commence in the first quarter of fiscal 2027. Lessor Accounting We lease office space in our four-story office building located in Elgin, IL. As a lessor, we retain substantially all of the risks and benefits of ownership of the investment property. Under Topic 842: Leases, we continue to account for all of our leases as operating leases. Lease agreements may include options to renew. We accrue fixed lease income on a straight‑line basis over the terms of the leases. There is generally no variable lease consideration and an immaterial amount of non-lease components such as recurring utility and storage fees. Leases between related parties are immaterial. Leasing revenue is as follows:
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For the Quarter Ended |
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For the Thirty-Nine Weeks Ended |
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March 26,
2026 |
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March 27,
2025 |
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March 26,
2026 |
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March 27,
2025 |
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Lease income related to lease payments |
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$ |
252 |
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$ |
228 |
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$ |
725 |
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$ |
1,185 |
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The future minimum, undiscounted fixed cash flows under non-cancelable tenant operating leases for each of the next five years and thereafter are as follows:
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Fiscal Year Ending |
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June 25, 2026 (excluding the thirty-nine weeks ended March 26, 2026) |
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$ |
323 |
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June 24, 2027 |
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1,397 |
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June 29, 2028 |
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831 |
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June 28, 2029 |
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765 |
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June 27, 2030 |
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757 |
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June 26, 2031 |
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763 |
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Thereafter |
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1,887 |
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$ |
6,723 |
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