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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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For the fiscal year ended January 25, 202030, 2021

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or

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Commission File Number: 001-37849

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AT HOME GROUP INC.

(Exact name of registrant as specified in its charter)

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(972) 265-6227

(Registrant’s telephone number, including area code)

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Securities registered pursuant to Section 12(b) of the Act:

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Securities registered pursuant to Section 12(g) of the Act: None

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

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The aggregate market value of the common stock of the Registrant held by non-affiliates of the Registrant on July 27, 2019,25, 2020, based upon the closing price of the Registrant's common stock as reported on the New York Stock Exchange on July 26, 2019,24, 2020, was $325,478,429.$459,884,503.

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There were 64,185,75165,400,065 shares of the registrant’s common stock, par value $0.01 per share, outstanding as of May 15, 2020.March 22, 2021.

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DOCUMENTS INCORPORATED BY REFERENCE

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Portions of the registrant's definitive Proxy Statement for its 20202021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. The Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended January 25, 2020.30, 2021.

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AT HOME GROUP INC.

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PART I

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This Annual Report on Form 10-K contains forward-looking statements made pursuant to and within the meaning of Section 27Athe safe harbor provisions of the Private Securities Litigation Reform Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).1995. You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate”, "are confident", "assume", “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “look ahead”, "look forward", “may”, “might”, "on track", "outlook", “plan”, “potential”, “predict”, "reaffirm", “seek”, “should”,"trend", “will”, or “vision”, or the negative thereof or other variations thereoncomparable terminology regarding future events or comparable terminology. conditions. In particular, forward-looking statements in this Annual Report on Form 10-K include, without limitation, statements about our financial and operating performance, cash flows, liquidity, financial condition, inventory, the markets in which we operate, our expected new store openings, our real estate strategy, the impact of the global pandemic of the novel coronavirus disease (“COVID-19”), growth targets, and potential growth opportunities, market share, competition, the impact of expected stock option exercises and future capital expenditures, estimates of expenses we may incur in connection with equity incentive awards to management, customer and macroeconomic trends, and other statements regarding our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained in this report are forward-looking statements.Furthermore, statements contained in this document relating to the recent global pandemic of the novel coronavirus disease (“COVID-19”), the impact of which remains inherently uncertain on our financial results, are forward-looking statements.performance.

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We have based theseSuch forward-looking statements are based on our current beliefs and expectations, assumptions, estimates and projections. Whilewhich we believe these expectations, assumptions, estimates and projections are reasonable, suchreasonable. However, forward-looking statements are only predictions and involvesubject to significant known and unknown risks and uncertainties that may cause actual results, performance or achievements in future periods to differ materially from those assumed, projected or contemplated in the forward-looking statements, including, but not limited to, the riskfollowing factors: the ongoing global COVID-19 pandemic and related challenges, risks and uncertainties, including historical and potential future measures taken by governmental and regulatory authorities (such as requiring store closures), which have significantly disrupted our business, employees, customers and global supply chain, and for a period of time, adversely impacted our financial condition (including resulting in goodwill impairment) and financial performance, and which disruption and adverse impacts may continue in the future; the recent and ongoing direct and indirect adverse impacts of the global COVID-19 pandemic to the global economy and retail industry; the eventual timing and duration of economic stabilization and recovery from the COVID-19 pandemic, which depends largely on future developments; general economic conditions in the Unites States and globally, including consumer confidence and spending, and any changes to current favorable macroeconomic trends of strong home sales, nesting and de-urbanization (which were enhanced and accelerated due to COVID-19, and may not continue upon a successful vaccine rollout in significant numbers that impacts consumer behavior); our indebtedness and our ability to increase future leverage, as well as limitations on future sources of liquidity, including debt covenant compliance; our ability to implement our growth strategy of opening new stores, which was suspended for fiscal 2021 (with the exception of stores that were at or near completion) and, while ramping significantly, will be limited in the near term; our ability to effectively obtain, manage and allocate inventory, and satisfy changing consumer preferences; increasing freight and transportation costs (including the adverse effects of international equipment shortages) and increasing commodity prices; reliance on third-party vendors for a significant portion of our merchandise, including supply chain disruption matters and international trade regulations (including tariffs) that have, and may continue to, adversely impact many international vendors; the loss or disruption to operating our distribution network; significant competition in the fragmented home décor industry, including increasing e-commerce; the implementation and execution of our At Home 2.0 and omnichannel strategies and related investments; natural disasters and other adverse impacts on regions in the United States where we have significant operations; our success in obtaining favorable lease terms and of our sale-leaseback strategy; our reliance on the continuing growth and utility of our loyalty program; our ability to attract, develop and retain employee talent and to manage labor costs; the disproportionate impact of our seasonal sales activity to our overall results; risks related to the loss or disruption of our information systems and data and our ability to prevent or mitigate breaches of our information security and the compromise of sensitive and confidential data; our ability to comply with privacy and other laws and regulations, including those associated with entering new markets; and the significant volatility of the trading price of our common stock.

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Additional information about these and other factors describedthat may cause actual results, performance or achievements in “Itemfuture periods to differ materially from those assumed, projected or contemplated in the forward-looking statements may be found in “Item 1A. Risk Factors”Factors” included in this Annual Report on Form 10-K many of which are beyondand subsequent reports we file with the Securities and Exchange Commission (the “SEC”), including our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these risks and uncertainties, youQuarterly Reports on Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this report are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this report. In addition, even if our resultsincluded herein, which

Table of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this report, they may not be predictive of results or developments in future periods.Contents

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Any forward-looking statement that we make in this Annual Report on Form 10-K speaksspeak only as of the date of such statement,in particular taking note of uncertainties arising in respect ofhereof or the rapidly evolving COVID-19 pandemic which, except where specifically described, are not reflected in the information presenteddate otherwise specified herein. Except as required by law, we do not undertake any obligation to update or revise or to publicly announce any update or revision to, any of the forward-looking statements for any reason, whether as a result of new information, future events or otherwise, after the date of this report. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission (the “SEC”) after the date of filing this report.otherwise.

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Unless the context otherwise requires, references in this Annual Report on Form 10-K to “the Company”, “At Home”, “we”, “us”, and “our” refer to At Home Group Inc. and its consolidated subsidiaries.

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ITEM 1. BUSINESS

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History and Company Overview

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At Home is thea leading home décor superstore, based on the number of our locations and we believe our large format stores that we believe dedicate more space per store to home décor than any other player in the industry. We are focused on providing the broadest assortment of everyday and seasonal products for any room, in any style, for any budget. We utilize our space advantage to out-assort our competition, offering over 50,000 SKUs throughout our stores. Our differentiated merchandising strategy allows us to identify on-trend products and then value engineer thosesimilar products to provide desirable aesthetics at attractive price points for our customers. Over 70%75% of our products are unbranded, private label or specifically designed for us. We have developed a highly efficient operating model that seeks to drive growth and profitability while minimizing operating risk. Our merchandising, sourcing and pricing strategies generate strong ticket growth across our product offering and increase store traffic and time in store. Through specialized in-store merchandising and visual navigation elements, we enable a self-service model that minimizes in-store staffing needs and allows us to deliver exceptional value to our customers. We believe thatwith our quickly expanding omnichannel offering, broad and comprehensive offeringassortment, enhanced focus on customer loyalty and compelling value proposition, combine to createwe are a leading destination for home décor with the opportunity to continue taking market share in a highly fragmented and growing industry.

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restrictions and restrictions on public gatherings. Due to these restrictions in the first quarter of fiscal year 2021 and a desire to take strong precautions, we closed all of our stores in late March 2020 and gradually opened stores in compliance with state and local mandates. For the last three quarters of fiscal year 2021, our operational and financial performance benefitted from a number of macroeconomic and consumer trends due to the COVID-19 pandemic, including strong home sales, nesting and de-urbanization and pent-up demand for home décor products.

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Recurring COVID-19 outbreaks have led to the re-introduction of some restrictions on retail operations in certain jurisdictions, and there can be no assurance that our stores will not be subject to modified hours, operations, capacity limitations and store closures in future periods. Due to the size of our stores, we do not expect to be impacted by capacity restrictions, which we believe differentiates us from some of our smaller format competitors. We remain committed to providing our customers with a seamless shopping experience and, in fiscal year 2021, we accelerated our omnichannel capabilities in response to the impact of the COVID-19 pandemic to provide our customers with additional options for purchasing our products.

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At the onset of the COVID-19 pandemic, we implemented a number of other measures to help mitigate the operating and financial impact of the pandemic, including the suspension of all new markets acrossstore openings and remodeling projects with the country. Our portable conceptexception of seven stores that were at or near completion. The COVID-19 pandemic also had, and continues to have, an impact on our third-party supply chain and our inventory. In the spring of 2020, while managing stay-at-home orders and store closures, we canceled orders and reduced the amount of inventory coming into our stores. As store traffic and net sales improved, we sought to strengthen our inventory positions. However, a general increased demand for shipping and other pandemic impacts has delivered consistent store economics across all markets, from smaller, less dense locationsled to larger, more heavily populated metropolitan areas.an increase in freight and transportation costs and product delivery delays.

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The future impact of the COVID-19 pandemic on our business, strategy and financial performance will depend largely on future macroeconomic, scientific, health, legal and regulatory developments.

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Our new store model combines high average unit volumes and high margins with low net capital investment and occupancy costs, resulting in cash flow generation early in the life of a store. Our stores typically mature within six months of opening. On average, over the past three fiscal years, our new store sites which are leased or purchased require approximately $4 million to $5 million of net investment and our new build stores require approximately $2 million to $3 million of net investment (net of sale leaseback proceeds). In previous fiscal years, we have delivered an average payback period of approximately two and a half years for our new leased and purchased stores and less than one and a half years for our new build stores. For fiscal years 2020, 2019 and 2018, 83%, 74% and 75% of our new stores, respectively, have been leased at the time of opening.

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Drive Comparable Store SalesMerchandise

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We will seekbelieve we have the largest assortment of everyday and seasonal home décor products among all big box retailers. With four main design lifestyles, from traditional to drive demandglobal and from farmhouse to modern, we cover the full spectrum of home décor styles and we believe we have something for everyone. We are advantageously situated as a value player in the home décor market, with an average price point of less than $15 and typical customer spend by providing a targeted, exciting product selection and a differentiated shopping experience, including the following specific strategic initiatives:of approximately $75 per visit.

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We employ an improved everyday low price (“EDLP+”) strategy that offers our customers the best possible pricing without the need for consistent discounts or promotions. We consistently ran EDLP+ campaigns throughout fiscal year 2021 which spanned across a majority of our departments. When customers view our prices, they can be confident in the value they receive and do not need to wait for sales or coupons to make purchasing decisions. We believe this results in continued traffic to our stores and enables the strong product margins that we enjoy across our product offering. Over 80% of our net sales occur at full price, with the balance attributable to limited special buys and selective markdowns used to clear slow-moving inventory or post-dated seasonal product. For the limited set of products that are directly comparable to products offered by other retailers, we seek to offer prices below our specialty competitors and at or below our mass retail competitors.

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Build the At Home BrandWe have a fully-integrated and Create Awarenesscentralized merchandising team that is led by our Chief Merchandising Officer and includes specialized teams in buying and product development, trend, inventory planning and allocation and direct sourcing. Our trend team brings designer-level aesthetics to customers at competitive price points, and our sourcing organization drives our success as a value player.

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During fiscal year 2015, we launched the At Home brand, which we believe better communicates our positioning as the leading home décor superstore. Additionally, we re-established a marketing function and reinstated marketing spend to highlight our new brand, broad product offering and compelling value proposition. Given the relative newness and limited awareness of the At Home brand in certain markets, we believe there is still a significant opportunity to grow our brand and build awareness in both existing and new markets.

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To address this opportunity, we have increased our marketing spend in recent years to improve our brand awareness and to drive traffic to our website and to our stores. We increased spend from nearly zeroOur merchant team focused on SKU rationalization in fiscal year 20132021 by identifying the least productive SKUs with the goal to approximately 2.7% of net sales inreduce our overall SKU count. In fiscal year 2018, approximately 3.1% of net sales in fiscal year 20192021, our efforts were focused on décor, textiles, accent furniture and approximately 3.3% of net sales in fiscal year 2020. We intendrugs. Within these departments, we reallocated inventory dollars from lower performing items to continue to allocate marketing spend to both traditional and digital media to increase awareness of our differentiated value proposition among specialty home décor retail and to drive both new and existing customers to our stores. However, in response to the COVID-19 pandemic, we have significantly curtailed our advertising spend, consulting projects and non-essential operating expenses.those with higher returns.

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Continue Enhancing Shopping Experience through Digital InitiativesProduct Mix

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Home furnishings, which generally consists of accent furniture, furniture, mirrors, patio cushions, rugs and wall art, comprised approximately 42%, 43% and 44% of total net sales for fiscal years 2021, 2020 and 2019, respectively. In addition, accent décor, which generally consists of artificial flowers and trees, kitchen, bath, bedding, candles, garden and outdoor décor, holiday accessories, home organization, pillows, pottery, vases and window treatments, comprised approximately 53%, 53% and 52% of total net sales for fiscal years 2021, 2020 and 2019, respectively. Our superstore format and unique approach to merchandising result in our ability to offer multiple styles, colors and design elements most other retailers are unable to carry.

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Department reinventions are executed throughout the fiscal year to ensure our product is refreshed and relevant to our customers. During fiscal year 2021, we reinvented product within several departments, including bedding, bath, holiday accessories, vases and candles. Additionally, our collaborations, which are multi-year rotating partnerships with brands and designers, provide an additional avenue to bring in a variety of seasons and styles within our product mix. During fiscal year 2021, these collaborations included partnerships with Grace Mitchell and FAO Schwarz.

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Sourcing

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ThroughWe believe our customer research,sourcing model provides us with significant flexibility to control our product costs. We work very closely with over 500 vendors (which we have learnedrefer to as our “product partners”) to value engineer products at price points that while many home décor shoppers preferdeliver excellent value to browse online for ideas, inspirationour customers. In fiscal year 2021, approximately 35% of our merchandise was purchased from domestic product partners and general65% was purchased from foreign product information, they preferpartners in countries such as China, Vietnam, India, Turkey, Mexico and Hong Kong. We focused on improving supplier country diversification in fiscal year 2021 by sourcing additional product from various countries to complete their home décor purchases in person. Through our email database, our text program and our website, we are able to share new product launches, highlight key categories and provide our customers with décor ideas and inspiration.mitigate the impact of certain high-tariff goods from China. In addition, we launcheda majority of our Insider Perks program indomestic product partners purchase a portion of their products from foreign sources. Lead times vary depending on the second half of fiscal year 2018, which has 6.5 million members as of January 25, 2020. Our Insider Perks program members have exclusive accessproduct, ranging from three weeks to an annual birthday offer, receiptless returns, advanced notice of new merchandise and clearance events as well as compelling content from home décor influencers.nine months.

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In fiscal year 2020,2018, we continuedestablished a direct sourcing function to allow us to continue to increase our direct purchases from overseas factories, although we continue to purchase a substantial majority of products through domestic agents or trading companies. We believe direct sourcing represents an opportunity to increase our access to unique and quality products and give us greater control and visibility on product development, while reducing our product costs and improving item-level product margins.

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We seek to build long-term relationships with our product partners, who can provide support for our various marketing and in-store merchandising initiatives. However, we believe we are not dependent on any one product partners and have no long-term purchase commitments or arrangements. For many of our product partners, we are their fastest growing and, sometimes, largest account, which promotes collaboration between our companies. In fiscal year 2021, our top ten product partners accounted for approximately 20% of total purchases, with our largest product partner representing less than 5%. We believe our product partner relationships will continue to support our business growth.

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Our manufacturing and transportation supply chains were, and may continue to be, subject to the impact of the COVID-19 pandemic. We have been, and may continue to be, impacted by factory closures, port closures, equipment shortages, longshoremen availability and the inability or delay of our product partners to produce and ship products. In addition, our supply chain may be subject to financial risks as raw material producers and manufacturers experience financial hardships, closures or the inability to attract a labor force. While production of certain of our product categories is concentrated in certain regions that may be particularly impacted by local political, economic, social or environmental conditions, including COVID-19, our broader production base is diversified across regions with opportunities to make enhancementsstrategic shifts as business conditions allow.

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Our Stores and Our Omnichannel Offering

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Our stores continue to be the center of our customer offering. As of January 30, 2021, our store base was comprised of 219 stores in 40 states across the United States. A summary of our store locations by state as of January 30, 2021 is included in “Item 2. Properties”. We are committed to providing our customers with a seamless shopping experience whether they are shopping online or in our stores and, in fiscal year 2021, we accelerated our omnichannel capabilities in response to the impact of the COVID-19 pandemic.

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Store Operations and Layout

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Our stores vary in size between 75,000 and 165,000 square feet with an average of approximately 105,000 square feet. Our locations have a similar store layout that is specifically designed to engage our customers. We design our stores as shoppable warehouses with wide aisles, an interior race track and clear signage that enable customers to easily navigate the store. We also have store maps available at the entrances and on shopping carts for our customer to use while she shops. Throughout our stores, we merchandise products logically by color, design and size in order to appeal to our website,core shopper’s buying preferences and use feature tables and end caps to create continuous visual interest and to highlight value. Additionally, we utilize product vignettes that offer design inspiration and coordinated product ideas to our customers. Our large store format allows us to maintain high in-stock positions and sell larger-sized and fully assembled products. To make her shopping experience easier and support our efficient operating model, we install fixture shelves lower to the ground so that products are easily reachable and require minimal staff assistance. We also utilize special fixtures for our products such as rolling out local in-stock availability acrosswall art, mirrors and rugs to allow easy viewing, improved shopability and minimized product damage. We have a centralized checkout lane with multiple registers that makes the fleet. checkout process simple and efficient.

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We also pilotedcentralize major decisions relating to merchandising, inventory and pricing in order to allow our in-store team to focus on creating a clean and organized shopping environment. Our stores are typically led by a Store Director, a Store Manager and an Inventory Control Manager with a general staff averaging 30 employees, which fluctuates seasonally with business demands. Store employees are broadly split into two functional groups, customer service and operations, thereby allowing us to maximize efficiencies while aligning employees to the first stagesfunction that best suits their skills. Our proprietary labor model optimizes staffing levels based on hourly sales and traffic volumes. Additionally, employees utilize downtime to stock shelves and displays with new inventory. This model provides us with the flexibility to meet various seasonal demands while enabling consistent labor margins throughout the year. Our stores are managed company-wide by our VP of a Stores, three Regional Managers and twenty-one District Managers.

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Buy Online Pick-Up In-Store, (“BOPIS”) initiative duringCurbside Pick-up and Local Delivery

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We are expanding into more ways for the fourthcustomer to conveniently shop At Home. In fiscal quarter by offering a reserve online capabilityyear 2020, we piloted BOPIS in select markets and28 stores. In fiscal year 2021, we substantially increased our BOPIS capabilities in the first quarter of fiscal year 2021as well as introduced curbside pick-up and local delivery in response to the COVID-19 pandemic. Currently, more than 200 stores, or over 90%BOPIS and curbside pick-up are available in all of our store base, have BOPIS capabilities.stores and local delivery is available from nearly 75% of our stores.

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Our local delivery is provided through our partnership with PICKUP, a last-mile logistics service. Through that partnership, At Home provides customers the option of contactless local home delivery starting at $10 within a 30 mile radius of participating stores. Deliveries typically occur same-day, but next-day service is also available. PICKUP has experience in several markets with many major retailers. Nonetheless, deliveries from our stores follow completion of the sales transaction with our customer, thus minimizing exposure we might have in connection with the delivery.

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Our Industry

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We compete in the large, growing and highly fragmented home furnishings and décor market.

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Unlike other big box retail categories (e.g., office supplies, home improvement and electronics) where the top retailers hold a significant share of the overall market, the top three retailers in the home décor and furnishings category make up less than 25% of the market share. We believe we are uniquely positioned in the market, focused on providing

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the broadest assortment of home décor products at value price points.everyday low prices. In addition, the size of our stores enables us to carry a broad offering of fully assembled, larger merchandise, unlike many of our competitors, who are space constrained from providing a similar offering. We believe our focus on a broad assortment at value price points also positions us well within a fragmented market while also supporting our customer’s passion about, and love for, decorating her home.

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The home furnishings and décor market includes a diverse set of categories and retail formats. However, we believe that we do not have a direct competitor, as no brick and mortar retailer matches our size, scale or scope of the everyday and seasonal product assortment that we offer at everyday low prices. WhileOnline home décor retailers offer a broad selection of products in home furnishings and décor that is typically weighted toward more expensive items. Conversely, we have no direct competitor, certain products that we offer do compete with offerings by companies infocus primarily on the following segments:

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ability to open stores successfully in a diverse range of new markets across the country. Our portable concept has delivered consistent store economics across all markets, from smaller, less dense locations to larger, more heavily populated metropolitan areas.

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Our store growth has historically been supported by new store economics that we believe are compelling. Over the past three fiscal years, our new stores have generated an average of $6.7$6.5 million of net sales within the first full year of operations and reached maturity within the first six months. Our new store model combines high average unit volumes and high margins with low net capital investment and occupancy costs, resulting in cash flow generation early in the life of a store. On average, over the past three fiscal years, our new store sites which are leased or purchased require approximately $4$5 million to $5$6 million of net investment and our new build stores require approximately $2 million to $3 million of net investment (net of sale leaseback proceeds). We have delivered an average payback period of approximately two and a half years for our new leased and purchased stores and less thanapproximately one and a half years for our new build stores. For fiscal years 2021, 2020 and 2019, 100%, 83% and 74% of our new stores, respectively, have been leased at the time of opening.

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Site Selection, Development and AvailabilityFinancing

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We have a flexible and balanced approach to site development that allows us to optimize the investment characteristics of each new store and maintain our robust new store pipeline. We can lease a second generation property, purchase a second generation building or build a new location from the ground up, although our real estate strategy is focused on redeveloping second generation big box retail locations depending on availability. We have developed a highly analytical approach to real estate site selection with a stringent new store approval process. Our dedicated real estate team spends considerable time evaluating prospective sites before submitting a comprehensive approval package to our real estate committee, which is primarily comprised of our Chief Executive Officer, Chief Financial Officer and Chief Development Officer.Officers. We target markets that meet our specific demographic and site evaluation criteria and complete substantial research before opening a new site. We use a proprietary model which takes into account several demand factors including population density of our target customer, median household income, home ownership rates, retail adjacencies, competitor presence, presence of existing At Home locations and local economic growth metrics. Primary site evaluation criteria include availability of attractive lease terms, sufficient box size, co-tenancy, convenient parking, traffic patterns, visibility and access from major roadways. We typically favor locations near other big box retailers that drive strong customer traffic to the area.

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We believe there will continue to be an ample supply of large format real estate in the United States that is attractive to us, driven by multi-chain, national retailers relocating or closing stores, a number of retailers shifting to smaller locations and the relative lack of new retail concepts using larger store formats. We believe we are one of the only growing, large format retailers in the country. As a result, we have become a direct beneficiary of this available real estate and of various retailers looking to quickly shed stores. We typically offer a convenient solution to any selling or leasing party as we are able to take a wide variety of existing store spaces, move quickly and require little investment in time, resources or capital on their part. We take a disciplined approach to how we enter and build out our presence in markets and seek to optimize sales in a deliberate, carefully planned manner. In order to act quickly on new opportunities, we have scoredused our proprietary site selection model to assess over 20,000 big box retail locations in the United States with a proprietary site selection model.States. As a result of our proven track record, we have developed strong relationships with brokers, landlords and big box retailers and are often the first to receive a call when locations become available.

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Site Development and Financing

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We have a flexible and balanced approach to site development that allows us to optimize the investment characteristics of each new store and maintain our robust new store pipeline. We can lease a second generation property, purchase a second generation building or build a new location from the ground up.

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For purchased properties or new development builds, we can extract capital using sale-leasebacks through a proven and disciplined approach. We have relationships with a number of the major real estate investment trusts (“REITs”), many of which have demonstrated interest in our portfolio of assets. We have completed ninesix sale-leaseback transactions generating approximately $442$309 million in gross proceeds in the past fivethree fiscal years.

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We have developed an efficient process from site selection through new store opening. Our three-pronged approach to site development allows us to negotiate very favorable real estate terms that typically include low occupancy costs, the ability to unilaterally “opt out” of leased locations, and other features that provide us with flexibility to manage our store portfolio.

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attracting new customers to the At Home brand. We increased our marketing spend from nearly zero in fiscal year 2013 to approximately 2.7% of net sales in fiscal year 2018, approximately 3.1% of net sales in fiscal year 2019 and approximately 3.3% of net sales in fiscal year 2020. We expect thatHowever, as a result of the COVID-19 pandemic and our efforts to curtail marketing spend in the first and advertisingsecond quarters of fiscal year 2021 as well as our significant top-line outperformance, our marketing spend will continue to be a significant percentagewas approximately 2.5% of net sales in future fiscal years. However, in responseyear 2021.We intend to the COVID-19 pandemic, we have significantly curtailedcontinue to allocate marketing spend to both traditional and digital media to increase awareness of our advertising spend, consulting projectsdifferentiated value proposition among specialty home décor retail and non-essential operating expenses.to drive both new and existing customers to our stores.

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The home décor enthusiast views her home as a place that is constantly evolving with each season as well as everyday events in her life. At Home’s mission is to offer her the biggest selection of styles at the best prices every day, giving her endless possibilities and the confidence that she will find the perfect products at the perfect price every time she shops. We engage with her across various marketing channels before, during and after her store visit. We have built relationships with home décor influencers, leveraging Facebook and Instagram. We use email and text message marketing to inspire her with seasonally relevant décor and will be growing the reach of these efforts as we focus on expandingcontinuing to expand our base of 6.5over 9.0 million Insider Perks customers.loyalty program customers, which has increased approximately 40% since January 25, 2020.

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We also use traditional and digital media platforms (such as paid digital, outdoor, direct mail, paid search and social media) to build broader brand awareness and to drive traffic to our website and our stores. To launch our brand during new store openings, we have evolved our strategy through tactical testing to get to an effective and cost efficient mix of media, including outdoor, direct mail and social media.

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In fiscal year 2018,Through customer communications across various channels, including email, website, paid media, social and influencer programs, we are able to share new product launches, highlight key categories and provide our customers with décor ideas and inspiration. We launched our Insider Perks program which has 6.5 million members asin the second half of January 25, 2020. Our Insider Perks program members have exclusive access tofiscal year 2018, and added new tiers and more benefits in fiscal year 2021. Members receive special discounted pricing on specific items, an annual birthday offer, hassle-free receiptless returns, an extra 30-day extended return window and advanced notice of new merchandiseevents and clearance events as well as compelling content from home décor influencers.deals. Our new Insider Perks tiers include a new VIP tier and a new Design Professional tier called BOSS. In addition,fiscal year 2021, we also have anreissued the At Home branded credit card program through Synchrony Bank that includes loyalty incentives for our Insider Perks members. This program launched during fiscal year 2018 and allows At Home cardholders to take advantage of promotional financing offers on qualifying purchases, loyalty rewards and other cardholder exclusive benefits.

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In fiscal year 2020, we continued to make enhancements to our website, such as rolling out local in-stock availability across the fleet. In fiscal year 2020, we also piloted the first stages of a BOPIS initiative during the fourth fiscal quarter by offering a reserve online capability in select markets and substantially increased our BOPIS capabilities in the first quarter of fiscal year 2021 in response to the COVID-19 pandemic. Currently, more than 200 stores, or over 90% of our store base, have BOPIS capabilities.

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Distribution

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We operate a 592,000 square foot distribution center in Plano, Texas, which also serves as our corporate headquarters. We have invested in automating our Plano, Texas facility, implementing warehouse management software and robotics to efficiently handle daily product deliveries. At the beginning of fiscal year 2020, we opened our 800,000 square foot second distribution center in Carlisle, Pennsylvania, which required an additional incremental capital investment of $2.0 million, $5.5 million $13.0 million and $1.1$13.0 million in fiscal years 2021, 2020 and 2019, and 2018, respectively. With the opening ofWe believe our secondtwo distribution center, we estimate wecenters collectively should be collectively able to support more thanat least 350 stores. We also have an additional 555,000 square foot warehouse in Garland, Texas, for initial inventory build-up for new store openings. The improvements to our Plano, Texas distribution center and the opening of our Carlisle, Pennsylvania distribution center will continue to support our needs as we expand our store base.

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The vast majority of our current products are shipped directly to our distribution centers, which serve as cross-dock facilities, storing very limited inventory on site. In order to streamline store operations and reduce labor requirements, all of the merchandise in our distribution centers is prepared for the sales floor prior to transport. We

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holiday decorating seasons, the second and fourth fiscal quarters have historically contributed, and are expected to continue to contribute, significantly to our operating results for the entire fiscal year. In anticipation of seasonal increases in sales activity during these periods, we incur significant additional expense prior to and during our peak seasonal periods, which we may finance with additional short-term borrowings. These expenses may include the acquisition of additional inventory, seasonal staffing needs and other similar items.

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Information Systems

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We believe that our management information systems will support our growth and enhance our competitive position. Our efficient operating model is supported by using industry standard applications in the areas of merchandising, store systems, replenishment, distribution and financial systems. We use a combination of these industry standard systems along with automated and easy to use proprietary systems to support all areas of our business. Over the past seven fiscal years, we have invested in IT systems and infrastructure, including investments in merchandising, planning and allocation (JDA), POS systems (IBM/Toshiba), distribution center (PKMS), order management (KIBO), e-commerce (SalesForce), relating to our BOPIS program, and finance and accounting (SAP) to ensure our systems are robust and scalable. Additionally, over the past seven fiscal years we have invested in data centers and additional IT team members to provide appropriate support and project delivery capabilities needed for our growth.

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Human Capital Management

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We live our values every day: to be creative; to work together; to be smart and scrappy; to do the right thing; and to have fun. Our values underlie our vision to become the leading home décor retailer and our mission to enable everyone to affordably make their house a home. Attracting, developing and retaining the best people is critical to achieving our mission and vision and to driving our culture and long-term success. We invest in our employees and promote a culture of leadership, open communication, inclusiveness, creativity and accountability. Our employee training and policies, including our Code of Business Principles, support our culture, vision and mission.

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Our management is responsible for shaping our culture, including setting the right tone-at-the-top and ensuring our policies and processes reflect and reinforce our values. The Board and Board committees provide leadership and oversight regarding, among other things, compensation and benefit programs, culture, compliance, key employee succession planning, and employee health and safety.

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Employees

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As of January 25, 2020,30, 2021, we employed approximately 6,2897,692 employees, including 5,6907,028 store employees and 599664 other employees across the corporate and distribution center functions.functions in the United States. Of the 5,6907,028 store employees, 632691 were full-time salaried level staff and the remaining employees consisted of a mix of full-time and part-time hourly workers. Based on the level of transactions experienced at different times of the day, week and year, store labor is planned to serve customers effectively during peak periods while minimizing overall labor costs. None of our employees are currently covered under any collective bargaining agreements.

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Talent Development and Retention

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Our employees are a critical component of our success, and we prioritize attracting, retaining and promoting top talent both in our stores and in our corporate structure. We provide our field and corporate leaders with the right tools and support to run the organization effectively. We recognize and reward employees who meet our high-performance standards, and we work to ensure our employees have opportunities for advancement and career growth. All employees are eligible to participate in our bonus incentive program.

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At Home offers meaningful training and development opportunities.Most field employees begin their workday with short online educational training courses through our software learning platform. We also typically host a three-day annual leadership conference that brings together our field and corporate leadership with the goal of collaborative learning and building our At Home community.

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Diversity, Equality and Inclusion

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Our commitment to diversity begins at the top, with a diverse Board and executive leadership team. As of January 30, 2021, our corporate leadership team consists of 13 out of 29 or 45% female officers. At Home strives to build a diverse, inclusive and respectful workplace for all employees. Our corporate culture, priorities and policies reflect our commitment to equality and contribute to driving strong performance. Our field teams intentionally tend to reflect the diversity of our customers and the communities where we operate.

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Employee Benefits, Health and Safety

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In response to the COVID-19 pandemic, we introduced new tools for communication and store closures resulting fromincreased the regularity of shelter-in-place or stay-at-home orders by statewidespread employee communication. We transitioned the frequency of our town hall meetings to be monthly rather than quarterly; we hosted executive listening sessions; we relaunched our monthly CEO small group sessions; and local governments, duringwe introduced executive-sponsored employee engagement groups. Our executive leadership team and our internal communication team work together to share ongoing communications with our employees that address issues of interest and importance, with the first quarter ofmost notable issues in fiscal year 2021 revolving around the pandemic. The importance we eliminated approximately 10%put on communication reinforces employee engagement, reminds our people of available resources, and promotes our At Home values and culture.

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We want our employees to thrive within and outside of their working environment. We provide a market competitive total rewards and benefits package to address the current needs of our employees, including their comprehensive health, financial wellness, quality of life coverage and childcare support. We also offer resources and events that support the physical, mental and financial health and well-being of our employees, including our annual corporate Wellness Week and our safety training programs to prevent workplace accidents and injuries. We are proud to have created the At Home Foundation to provide financial assistance to eligible employees facing unforeseen hardship, including as a result of COVID-19. The At Home Foundation relies primarily on donations from employees in order to fund grants.

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We prioritize the safety and well-being of our employees, customers and communities. In response to the pandemic, we introduced numerous operational changes and protocols aimed at ensuring the health and safety of every individual in our stores. We are somewhat unique in that our large format stores offer space and wide aisles for social distancing. In addition to our store protocols, our corporate employees who are able to work remotely have been given the flexibility to continue doing so. And our Safe Home Office Policy ensures our corporate home office roles, primarily relatedis safe, clean and available for employees who need or choose to new store development and openings, and implemented temporary furloughs of approximately 30% of home office associates and approximately 15% of store employees (a portion of whom have been reinstated as of the filing of this report) and a hiring freeze.use it.

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Intellectual Property

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We own a U.S. trademark registration for the trademark “at home” and design, which was registered by the United States Patent & Trademark Office on July 7, 2015 for a ten-year term and is renewable every ten years thereafter. We also own the domain name athome.com and a number of other registered trademarks, pending trademark applications and domain names that we use in our business. Collectively, we consider our trademarks and domain names to be important assets of our operations and seek to actively monitor and protect our interest in this property.

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Government Regulation

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We are subject to labor and employment laws, laws governing truth-in-advertising, privacy laws, environmental laws, safety regulations, data privacy and other laws, including consumer protection regulations that regulate retailers

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Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available through the investor relations section of our website at investor.athome.com. Reports are available free of charge as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. The SEC maintains an Internet site that contains our reports, proxy and information statements, and other information that we file electronically with the SEC at www.sec.gov. References to website addresses in this Annual Report on Form 10-K are not intended to function as hyperlinks and, except as specified herein, the information contained on, or that can be accessed through, such websites is not part of this Annual Report on Form 10-K.

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ITEMITEM 1A. RISK FACTORS

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The following risk factors may be important to understanding any statement in this Annual Report on Form 10-K or elsewhere. Our business, financial condition and operating results can be affected by aA number of factors, whether currently known or unknown, including but not limited to thosethe factors described below. Any one or more of such factorsbelow, could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect our business, business prospects, financial condition, operating results, of operationscash flows and stock price.price, and may cause actual results, performance or achievements in future periods to differ materially from those assumed, projected or contemplated. All forward-looking statements made by us in this Annual Report on Form 10-K, in our Annual Report to our Stockholders and in subsequent reports we file with the SEC, as well as in our press releases and other public communications, are qualified by the risks described below, as may be updated by subsequent reports we file with the SEC.

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Risks Relating to Our Business and Strategy

General​

Adverse macroeconomic conditions could materially adversely affect our business, results of operations, financial condition and growth.

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The Company’s operations depend significantly on economic conditions in the U.S. and countries related to our international supply chain. Any adverse macroeconomic conditions, or uncertainty regarding such conditions, could reduce overall consumer discretionary spending and erode consumer confidence, and thereby reduce overall spend in retail stores generally, cause consumers to shift their spending to products other than those sold by us, or cause our customers to buy products sold by us that are less profitable than other product choices. Adverse macroeconomic conditions that could impact us include: slower growth or a recessionary economy; certain changes in monetary policy; reduced employment levels; increased inflation; higher healthcare costs; increased fuel and other energy costs; bankruptcies; increased real estate leasing costs; declines in home or asset values; higher consumer debt levels; lower availability of credit; and increased taxes and interest rates. The foregoing adverse macroeconomic factors also may materially adversely affect our supply chain, other business revenuepartners, landlords and profitability.

General conditionsservice providers in the United StatesU.S. and global economy that are beyond our control mayglobally. Any such adverse macroeconomic conditions or uncertainties regarding such conditions could materially adversely affect our business, results of operations, financial condition and financial performance. As a retailer that is dependent upon consumer discretionary spending for home décor products, our customers may allocate less money for discretionary purchases as a result of increased levels of unemployment, reduced consumer disposable income, higher interest rates, higher fuel and other energy costs, higher tax rates and other changes in tax laws, foreclosures, bankruptcies, falling real estate and asset prices, reduced availability of consumer credit, higher consumer debt levels, a decline in consumer confidence, inflation, deflation, recession, an overall economic slowdown and other factors that influence consumer spending. The COVID-19 pandemic has created uncertainty in the global economy that has resulted in an unprecedented sharp economic downturn, which has adversely affected our business, revenues and profitability in the first quarter of fiscal year 2021. Our actual results for the remaindergrowth.

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During different periods of fiscal year 2021, remain subject to a high degree of uncertainty due to uncertainty surrounding the continued durationCOVID-19 pandemic had materially adverse and materially positive impacts on our business. The future impact of the COVID-19 crisispandemic on our business, results of operations, financial condition and cash flows will depend largely on future macroeconomic, scientific, health, legal and regulatory developments.

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The global COVID-19 pandemic has resulted in significant disruptions to the U.S. and global economies, and it has substantially impacted our business, results of operations, financial condition and cash flows. From time to time, in an effort to mitigate the continued spread of the COVID-19 pandemic, various government, regulatory and private entities have implemented significant restrictions, including stay-at-home orders, quarantines, travel restrictions and restrictions on public policy response.gatherings. Due to these restrictions in the first fiscal quarter of 2021 and a desire to take strong precautions, we closed all of our stores in late March 2020. We gradually opened stores in compliance with state and local mandates. The temporary closure of our stores and decline in store traffic as we gradually reopened stores resulted in significantly reduced net sales and cash flows from operations during such period, although we eventually obtained rent relief from certain landlords to partially offset the negative financial impacts. As a result of the full effect thatdecline in our operating performance and sustained decline in our market capitalization driven by the outbreak of COVID-19 may have on our financial performance cannot be quantified at this time, and discretionary spending on home décor items could contract inpandemic, as well as the future. Accordingly, our historical financial information may not be indicative of our future performance, financial condition and results of operations.

In addition, our costs and expenses could be materially adversely impacted by general economic factors such as higher interest rates, higher fuel and other energy costs, higher transportation costs, higher commodity costs, higher costs of labor, tariffs, supply chain disruption or other trade restrictions, insurance and healthcare, increased rental expense, inflation in other costs, higher tax rates and other changes in the tax law and changes in other laws and regulations. The economic factors that affect our operations also affect the operations and economic viability of our suppliers from whom we purchase goods, a factor that can result in an increase in the cost to us of merchandise we sell to our customers.

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Outbreaksreduction of communicable disease,our near-term growth model, we determined goodwill was fully impaired and we recognized an impairment charge of $319.7 million in the first fiscal quarter of 2021.

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To enhance our liquidity during this period, we significantly cut our capital expenditures, including suspension or other public health emergencies,delay of new store openings, store remodels and consulting projects, and implemented critical inventory management. As noted in the following risk factor, our growth strategy primarily is focused on successfully opening and operating new stores, and we suspended all new store openings and remodeling projects in response to the COVID-19 pandemic with the exception of seven stores that were at or near completion.

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For the last three quarters of fiscal year 2021, we reported strong store traffic, net sales, gross margins and cash flows due to a number of macroeconomic and consumer trends in response to the COVID-19 pandemic, such as strong home sales, nesting and de-urbanization and pent-up demand in general and for home décor products. These results may not be indicative of results for future periods, including if current favorable trends do not continue or are offset by other adverse impacts. For example, some of the currentincreased customer demand may have been due to temporary impacts of the pandemic, including an intense focus on a person’s home as well as U.S. stimulus payments in fiscal year 2021. While additional stimulus payments have been approved in fiscal year 2022, consumers may utilize such payments differently than the prior stimulus payments, especially upon a successful vaccine rollout in significant numbers that impacts consumer behavior.

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The extent and nature of the future impact of COVID-19 on our business is highly uncertain, and will depend largely on future macroeconomic, scientific, health, legal and regulatory developments within the United States and countries that are part of our supply chain. Recurring COVID-19 outbreaks have led to the re-introduction of some restrictions on retail operations in certain jurisdictions and such restrictions could be re-introduced more broadly. There can be no assurance that our stores will not be subject to modified hours, operations, capacity limitations and store closures in future periods, which may reduce sales. Further, in such case, we may not be able to obtain additional rent relief from our landlords. Any extended store closures could put increased demand on our omnichannel platform. Many of our larger, significant competitors have more highly developed omnichannel platforms and they may be able to more quickly and effectively respond to such changes in consumer behavior.

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Our supply chain was adversely affected in fiscal year 2021, and continues to be adversely affected, by international equipment shortages and shipping delays due to the COVID-19 pandemic. In the spring of 2020, while managing stay-at-home orders and store closures, we canceled orders and reduced the amount of inventory coming into our stores. As store traffic and net sales improved, we sought to strengthen our inventory positions. We believe these trends across the industry have caused significant congestion in the supply chain due to a global surge in demand for shipping space. Our increased net sales in last three quarters of fiscal year 2021 caused us to require shipping space well above our contracted volumes. While we are managing our inventory by working with our vendors to prioritize freight and minimize the impact where possible, this supply chain congestion has caused delays in our receipt of inventory. We are highly dependent on our third-party supply chain, and any further adverse impact from the COVID-19 pandemic has substantially impactedon their future ability to manufacture or deliver products to us could lead to inventory constraints in certain product categories and will continue to negativelymaterially adversely affect our business, results of operations, financial condition and cash flows.

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The global COVID-19 pandemic has resulted in significant disruptions to the global economy, and has been substantially impacting our business, results of operations and financial condition.

Following government mandates in certain locations as well as increasing advice from the Centers for Disease Control and Prevention for persons in the United States to take extraordinary health precautions, on March 20, 2020 we announced that we would temporarily close all of our stores nationwide for one week, after which we began to reopen stores in regions that were not required to remain closed by state or local mandates. Approximately 80% of our stores are fully open to foot traffic, and fewer than 10 stores remain closed to both foot traffic and curbside pickup, as of the filing of this report. At this time, the COVID-19 pandemic and resulting store closuresaccompanying market volatility, uncertainty and economic disruption also have caused a decline in revenue and cash flow from operations, adverse effects on store traffic, supply chain disruption, and has resulted in incremental costs which have disrupted our operations and adversely affected our business, resultsthe effect of operations and financial conditionheightening many of the other risks described herein.

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We significantly curtailed opening new stores in fiscal year 2021. While2021 and we have plans for fully reopening our remainingplan to open fewer net new stores in the future, these plans depend on a number of factors, including applicable regulatory restrictions, and there is substantial uncertainty regarding the manner and timing in which we can return some or all offiscal year 2022 than our business to more normal operations.

The temporary closure of our stores and decline in store traffic due to the COVID-19 pandemic has resulted in significantly declined cash flows from operations. There can be no assurance that we will not be required by landlords or authorities at the local, state or federal level to reinstate or extend store closures, or as to how long any such closure would continue. In general, during any such closure, we would still be obligated to make payments to landlords and for routine operating costs, such as utilities and insurance. There can be no assurance that we will have sufficient cash flows from operations or other sources of liquidity to continue making such payments when due, or that efforts to reduce, offset or defer such obligations, such as entering into deferral agreements with landlords or other creditors, will be successful. On March 12, 2020, as a precautionary measure to provide more financial flexibility and maintain liquidity in response to the COVID-19 pandemic, we elected to borrow an additional $55 million under our asset-based revolving line of credit (the “ABL Facility”), as described in Note 5 – Revolving Line of Credit, to our audited consolidated financial statements included in “Item 15. Exhibits and Financial Statement Schedules”. Additionally, we are seeking to amend our ABL Facility to provide for further incremental borrowings but there is no assurance that we will be successful in borrowing such incremental funds and such additional borrowings may lead to fees, increased interest rates and interest expense, and additional restrictive covenants and other lender protections.

long-term growth goal. Our customers may also be negatively affected by layoffs, work reductions or financial hardship as a result of the global outbreak of COVID-19, which could negatively impact demand for our products as customers delay or reduce discretionary purchases. Even once we are able to fully reopen our stores, health concerns could continue and could cause employees or customers to avoid gathering in public places, which could have an adverse effect on store traffic or the ability to adequately staffsuccessfully re-implement our stores. Any significant reductionnew store strategy in customer visits to, and spending at, our stores caused directly or indirectly by COVID-19 would continue to result in a loss of revenue and profits and could result in other material adverse effects.

The negative impact of the outbreak of COVID-19 could result in an adverse impact to manufacturing activity and supply chains, including as a result of work stoppages, factory and other business closings, slowdowns or delays, or if we fail to make timely payments to our suppliers. In addition, there may be restrictions and limitations placed on workers and factories, including shelter-in-place and stay-at-home orders and other limitations on the ability to travel and return to work, which could result in shortages or delays in production or shipment of products.

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We intend to open approximately 15 net new stores in fiscal year 2022, while also refreshing or remodeling a portion of our existing store base. Beginning in fiscal year 2023, we intend to open net new stores in line with our strategy of 10% net new stores per year. Our ability to successfully re-implement our new store strategy in future periods, on a timely basis or at all, would have a material impact on our business, results of operations, brand and stock price. The success of this strategy is dependent upon, among other things: the retail environment and other macroeconomic factors discussed above; the identification of suitable markets and the availability of real estate that meets our criteria for traffic, square footage, lease economics and demographics; the negotiation of acceptable lease terms; construction costs; the hiring, training and retention of local employees; and efficiently managing new inventory and distribution processes.

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Our results of operations have been and will continue to be materially affected by the timing and number of new store openings.

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The performance of new stores may vary depending on the time of year of the outbreak. Whilestore opening, store opening and occupancy costs, our brand and reputation in the ultimate durationmarket and impactthe location of this suspensionthe new store, including whether it is unknown, itlocated in a new or existing market. A new store in a new geographic market, where we are less familiar with the population and are less well known, may face different or additional risks. On the other hand, new stores in the same or adjacent geographic regions could result in competition among our stores. Further, we incur higher than normal employee and marketing costs for a store opening, while also typically benefitting from higher net sales in the initial opening period.

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Our long-term planned store expansion will place increased demands on our operational, managerial, administrative and other resources. We have a material adverse effect on the execution ofcontinually made investments in our inventory management and allocation systems, distribution systems, financial and management controls and information systems. Managing our growth strategyeffectively, including increasing our omnichannel platform, will require us to continue to enhance the foregoing and ourincur capital investment and expenses. Our return on investment, business financial condition and results of operations.operations will be adversely affected if we cannot manage our growth effectively, including competitive and operating challenges.

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Failure to obtain, manage and allocate our inventory effectively and our inability to satisfy changing consumer demands and preferences could materially adversely impact our operations.

Due to the nature ofaffect our business we make decisions regarding merchandise several months in advanceand profitability.

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We are focused on providing the broadest assortment of each of the seasons in which such merchandise will be sold, particularly with respecteveryday and seasonal products, offering over 50,000 SKUs throughout our large format stores. Our ability to maintain our merchandise that is manufactured, purchasedappeal to existing customers and imported from countries around the world. We must maintain sufficient inventory levels to operate our business successfully. However, if we misjudge consumer preferences or demands, we could have excess inventory that may need to be held for a long period of time, written down or discarded in order to clear excess inventory, especially seasonal and holiday merchandise. Conversely, if we underestimate consumer demand, we may not be able to provide certain products in a timely manner to ourattract new customers in order to meet their demand, which can result in lost sales. Either event could have a material adverse impactdepends on our business, financial condition and results of operations. Additionally, if our inventory planning and allocation system is unsuccessful, including the additional processing requirements attributable to our second distribution center, our ability to properly allocateoriginate, develop and offer a compelling product assortment responsive to customer preferences and design trends. Our business is vulnerable to demand and pricing shifts, suboptimal selection and timing of merchandise purchases, and distribution, and challenges with inventory to stores could be adversely affected.

Theremanagement and allocating product among store locations. We have not always accurately identified consumer trends and predicted our customers’ preferences in particular store markets or in aggregate, and there can be no assurance that we will be able to continue to offer assortments of products that appeal to our customers or that we will satisfy changing consumer demands and preferencessuccessfully do so in the future. Accordingly,We are more promotional in our business, financial conditionselling activities when we have excess inventories for particular products, which adversely impacts our profitability, and resultswe will continue this pricing strategy in future periods as necessary.

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Obtaining the right inventory and allocating such inventory is particularly critical with our seasonal products.For example, our seasonal purchases for Halloween and Christmas in fiscal year 2021 were made at time when many of operationsour stores were closed due to the pandemic and there was significant economic uncertainty. While customer demand was very high for Halloween and Christmas seasonal product, we did not have sufficient inventory to meet such demand. Although we make opportunistic seasonal buys to supplement our earlier purchasing decisions, this ability has limitations. Our purchasing strategy and inventory constraints have and may continue to limit our growth and net sales below customer demand.

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Difficulties with our vendors, disruptions in our supply chain, increased commodity prices or increased freight and transportation costs could be materially adversely affected if:

In addition, inventory shrinkage (inventory theft, loss or damage) rates could negatively impact our financial results. Furthermore, failure to control merchandise returns could also adversely affect our business. results of operations.

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We have established a provision for estimatedrely on third-party manufacturers and vendors to supply all of our products. Our performance depends on our ability to purchase merchandise returns based upon historical experienceat sufficient levels and other known factors. However, if actual returns are greater than those projected by management, additional reductions of revenue could be recorded in the future. In addition, to the extent that returned merchandise is damaged or otherwise not appealing to our customers, we may not receive full retail valueat competitive prices from the resale or liquidation of the returned merchandise.

Our business model currently relies on purchasing all inventory centrally through our home office in Plano, Texas. At this office, all product samples are developed and/or received and reviewed; in addition, all purchase orders are placed, fulfilled and allocated from the same location. Major catastrophic events such as natural disasters, epidemic disease (such as the global COVID-19 pandemic), localized labor issues or wages increases, fire or flooding, malfunctionvendors who can deliver products

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in a timely and efficient manner and in compliance with our vendor standards and all applicable laws and regulations. While we historically have not relied on any single vendor or disruptionsmall group of vendors for our products and have not had difficulties replacing vendors for various products we sell, there is no assurance that we will continue to be able to acquire desired merchandise in sufficient quantities or on terms acceptable to us, or be able to develop relationships with new vendors to replace any discontinued vendors. Our current strategy includes rationalizing our SKUs, creating more privately branded products and streamlining our supply chain, all of which may increase our reliance on particular manufacturers and vendors in future periods.

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Our ability to access products from our vendors has been, and may continue to be, adversely affected by geopolitical conflict and instability, public health issues (including the global COVID-19 pandemic and related quarantines), the financial instability of vendors, vendors’ noncompliance with applicable laws and our product requirements, trade restrictions, port closures and congestion, tariffs, and any disruptions in our vendors’ distribution network, supply chain or information systems,technology systems. Our supply chain was adversely affected in fiscal year 2021, and continues to be adversely affected, by international equipment shortages and shipping delays due to the pandemic, the impact of which is further exacerbated by the record demand for our products and sales growth in recent quarters. We expect our cost of sales and gross margin will be significantly impacted by an increase in freight costs due to the global shipping shortage. There is also typically a disruptiontwo-quarter lag from when we ship product to when these costs are expensed, so recent shortages and delays and resulting incremental freight costs will impact our profitability greater in communication services, power outages, forced closures or shipping interruptionsthe second half of fiscal year 2022 and future impacts will have a similar time lag. Disruptions within our supply chain could delay or otherwise adversely affect our ability to obtain inventory purchasingin a timely manner, which could impair our ability to meet customer demand for products and result in reduced sales, increased supply chain costs or allocation,reputational harm.

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We are adversely affected by substantial increases in product costs due to commodity cost increases or general inflation, including with respect to freight and transportation costs. Prices of certain commodities used in our merchandise, such as well aspetroleum, resin, copper, steel, cotton and lumber, are subject to fluctuation arising from changes in currency exchange rates, tariffs and trade restrictions and labor, fuel, freight and other transportation costs. In recent years, we have faced inflationary pressure on freight costs, which were heightened by tariff-related shipment surges and port congestion. Our costs and expenses could be materially adversely impacted by higher freight and transportation costs.

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Due to the ultimate distributionuncertainty of inventorycommodity price fluctuations and inflation and our strategy to maintain everyday low prices, we may not be able to pass some or all of these increased costs on to our storescustomers (which lowers our gross margins) and customers. Such disruptions couldattempting to pass along increased costs to customers has in the past had, and may continue to have, a direct negative impact on comparable store sales. Even if we are able to pass these increased costs on to our salescustomers, we may not be able to do so on a timely basis, our gross margins could decline and results of operations. Our business model of central purchasing could also failwe may not be able to accountimplement other price increases for differencesour merchandise. Any rapid and significant changes in consumer preferences by market. In such cases, and where our focus of providingcommodity prices or other supply chain costs would further exacerbate the broadest assortment of products for any room similarly did not account for differences in consumer preferences by market, our sales and results of operations could be adversely affected.foregoing risks.

Our manufacturing and transportation supply chains may be​

We are subject to international risks because we import a significant portion of our merchandise.

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Although our stores are based solely in the U.S., our business is subject to certain risks of a global company because we rely on foreign manufacturers and vendors to supply a large majority of our merchandise. Approximately 65% of our merchandise was purchased from vendors in foreign countries such as China, Vietnam, India, Turkey, Mexico and Hong Kong during fiscal year 2021, which percentage is consistent with recent prior fiscal years. In fiscal year 2021, we sourced additional product from various countries to mitigate the impact of global pandemics, suchhigh-tariff categories goods from China. In addition, many of our domestic suppliers purchase a portion of their products from foreign sources. For example, we purchase merchandise from domestic suppliers that is imported from China or that is manufactured in China. Currently, we do not employ any resources on the ground in Asia to manage our procurement process and various supplier relationships. Instead, we often rely on trading companies to handle sourcing and logistics with Asian factories, although this will be partially mitigated as COVID-19.we increase our use of direct sourcing. Our significant international supply chain increases the risk that we will not have adequate and timely supplies of various products due to local political, economic, social or environmental conditions (including political instability, international conflicts, acts of terrorism or natural disasters), epidemics (including the COVID-19 pandemic), transportation delays (including dock strikes,

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inefficient freight requirements, and other work stoppages), restrictive actions by foreign governments or changes in U.S. laws, trade policy and regulations affecting imports or domestic distribution.

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All of our products manufactured overseas and imported into the U.S. are subject to duties collected by the U.S. Customs Service. We may be impacted by factory closures, port closuressubjected to additional duties or tariffs, significant monetary penalties, the seizure and forfeiture of the inabilityproducts we are attempting to import or the loss of import privileges if we or our suppliers are found to be in violation of U.S. laws and regulations applicable to the importation of our vendorsproducts. Tariffs also can impact our or our vendors’ ability to produce and ship products. In addition, oursource product efficiently or create other supply chain disruptions. The tariffs enacted in fiscal year 2019 did not have a material adverse impact on our gross margin due to a combination of supplier negotiations, direct sourcing and strategic price increases. However, the additional tariffs enacted in fiscal year 2020 led us to institute strategic price increases, which had a direct negative impact on comparable store sales. We may not be subjectable to financial risks as raw material producers and manufacturers experience financial hardships, closuresfully or substantially mitigate the inabilityimpact of future tariffs, pass price increases on to attract a labor force. While productionour customers or secure adequate alternative sources of certain of our product categories is concentrated in localized regions that are subject to the COVID-19 pandemic, our broader production base is diversified across regions with opportunities to make strategic shifts as business conditions allow.products.

The loss of, or disruption in, or our​

Our inability to efficiently operate or manage disruptions in our distribution network could have a materially adverse impact onadversely affect our business.

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We operate cross dockcross-dock distribution centers in Plano, Texas and Carlisle, Pennsylvania, as well as warehouse premises in Garland, Texas. The majority of our inventory is shipped directly from suppliers to our distribution centers where the inventory is processed promptly and then shipped to our stores. Only mattresses and some food items are shipped directly to stores. We rely in large part on the orderly operation of this receiving and distribution process, which depends on our automated distribution system, adherence to shipping schedules and effective management of our distribution network. If complications arise with ourWe do not have significant storage at the distribution facilitiescenters or ifstores (other than what is on store shelves) or otherwise. Disruptions in the facilities or warehouse premises (or a significant portionoperations of inventory located there) is severely damaged or destroyed, our ability to receive and deliver inventory on a timely basis will be significantly impaired. There can be no assurance that disruptions in operationsany distribution facility due to natural or man-made disasters, epidemic disease, fire, flooding, terrorism or other catastrophic events, system failure, labor disagreements or shipping problems will not result in delays in the delivery of merchandisemay significantly impair our ability to our stores. For example, the global COVID-19 pandemic hasreceive and could continue to result in disruption in the supply of products to our stores during any period in which either of our distribution centers is closed or if employees at our distribution centers are unable to work due to the outbreak or government response thereto.

Such delaysdeliver inventory on a timely basis, and could materially adversely impactaffect our business. In addition, we could incur significantly higher costs

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We expect to make additions and longer lead times associated with distributing merchandiseupgrades to our stores duringinfrastructure investments in the time it takes for usfuture to reopen or replacecontinue to support our distribution centers. Moreover, our business interruption insurance may not be adequateoperating model over a significantly expanded store base. We made significant investments relating to cover or compensate us for any losses that may occur. We opened our second distribution center in earlyPennsylvania, which opened in the beginning of fiscal year 2020, and we believeincurred net operating costs in connection therewith during fiscal year 2020 that impacted our two distribution centers in Plano, Texas and Carlisle, Pennsylvania, should collectively be able to support more than 350 stores. However, there can be no assurance that there will not be any delay in fully utilizing the new distribution center or that there will not be any delays or issues in shipping schedules, logistics or systems.operating margins.

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We rely upon various means ofindependent third-party transportation through third parties, including shipments by air, sea, rail and truck,providers to deliver products to our distribution centers from vendors and from our distribution centers to our stores, as well asstores. Our use of third-party transportation providers for direct shipments from vendorsis subject to stores. Laborvarious risks, including labor shortages or capacity constraints in the transportation industry, disruptions to the national and international transportation infrastructure, fuel shortages or transportation cost increases (such as increases in fuel costs or port fees). Any disruption, unanticipated expense or operational failure related to our distribution network could negatively affect certain store operations and materially adversely affect our business and operating results particularly as we receive and deliverof operations. Any significant expansion of our seasonal and holiday merchandise.omnichannel strategy may exacerbate the foregoing risks.

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We operate in a highly competitive retail environment and the size and resources of some of our competitors may allow them to compete more effectively than we can.

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The retail home décor business is highly competitive. Because of the fragmented nature of the home décor market, we compete with a diverse group of retailers, including mass merchants, home improvement and craft stores, home specialty/décor retailers, as well as various other small, independent retailers. Some of our competitors have greater financial resources and larger customer bases than we have, and as a result may have a more advanced omnichannel platform, be able to adapt quicker to changes in consumer behavior, have larger and more dependable customer loyalty programs, and maintain higher profitability in an aggressive low pricing environment. Rapidly evolving technologies are altering the manner in which retailers communicate and transact with customers, led by internet-based and omnichannel retailers that have made significant investments in recent years, including with pricing technology and shipping capabilities. Our current strategy is designed to increase our ability to compete, but it remains subject to significant execution risk that will require adjustments over time, including to address future investments made by larger competitors. Slower growth or a numberloss of risks because we import a significant portion of our merchandise.

Approximately 65% of our merchandise was purchased from vendors in foreign countries such as China, Vietnam, India, Turkeycustomers, net sales or market share could require us to increase marketing and Hong Kong during fiscal year 2020. In addition, many of our domestic vendors purchase a portion of their products from foreign sources. For example, we purchase merchandise from domestic vendors that is imported from China or that is manufactured in China and assembled in the United States. Currently, we do not employ any resources on the ground in Asia to manage our procurement process and various vendor relationships. Instead, we often rely on trading companies to handle sourcing and logistics with Asian factories.

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Substantial regulatory uncertainty exists regarding international tradeadvertising expenditures or increase the use of discounting or promotional campaigns (in particular due to our everyday low pricing strategy), each of which could materially adversely affect our margins and trade policy, bothprofitability.

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Our inability to successfully execute and optimize our omnichannel retail strategy and maintain a relevant and reliable omnichannel experience for our customers could materially adversely affect our business, growth, results of operations and financial condition.

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Our success depends on our ability to appeal to existing and potential customers, who increasingly rely on multiple channels to meet their shopping needs. Consumers, particularly in light of the United StatesCOVID-19 pandemic, are increasingly embracing various shopping methods and abroad. For example,customer expectations about the United States introduced multiple tranches of tariffs on certain goods imported from China. The United Statesmethods by which they purchase and receive products or services are evolving. We may be challenged to further develop our omnichannel capabilities while continuing to optimize our physical store operations and maintaining profitability. Our omnichannel strategy has and will continue to require investment in technology, operational changes and management focus. Changes in consumer shopping habits may reduce customer traffic at various times, called for the possible implementation ofour current physical retail locations, which may lead to a border tax and hasdecline in our operating performance. There is also raised the possibility of other initiativesno assurance that may affect importation of goods including renegotiation of trade agreements with other countries and the possible introduction of further import duties or tariffs. Someany of our merchandisecurrent or future omnichannel initiatives will offset any decline in store traffic.

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Omnichannel retailing is included on the lists of products issuedrapidly evolving and we must counteract new developments and technology investments by the Office of the U.S. Trade Representative and may be impacted by tariffs to the extent that such merchandise is sourced from China. In addition, President Trump removed India and Turkey from the Generalized System of Preferences, a U.S. program that allows developing countries to export a range of products to the United States duty-free, effective June 5, 2019 and May 17, 2019, respectively. Some of our merchandise may be impacted by this change to the extent that it is sourced from India or Turkey. Such tariffs, and the possible implementation of a border tax or additional tariffs, as well as any potential retaliatory trade restrictions implemented by other countries, could materially increase our cost of goods sold with respect to merchandise that we purchase from vendors who manufacture products in China or other countries outside the United States or cause potential delays in products received from our vendors. Such adverse results could in turn require us to increase our prices or find alternative vendors in unaffected countries and, in the event consumer demand declines as a result, negatively impact our financial performance. Furthermore, certain of our competitors may be better positioned than us to withstand or react to border taxes, tariffs or other restrictions on global trade and as a result we may lose market share to such competitors. Due to broad uncertainty regarding the timing, content and extent of any regulatory changes in the U.S. or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition and results of operations. We may not be able to fullycompete as effectively with seasoned e-commerce retailers or substantially mitigatelarger omnichannel competitors who have more well established omnichannel and online sales and distribution networks, and greater resources than we do to devote to these strategies. In fiscal year 2021, we nationally launched our BOPIS program, curbside pick-up and local delivery options, although the impactvast majority of such tariffs, pass price increases onsales continue to be in our stores. If our omnichannel offerings are unable to compete against other omnichannel competitors to attract customers, or secure adequate alternative sourcesif any future expanded omnichannel offerings are not successful, our ability to compete with other retailers would be diminished and our business, growth, results of products.operations and financial condition could be materially adversely affected.

On October 1, 2018, the United States, Canada​

The investment and Mexico agreed to a new trade deal to replace the North American Free Trade Agreement, now known as the United States-Mexico-Canada Agreement (“USMCA”). After congressional approval, the USMCA was signed into law on January 29, 2020. The USMCA has been ratified by all three nations and is expected to enter into force on July 1, 2020. The full impact of the USMCA on us, our customers and on the economic conditionsgrowth in our markets is currently unknown.omnichannel capabilities also increases our vulnerability to other material risks and uncertainties, including changes in required technology interfaces, technical failures, costs and technical issues related to upgrading website software, changes in applicable federal and state regulations, data security and ransomware breaches, consumer privacy concerns and maintaining competitive technology, some of which we do not control. It also may take longer than anticipated to generate the expected benefits from our omnichannel initiatives and there can be no guarantee that these initiatives will provide the anticipated benefits or result in improved results of operations.

Foreign sourcing subjects us to a number of risks generally associated with doing business abroad such as the following:​

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Over time,primarily includes opening new stores, requiring that we regularly enter into new leases at current store locationsmarket rental rates and incur capital expenditures to build the lease to suit, which may not continue to be desirable because of changes in demographics within the surrounding area or a decline in shopping traffic, including traffic generated by other nearby stores. Althoughadversely impact our operating margins.

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While we have the right to terminate some of our leases under specified conditions, including by making certainspecified payments, (typically within two to three years after opening a store), we may not be able to terminate a particular lease if or when we would like to do so.desired. If we decide to close stores, we are generally required to either continue to payperform obligations under the applicable leases, which often include, among other things, paying rent and operating expenses for the balance of the lease term, or for certain locations, paypaying to exercise rights to terminate, which in either case could be expensive. Even ifterminate. When we are able to assign leases or sublease vacated locations where our lease cannot be terminated,space to third parties, we may remain liable on the lease obligations, which could lead to significant expense if the assignee or sublessee does not perform.

In addition, when leasesthe lease terms for the stores in our ongoing operations expire, we may be unableour ability to negotiate renewals, eitherrenew such expiring leases on commercially acceptable terms or, at all, which could cause usif such leases cannot be renewed, our ability to close storeslease a suitable alternative location on favorable terms will each depend on many factors, such as conditions in locations that may be desirable. We may be unable to relocate these stores cost-effectively or at allthe local real estate market, competition for desirable properties and there can be no assurance that any relocated stores will be successful.our relationships with current and prospective lessors.

We are subject to risks associated with our sale-leaseback strategy.​

From time to time, we engage in sale-leaseback transactions. Thetransactions, the net proceeds from such transactionswhich have been used to reduce outstanding debt and fund future capital expenditures for new store development. However,development; however, the sale-leaseback market may cease to be a reliable source of additional cash flows for us in the future if capitalization rates become less attractive or other unfavorable market conditions develop, or the perceived value of our owned property declines. For example, should the sale-leaseback market require significantly higher yields (which may occur as interest rates rise), we may not enter into sale-leaseback transactions, which could adversely affect our abilityresult in an increase in financing expense.

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Failure to reduce outstanding debtattract, develop and fund capital expenditures for future store development.

We operate inretain quality employees and to manage labor costs (including any impact of a highly competitive retail environment.

The retail business is highly competitive. The marketplace for home décor products is highly fragmented as many different retailers compete for market share by using a variety of store formats and merchandising strategies, dedicating a portion of their selling space to a limited selection of home décor, seasonal and holiday merchandise. Although we are the only big box concept solely dedicated to the home décor space, for all of our major products we compete with a diverse group of retailers, including mass merchants (such as Target and Wal-Mart), home improvement stores (such as Home Depot and Lowe’s), craft retailers (such as Hobby Lobby, Jo-Ann Stores and Michaels Stores), home specialty/décor retailers (such as Bed Bath & Beyond, The Container Store, Home Goods and Pier 1 Imports), as well as various other small, independent retailers. In addition, we compete with Internet-based retailers (such as Wayfair and Amazon), which competition could intensify in the future.

We compete with these and other retailers for customers, retail locations, management and other personnel. Some of our competitors are larger and have greater resources, more customers and greater store brand recognition. They may secure better terms from vendors, adopt more aggressive pricing and devote more resources to technology, distribution and marketing. Competitive pressures or other factors could cause us to lose customers, sales and market share, which may require us to lower prices, increase marketing and advertising expenditures or increase the use of discounting or promotional campaigns, each of whichsignificantly increased minimum wage) could materially adversely affect our marginsbusiness and could resultprofitability.

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Our performance depends on attracting, developing and retaining qualified employees at the store operations level, in distribution centers, and at the corporate level, all at costs that allow us to conduct our operations profitably. Many of our store employees are in entry level or part-time positions with historically high rates of turnover. Our ability to meet our labor needs, while managing our labor costs, is subject to many external factors, including competition for and availability of qualified employees in a given market, unemployment levels within those markets, prevailing wage rates, minimum wage laws, changing demographics, health and other insurance costs and changes in employment and labor laws (including changes in the process for our employees to join a union) or other workplace regulation. In the event of changes in the federal or state minimum wage, living wage requirements or changes in other wage or workplace regulations, including, for example, health care or employee leave regulations, or if our overall compensation and benefits fail to remain competitive, then the quality of our workforce could decline, our labor costs may increase and our business and profitability may be materially adversely affected.

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Our business is moderately seasonal and weak sales during one of our peak seasons could have a disproportionate effect on our overall results of operations and financial condition.

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Our net sales and operating income fluctuate seasonally due to our seasonal and holiday merchandise, with a higher level of our operating income typically realized during the second and fourth fiscal quarters. Any decrease in sales or margins during these periods could have a disproportionate effect on our operating results of operations and profitability. We cannot guarantee thatfinancial condition for the fiscal year.

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In anticipation of seasonal increases in sales activity during these periods, we will continueincur significant additional expense prior to and during our peak seasonal periods, which we may finance with additional short-term borrowings. Seasonal fluctuations affect our inventory levels and staffing levels. In particular, we must carry a significant amount of inventory, especially before the spring and holiday season selling periods. If we are not successful in selling our inventory, we may have to write down our inventory, sell it at significantly reduced prices (which is part of our historical pricing strategy) or not be able to compete successfully against existing or future competitors. Further, although we do not currently engage in e-commerce, there is no assurance that we will not in the future,sell it at all, any of which could cause our gross margins to decline and the use of e-commerce by our competitors could have a materialan adverse effect on our business. Expansion into markets served by our competitors, entry of new competitors, expansion of existing competitors into our markets or the adoption by competitors of innovative store formats and retail sale methods, including e-commerce, could cause us to lose market share and could be detrimental to our business, financial condition and results of operations.operations and financial condition.

Opening new stores in existing markets may negatively affect sales at our existing stores.​

The consumer target area of our stores varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography. As a result, the opening of a new store in or near markets in which we already have stores could adversely affect the sales of existing stores.

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ExistingDisruptions to our information systems, or our failure to adequately support, maintain and upgrade these systems, could negatively impact our business and results of operations.

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We rely heavily on information technology systems across our operations for numerous purposes including for finance and accounting functions, merchandising and inventory management, administrative functions, inventory management, point-of-sale processing and payment in our stores and on our website, supply chain management, delivery services, loyalty rewards functionality and various other processes and transactions. Additionally, the success of initiatives to drive growth through omnichannel operations is highly dependent on our technology systems. We also rely on third-party providers and platforms for some of these information technology systems and support. We may be unable to improve, upgrade, integrate or expand upon our existing systems on a timely basis, and any costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology could also make it more difficultdisrupt or reduce the efficiency of our operations.

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Although we, as well as our third-party service providers, have operational safeguards in place, they may not be effective in preventing the failure of these information technology systems or platforms to buildoperate effectively. Such failures may be caused by various factors, including power outages, computer viruses, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, errors or improper use by our consumer base foremployees or third-party service providers, or a new storebreach in the same market. Oursecurity of these systems or platforms, including through cyber-attacks (including ransomware). If our incident response, disaster recovery and business strategy doescontinuity plans do not entail opening new stores that we believe willeffectively resolve these issues, such system failures could also disrupt our ability to track, record and analyze sales and inventory, process financial information (including credit card transactions), process payroll or vendor payments or engage in other similar normal business activities. The foregoing risks could cause reputational harm and materially affect sales at our existing stores, but we may selectively open new stores in and around geographic regions of existing stores that are operating at or near capacity to effectively serve our customers. Sales cannibalization between our stores may become significant in the future as we continue to expand our operations and could affect our comparable store sales, which could, in turn, adversely affect our business financial condition orand results of operations.

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Unauthorized disclosure of sensitive or confidential customer information could harm our business and standing with our customers and subject us to penalties under data protection rules and privacy laws.

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We faceregularly receive and store information about our customers, employees, vendors and other third parties. In connection with certain activities, including payment processing, website hosting, data encryption and software support, among others, we utilize third-party service providers, and we believe we take appropriate steps to require such providers to secure such information and periodically assess their ability to do so. We invest considerable resources in maintaining our computer systems and protecting sensitive information, but our facilities and systems, and those of our third-party service providers, may nevertheless be vulnerable to security breaches, cybercrimes, computer viruses, programming or human errors or other similar events, some of which may not be immediately detected. A breach of our security systems, or those of our third-party service providers, resulting in unauthorized access to stored personal information could cause us to incur significant costs to restore the integrity of our data and systems, and subject us to government penalties and private litigation, any of which may materially adversely affect our results of operations, and cause reputational harm. The recent increase in remote working by our employees and the increase in online orders as a result of the COVID-19 pandemic may exacerbate any of the foregoing risks. While we maintain insurance coverage that may cover certain aspects of cyber risks, relatedsuch insurance coverage may be insufficient to cover all losses and would not remedy any damage to our substantial indebtedness and limitations on future sourcesreputation in the event of liquidity.a data security incident.

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AsThe legal and regulatory environment regarding cybersecurity and data privacy is increasingly complex and expansive, including enhanced requirements for using and treating personal data. Although we have implemented policies and procedures that are designed to ensure compliance with applicable laws, rules and regulations, these matters are increasingly subject to enforcement, litigation and increasing complexities. If our privacy or data security measures fail to comply with applicable current or future laws and regulations, we could incur substantial costs or be exposed to further litigation and regulatory risks, which could adversely affect our results of January 25, 2020, we had total borrowingsoperations and cause reputational harm.

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Table of $571.7 million outstanding under our ABL FacilityContents

Risks Relating to Debt and Liquidity

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Our debt and our Term Loan (as defined below). Our substantialability to increase future leverage could limit our operating flexibility and material adversely affect our financial condition and cash flows.

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Although currently we have significant borrowing availability, historically we have had periods of significant leverage and any future increased leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry expose(placing us at a competitive disadvantage compared to interest rate risk associated withcompetitors that are less highly leveraged), reduce our variable rateability to use cash flows for operating, investing and financing opportunities (including working capital, capital expenditures, mergers and acquisitions and equity or debt repurchases), and prevent us from meeting our obligations under the agreements governing our indebtedness. Our ability to meet our payment and other obligations under the ABL Facility and $350 million senior secured term loan (the “Term Loan”). Our substantial indebtedness couldthe Senior Notes indenture depends on our ability to generate significant cash flows in the future. We are a holding company and do not have important consequencesany material assets or operations other than ownership of equity interests of our subsidiaries, and our ability to make scheduled payments on our debt obligations will depend on their ability to general sufficient cash flows and distribute funds to us. We cannot assure you that our business will generate cash flow from operations, or that additional capital will be available to us, including:

The occurrence of any one of these eventsalternatives, we may not be able to meet our payment obligations under the ABL Facility or the Senior Notes indenture. Furthermore, the ABL Agreement and the Senior Notes indenture contain covenants that may restrict our ability to implement our business plan, finance future operations, pay dividends, respond to changing business and economic conditions, secure additional financing, and engage in certain transactions (including mergers, acquisitions and dispositions).

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If we default under the ABL Agreement or the Senior Notes indenture because of an inability to meet our payment obligations, a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable. We cannot assure you that we would have ansufficient funds to repay all the outstanding amounts under the ABL Facility or the Senior Notes indenture, and any acceleration of amounts due would have a material adverse effect on our business, growth strategy, liquidity, financial condition results of operations, and ability to satisfy our obligations under our indebtedness.

continue as a going concern. We and our subsidiaries also may be able to incur substantial additional indebtedness in the future, subject to the foregoing restrictions, contained inwhich could exacerbate the credit agreements governing our ABL Facility and Term Loan.leverage risks noted above.

Furthermore, certain​

Certain of our variable rate indebtedness uses LIBOR as a benchmark for establishingbears interest based on the rate of interest. LIBOR has been the subject of recent regulatory guidance and proposals for reform, and itLondon Interbank Offered Rate (LIBOR), which is currently expected that LIBOR willto be discontinued generally after 2021. While our material financing arrangements indexed to LIBOR provide procedures for determining an alternative base rate in the event that LIBOR is discontinued, there can be no assurances as to whether such alternative base rate will be more or less favorable than LIBOR. We intend to monitor developments with respect toAny changes in regulatory standards or industry practices, such as the phasing out of LIBOR. The consequences of these developments cannot be entirely predicted, but could include an increasetransition away from LIBOR as a benchmark reference for short-term interest rates, may result in cost of our variable rate indebtedness.

In response to the global COVID-19 pandemic, we temporarily closed all of our stores, of which approximately 20% are open only to curbside pickup and/or delivery as of the filing of this report, and borrowed $55 million in incremental borrowings under our ABL Facility. We expect the incremental borrowings to remain outstanding for the remainder of fiscal year 2021. Additionally, we are seeking to amend our ABL Facility to provide for further incremental

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things, increased litigation and regulatory risk that could result in significant administrative and third party expenses, monetary damages including fines and penalties, administrative enforcement actions, and civil and criminal liability, any of which could materially adversely affect our business, results of operations, cash flows and reputation.

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Substantial regulatory uncertainty exists regarding international trade and trade policy, both in the United States and abroad, in particular in recent years due to multiple tranches of tariffs on certain goods imported from China and related trade disputes, as well as the impact of the new free trade agreement among the United States, Canada and Mexico. In addition, as a publicly traded company weany changes in the legal or regulatory environment affecting labor and employment, trade, product safety, cybersecurity and data privacy, transportation and logistics, health care, tax, responsible sourcing, operations or environmental issues, among others, may be exposed toincrease the riskcomplexity of stockholder litigation if our stock price declines. Laws and regulations affecting our business may change, sometimes frequently and significantly, as a result of political, economic, social or other events. Changes in the regulatory environment in which we operate and the areasrelated cost of product safety, environmental protection, privacy and information security, health care, labor and employment, U.S. customs, advertising and taxes, among others, could potentially impact our operations and financial results. For example, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use and environmental factors could delay or prevent development of new stores in particular locations. Environmental laws and regulations also govern, among other things, discharges of pollutants into the air and water as well as the presence, handling, release and disposal of and exposure to hazardous substances. These laws provide for significant fines and penalties for noncompliance. Third parties may also make personal injury, property damage or other claims against us associated with actual or alleged release of, or exposure to, hazardous substances at our properties. We could also be strictly liable, without regard to fault, for certain environmental conditions at properties we formerly owned or operated as well as at our current properties. We could be negatively impacted by developments in these areas due to the costs of compliance, andcompliance. In addition, if we fail to comply with a law or regulation,other applicable laws and regulations, including the Foreign Corrupt Practices Act and local anti-bribery laws, we maycould be subject to claims, lawsuits,reputational and legal risk, including government enforcement action and class action civil litigation. Although we undertake to monitor changes in these laws, if these laws change without our knowledge, or are violated by importers, manufacturers, vendors or agents, we could experience delays in shipments and receipt of goods, or be subject to fines penalties, loss of a license or permit and adverse publicity or other consequences thatpenalties under the applicable regulations, any of which could have a material adverse effect onnegatively affect our business and results of operations.

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Product recalls and/or product liability, as well as changes in product safety and other consumer protection laws, may adversely impact our operations, merchandise offerings, reputation, results of operations, cash flow and financial condition.

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We are subject to regulations by a variety of federal, state and international regulatory authorities, including Thethe Consumer Product Safety Commission. A large portionWe face enhanced risks since all of our merchandise isproducts are manufactured inby third parties, including a significant portion from foreign countries. As such, one or more of our vendors mightmanufacturers that may not adhere to U.S. product safety requirements or ourcustomary quality control standards, and we might not identify theany deficiency before merchandise ships to our stores. If our merchandise offerings do not meet applicable safety standards or our customers’ expectations regarding safety, we could experience lost sales and increased

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Sales of a substantial number of shares of our common stockProvisions in the public market by our existing stockholders could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.

Moreover, the approximately 16.4% of our outstanding common stock held by AEA and the approximately 6.7% of our outstanding common stock held by Starr Investments has been registered for resale on Form S-3. Pursuant to the registration rights agreement to which we and such holders are parties, these holders have the right, subject to certain conditions, to require us to facilitate future offerings of their shares, which would result in their shares becoming freely tradable without restriction under the Securities Act, unless purchased by affiliates (as defined in Rule 144 under the Securities Act). In November 2018, the shares of our common stock owned by Starr Investments became eligible for sale without registration pursuant to Rule 144 of the Securities Act, but such shares may still be sold in connection with future offerings pursuant to the registration rights agreement. Sales of stock by these stockholders could have a material adverse effect on the trading price of our common stock.

As of May 15, 2020, we had 64,185,751 shares of common stock outstanding. Of these shares, all but the 10,536,504 shares of our common stock held by AEA, as well as the shares held by our executive officers and directors, are freely transferable without restriction or further registration under the Securities Act.

On April 5, 2017, we filed a registration statement on Form S-8 under the Securities Act to register the shares of common stock to be issued under our equity compensation plans and, as a result, all shares of common stock acquired upon exercise of stock options granted under our plans are also freely tradable under the Securities Act, unless held by our affiliates. As of January 25, 2020, there were stock options outstanding to purchase a total of 5,825,516 shares of our common stock and 748,512 shares of our common stock subject to restricted stock units. In addition, as of January 25, 2020, 4,917,609 shares of our common stock were reserved for future issuance under our Equity Incentive Plan.

If securities or industry analysts do not publish or cease publishing research or reports about At Home, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.

The trading market for our common stock depends in part on the research and reports that third-party securities analysts publish about At Home and the retail industry. One or more analysts could downgrade our common stock or issue other negative commentary about At Home or our industry. In addition, if one or more of these analysts cease coverage of At Home, we could lose visibility in the market. As a result of one or more of these factors, the trading price of our common stock could decline.

Some provisions of our charter documents and Delaware law may have anti-takeover effectsdeter takeover efforts and other actions that could discourage an acquisitionstockholder believe are in their best interests, or limit the ability of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.obtain a favorable judicial forum for disputes with us.

Provisions in​

Delaware law and certain provisions of our second amended and restated certificate of incorporation and our amended and restated bylaws as well as provisions of the Delaware General Corporation Law, or DGCL, could make it more difficultharder for a third-partythird party to acquire us or increase the cost of acquiring us, even if doing so would benefitmight be beneficial to our stockholders. These provisions include, among other things: establishing a classified board of directors such that not all members of the board are elected at one time; limiting the ability of our stockholders including transactions into act by written consent; authorizing the issuance of preferred stock without stockholder approval, which could be used to dilute a potential hostile acquirer; eliminating the ability of stockholders might otherwise receiveto call a premium for their shares. These provisions include:

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lease agreement, and are subject to certain limitations. A summary of our store locations by state as of January 25, 202030, 2021 is below:

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We lease a 592,000 square foot distribution center in Plano, Texas, which also serves as our corporate headquarters. The lease will expire in 2036 and we have options to renew the lease for an additional period of up to 20 years. At the beginning of fiscal year 2020, we opened an 800,000 square foot second distribution center in Carlisle, Pennsylvania. The lease will expire in 2031 and we have options to renew the lease for an additional period of up to 10 years. We believe that our current distribution center facilities will be sufficient to support more thanat least 350 stores. We also lease an additional 555,000 square foot warehouse premises located in Garland, Texas, for initial inventory build-up for new store openings. The lease will expire in 2024 and we have options to renew the lease for an additional period of up to five years.

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ITEM 3. LEGAL PROCEEDINGS

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We are subject to various litigations, claims and other proceedings that arise from time to time in the ordinary course of business. We believe these actions are routine and incidental to the business. While the outcome of these actions cannot be predicted with certainty, we do not believe that any will have a material adverse impact on our business.

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ITEM 4. MINE SAFETY DISCLOSURES

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Not applicable.

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PARTPART II

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

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Market Information

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Our common stock is listed on the NYSENew York Stock Exchange (the “NYSE”) under the symbol “HOME”. As of January 25, 2020,30, 2021, there were approximately sixtwo holders of record of our common stock. The number of holders of record is based upon the actual number of holders registered at such date and does not include holders of shares in “street names” or persons, partnerships, associates, corporations or other entities identified in security position listing maintained by depositories.

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Dividend Policy

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We do not currently expect to pay any cash dividends on our common stock for the foreseeable future. Instead, we intend to retain future earnings, if any, for the future operation and expansion of our business, and the repayment of debt.debt and other strategic or opportunistic uses of our liquidity. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors may deem relevant. Our business is conducted through our subsidiaries. Dividends, distributions and other payments from, and cash generated by, our subsidiaries willwould be one of our principal sources of cash to repay indebtedness, fund operations and pay dividends. Accordingly, our ability to pay dividends to our stockholders is dependent onmay be significantly limited by the earnings and distributions of funds from our subsidiaries. In addition, the covenants in the agreements governing our existing indebtedness significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. For information regarding restrictions on the payment of dividends imposed by agreements for indebtedness, see “Note 5 – Revolving Line of Credit”, to our audited consolidated financial statements included in “Item“Item 15. Exhibits and Financial Statement Schedules”Schedules”, which is incorporated herein by reference.

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Unregistered Sales of Equity Securities and Use of Proceeds

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None.

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Purchase of Equity Securities by the Issuer and Affiliated Purchasers

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None.

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Performance Graph

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The following graph shows a comparison of cumulative total return to holders of shares of At Home Group Inc.’s common stock against the cumulative total return of S&P 500 Index and S&P 500 Specialty Retail Index from August 4, 2016 (the date our common stock commenced trading on the NYSE) through January 25, 2020.30, 2021. The comparison of the cumulative total returns for each investment assumes that $100 was invested in At Home Group Inc. common stock and the respective indices on August 4, 2016 through January 25, 202030, 2021 including reinvestment of any dividends. Historical share price performance should not be relied upon as an indication of future share price performance.

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Table of Contents

This performance graph and related information shall not be deemed “soliciting material” or to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities Act orof 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate it by reference into such filing.

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ITEM 6. SELECTED FINANCIAL AND OPERATING DATA

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The following selected consolidated financial data for each of the years ended January 25, 2020, January 26, 2019 and January 27, 2018, and the selected consolidated balance sheet data as of January 25, 2020 and January 26, 2019 have been derived from our audited consolidated financial statements, which are included in “Item 15. Exhibits and Financial Statement Schedules”. The selected consolidated financial data for the fiscal years ended January 28, 2017 and January 30, 2016 and the consolidated balance sheet data as of January 27, 2018, January 28, 2017 and January 30, 2016 have been derived from our audited consolidated financial statements, which are not included in this Annual Report on Form 10-K.