Container Store (TCSGQ) 10-Q 7 Jan 16 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Nov. 28, 2015	Dec. 23, 2015
Document and Entity Information
Entity Registrant Name	Container Store Group, Inc.
Entity Central Index Key	1,411,688
Document Type	10-Q
Document Period End Date	Nov. 28, 2015
Amendment Flag	false
Current Fiscal Year End Date	--02-27
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		47,986,975
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

Consolidated balance sheets

Consolidated balance sheets - USD ($) $ in Thousands	Nov. 28, 2015	Feb. 28, 2015	Nov. 29, 2014
Current assets:
Cash	$ 14,571	$ 24,994	$ 13,965
Accounts receivable, net	24,170	24,319	24,036
Inventory	109,296	83,724	103,850
Prepaid expenses	8,438	7,895	9,259
Income taxes receivable	1,637	1,698	3,205
Deferred tax assets, net	3,256	3,256	3,967
Other current assets	11,584	11,056	14,589
Total current assets	172,952	156,942	172,871
Noncurrent assets:
Property and equipment, net	175,239	169,053	168,859
Goodwill	202,815	202,815	202,815
Trade names	227,659	229,433	234,557
Deferred financing costs, net	6,540	7,742	8,231
Noncurrent deferred tax assets, net	2,285	1,739	1,055
Other assets	1,703	1,333	1,178
Total noncurrent assets	616,241	612,115	616,695
Total assets	789,193	769,057	789,566
Current liabilities:
Accounts payable	50,435	48,904	50,163
Accrued liabilities	57,744	59,891	54,837
Revolving lines of credit	8,415	2,834	10,250
Current portion of long-term debt	5,239	5,319	5,332
Income taxes payable	300	2,188	1,377
Deferred tax liabilities, net			29
Total current liabilities	122,133	119,136	121,988
Noncurrent liabilities:
Long-term debt	350,950	326,775	348,489
Noncurrent deferred tax liabilities, net	81,200	82,965	84,101
Deferred rent and other long-term liabilities	38,357	38,319	38,657
Total noncurrent liabilities	470,507	448,059	471,247
Total liabilities	$ 592,640	$ 567,195	$ 593,235
Commitments and contingencies (Note 7)
Shareholders' equity:
Common stock, $0.01 par value, 250,000,000 shares authorized; 47,986,975 shares issued and outstanding at November 28, 2015; 47,983,660 shares issued and outstanding at February 28, 2015; 47,981,512 shares issued and outstanding at November 29, 2014	$ 480	$ 480	$ 480
Additional paid-in capital	856,515	855,322	855,038
Accumulated other comprehensive loss	(20,587)	(18,342)	(10,541)
Retained deficit	(639,855)	(635,598)	(648,646)
Total shareholders' equity	196,553	201,862	196,331
Total liabilities and shareholders' equity	$ 789,193	$ 769,057	$ 789,566

Consolidated balance sheets (Pa

Consolidated balance sheets (Parenthetical) - $ / shares	Nov. 28, 2015	Feb. 28, 2015	Nov. 29, 2014
Consolidated balance sheets
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	250,000,000	250,000,000	250,000,000
Common stock, shares issued	47,986,975	47,983,660	47,981,512
Common stock, shares outstanding	47,986,975	47,983,660	47,981,512

Consolidated statements of oper

Consolidated statements of operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Consolidated statements of operations
Net sales	$ 197,241	$ 190,922	$ 562,556	$ 557,607
Cost of sales (excluding depreciation and amortization)	81,137	77,063	233,299	229,230
Gross profit	116,104	113,859	329,257	328,377
Selling, general, and administrative expenses (excluding depreciation and amortization)	101,949	93,842	289,469	275,015
Stock-based compensation	487	404	1,164	950
Pre-opening costs	2,994	1,597	6,870	6,943
Depreciation and amortization	8,834	7,776	25,249	22,599
Other expenses		363		1,170
Loss (gain) on disposal of assets	52	(3,879)	64	(3,665)
Income from operations	1,788	13,756	6,441	25,365
Interest expense	4,213	4,265	12,611	12,950
(Loss) income before taxes	(2,425)	9,491	(6,170)	12,415
(Benefit) provision for income taxes	(694)	3,242	(1,913)	2,790
Net (loss) income	$ (1,731)	$ 6,249	$ (4,257)	$ 9,625
Net (loss) income per common share- basic and diluted (in dollars per share)	$ (0.04)	$ 0.13	$ (0.09)	$ 0.20
Weighted-average common shares outstanding - basic (in shares)	47,986,975	47,979,581	47,985,298	47,967,566
Weighted-average common shares outstanding - diluted (in shares)	47,986,975	48,432,143	47,985,298	48,555,828

Consolidated statements of comp

Consolidated statements of comprehensive loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Consolidated statements of comprehensive loss
Net (loss) income	$ (1,731)	$ 6,249	$ (4,257)	$ 9,625
Unrealized gain (loss) on financial instruments, net of tax provision (benefit) of $159, ($361), $564, and ($584)	248	(560)	874	(946)
Pension liability adjustment	41	87	62	207
Foreign currency translation adjustment	(2,330)	(5,525)	(3,181)	(11,485)
Comprehensive (loss) income	$ (3,772)	$ 251	$ (6,502)	$ (2,599)

Consolidated statements of com6

Consolidated statements of comprehensive income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Consolidated statements of comprehensive loss
Unrealized (loss) gain on financial instruments, taxes	$ 159	$ (361)	$ 564	$ (584)

Consolidated statements of cash

Consolidated statements of cash flows - USD ($) $ in Thousands	9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014
Operating activities
Net (loss) income	$ (4,257)	$ 9,625
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	25,249	22,599
Stock-based compensation	1,164	950
Excess tax benefit from stock-based compensation		(90)
Loss (gain) on disposal of assets	64	(3,665)
Deferred tax (benefit) expense	(2,806)	1,249
Noncash interest	1,460	1,467
Other noncash items	181
Changes in operating assets and liabilities:
Accounts receivable	(1,153)	5,101
Inventory	(24,931)	(21,048)
Prepaid expenses and other assets	(1,093)	(460)
Accounts payable and accrued liabilities	3,871	3,149
Income taxes	(1,948)	(4,660)
Other noncurrent liabilities	422	1,447
Net cash (used in) provided by operating activities	(3,777)	15,664
Investing activities
Additions to property and equipment	(36,446)	(40,359)
Proceeds from investment grant	479
Proceeds from sale of subsidiary, net		3,846
Proceeds from sale of property and equipment	199	935
Net cash used in investing activities	(35,768)	(35,578)
Financing activities
Borrowings on revolving lines of credit	46,222	60,374
Payments on revolving lines of credit	(40,354)	(64,223)
Borrowings on long-term debt	33,000	34,748
Payments on long-term debt	(8,981)	(15,319)
Payment of debt issuance costs	(258)
Proceeds from the exercise of stock options	59	704
Excess tax benefit from stock-based compensation		90
Net cash provided by financing activities	29,688	16,374
Effect of exchange rate changes on cash	(566)	(541)
Net decrease in cash	(10,423)	(4,081)
Cash at beginning of period	24,994	18,046
Cash at end of period	14,571	13,965
Supplemental disclosures of non-cash activities:
Purchases of property and equipment (included in accounts payable)	2,060	$ 1,464
Capital lease obligation incurred	$ 374

Description of business and bas

Description of business and basis of presentation	9 Months Ended
	Nov. 28, 2015
Description of business and basis of presentation
Description of business and basis of presentation	1. Description of business and basis of presentation These financial statements should be read in conjunction with the financial statement disclosures in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015, filed with the Securities and Exchange Commission on May 8, 2015. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. Description of business The Container Store, Inc. was founded in 1978 in Dallas, Texas, as a retailer with a mission to provide customers with storage and organization solutions through an assortment of innovative products and unparalleled customer service. In 2007, The Container Store, Inc. was sold to The Container Store Group, Inc. (the “Company”), a holding company, of which a majority stake was purchased by Leonard Green and Partners, L.P. (“LGP”), with the remainder held by certain employees of The Container Store, Inc. On November 6, 2013, the Company completed its initial public offering (the “IPO”). As the majority shareholder, LGP retains controlling interest in the Company. The Container Store, Inc. consists of our retail stores, website and call center, as well as our installation and organizational services business. As of November 28, 2015, The Container Store, Inc. operated 77 stores with an average size of approximately 25,000 square feet (19,000 selling square feet) in 28 states and the District of Columbia. The Container Store, Inc.’s wholly owned Swedish subsidiary, Elfa International AB (“Elfa”) designs and manufactures component-based shelving and drawer systems and made-to-measure sliding doors. elfa® branded products are sold exclusively in the United States in The Container Store retail stores, website and call center, and Elfa sells to various retailers on a wholesale basis in approximately 30 countries around the world, with a concentration in the Nordic region of Europe. Seasonality The Company’s business is moderately seasonal in nature and, therefore, the results of operations for the thirty-nine weeks ended November 28, 2015 are not necessarily indicative of the operating results for the full year. Demand is generally highest in the fourth fiscal quarter due to Our Annual elfa® Sale, and lowest in the first fiscal quarter. Reclassifications Certain prior period amounts have been reclassified in order to provide consistent comparative information. These reclassifications do not materially impact the consolidated financial statements for the prior periods presented. Recent accounting pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Balance Sheet Classification of Deferred Taxes . The update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016, with early adoption permitted. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not believe the implementation of this standard will result in a material impact to its financial statements and will early adopt the guidance at the end of its fourth quarter of fiscal year 2015. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance must be applied on a prospective basis and is effective for fiscal years beginning after December 15, 2015, and interim periods within those years, with early adoption permitted. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In April 2015, the FASB issued ASU 2015-05 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement . The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for fiscal years beginning after December 15, 2015, and interim periods within those years, with early adoption permitted. The guidance may be applied either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. The Company does not believe the implementation of this standard will result in a material impact to its financial statements. In April 2015, the FASB issued ASU 2015-03 , Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. In addition, in August 2015, ASU 2015-15, Interest — Imputation of Interest, was released which added SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 states the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The impact of ASU 2015-03 and ASU 2015-15 on our consolidated financial statements will include a reclassification of net deferred financing costs related to our Senior Secured Term Loan Facility to be presented in the balance sheet as a direct deduction from the carrying amount of the Senior Secured Term Loan Facility, while net deferred financing costs related to our Revolving Credit Facility will remain an asset. As of November 28, 2015, the Company had $6,106 of net deferred financing costs related to our Senior Secured Term Loan Facility. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and GAAP. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. In July 2015, the FASB deferred the effective date of ASU 2014-09. Accordingly, this standard is effective for reporting periods beginning after December 15, 2017, including interim periods within that fiscal year, with early adoption permitted for interim and annual periods beginning after December 15, 2016. The Company is still evaluating the impact of implementation of this standard on its financial statements.

Long-term debt and revolving li

Long-term debt and revolving lines of credit	9 Months Ended
	Nov. 28, 2015
Long-term debt and revolving lines of credit
Long-term debt and revolving lines of credit	2. Long-term debt and revolving lines of credit On October 8, 2015, The Container Store, Inc. executed an amendment (“Amendment No. 2”) to its revolving credit facility (the “Revolving Credit Facility”). Under the terms of Amendment No. 2, among other items, (i) the maturity date of the loan was extended from April 6, 2017 to the earlier of (x) October 8, 2020 and (y) January 6, 2019, if any of The Container Store, Inc.’s obligations under its term loan credit facility remain outstanding on such date and have not been refinanced with debt that has a final maturity date that is no earlier than April 6, 2019 or subordinated debt, (ii) the aggregate principal amount of the facility was increased from $75,000 to $100,000, (iii) the interest rate decreased from a range of LIBOR + 1.25% to 1.75% to LIBOR + 1.25% and (iv) the uncommitted incremental revolving facility was increased from $25,000 to $50,000, which is subject to receipt of lender commitments and satisfaction of specified conditions. As provided in Amendment No. 2, the Revolving Credit Facility will continue to be used for working capital and other general corporate purposes. Amendment No. 2 allows for swing line advances of up to $15,000 and the issuance of letters of credit of up to $40,000, increased from the previous swing line limits of $7,500 and letter of credit limits of $25,000. The Company capitalizes certain costs associated with issuance of various debt instruments. These deferred financing costs are amortized to interest expense on a straight-line method, which is materially consistent with the effective interest method, over the terms of the related debt agreements. The Company capitalized $258 of fees associated with Amendment No. 2 that will be amortized through October 8, 2020.

Detail of certain balance sheet

Detail of certain balance sheet accounts	9 Months Ended
	Nov. 28, 2015
Detail of certain balance sheet accounts
Detail of certain balance sheet accounts	3. Detail of certain balance sheet accounts November 28, February 28, November 29, 2015 2015 2014 Inventory: Finished goods $ $ $ Raw materials Work in progress $ $ $ Accrued liabilities: Accrued payroll, benefits, and bonuses $ $ $ Accrued transaction and property tax Gift cards and store credits outstanding Unearned revenue Accrued lease liabilities Accrued interest Other accrued liabilities $ $ $

Net income (loss) per common sh

Net income (loss) per common share	9 Months Ended
	Nov. 28, 2015
Net income (loss) per common share
Net income (loss) per common share	4. Net income (loss) per common share Basic net income (loss) per common share is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed as net income (loss) divided by the weighted-average number of common shares outstanding for the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of the Company’s common stock for the period, to the extent their inclusion would be dilutive. Potentially dilutive securities are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive. The following is a reconciliation of net income (loss) and the number of shares used in the basic and diluted net income (loss) per common share calculations: Thirteen Weeks Ended Thirty-Nine Weeks Ended November 28, November 29, November 28, November 29, 2015 2014 2015 2014 Numerator: Net (loss) income $ $ $ $ Denominator: Weighted-average common shares outstanding — basic Weighted-average common shares outstanding — diluted Net (loss) income per common share - basic and diluted $ $ $ $ Antidilutive securities not included: Stock options outstanding

Pension plans

Pension plans	9 Months Ended
	Nov. 28, 2015
Pension plans
Pension plans	5. Pension plans The Company provides pension benefits to the employees of Elfa under collectively bargained pension plans in Sweden, which are recorded in other long-term liabilities. The defined benefit plan provides benefits for participating employees based on years of service and final salary levels at retirement. The defined benefit plans are unfunded and approximately 3% of Elfa employees are participants in the defined benefit pension plan. Certain employees also participate in defined contribution plans for which Company contributions are determined as a percentage of participant compensation. The Company contributed $593 and $893 for defined contribution plans in the thirteen weeks ended November 28, 2015 and November 29, 2014, respectively. The Company contributed $1,744 and $2,207 for defined contribution plans in the thirty-nine weeks ended November 28, 2015 and November 29, 2014, respectively.

Income taxes

Income taxes	9 Months Ended
	Nov. 28, 2015
Income taxes
Income taxes	6. Income taxes The Company’s effective income tax rate for the thirteen weeks ended November 28, 2015 was 28.6% compared to 34.2% for the thirteen weeks ended November 29, 2014. In the third quarter of fiscal 2015, the effective tax rate fell below the U.S. statutory rate primarily due to the mix of permanently reinvested foreign earnings that are subject to lower foreign tax rates. In the third quarter of fiscal 2014, the effective tax rate fell below the U.S. statutory rate primarily due to a non-taxable gain on the sale of a Norwegian subsidiary and the mix of permanently reinvested foreign earnings that are subject to lower foreign tax rates. The Company’s effective income tax rate for the thirty-nine weeks ended November 28, 2015 was 31.0% compared to 22.5% for the thirty-nine weeks ended November 29, 2014. During the first thirty-nine weeks of fiscal 2015, the effective tax rate fell below the U.S. statutory rate primarily due to the mix of permanently reinvested foreign earnings that are subject to lower foreign tax rates. During the first thirty-nine weeks of fiscal 2014, the effective tax rate fell below the U.S. statutory rate primarily due to a $1.8 million reduction in tax expense recorded in the second quarter of fiscal 2014 related to a refund of tax paid in a prior period, a non-taxable gain on the sale of a Norwegian subsidiary recorded in the third quarter of fiscal 2014, and the mix of permanently reinvested foreign earnings that are subject to lower foreign tax rates.

Commitments and contingencies

Commitments and contingencies	9 Months Ended
	Nov. 28, 2015
Commitments and contingencies
Commitments and contingencies	7. Commitments and contingencies In connection with insurance policies and other contracts, the Company has outstanding standby letters of credit totaling $3,598 as of November 28, 2015. The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business, none of which is expected to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows on an individual basis or in the aggregate.

Accumulated other comprehensive

Accumulated other comprehensive income	9 Months Ended
	Nov. 28, 2015
Accumulated other comprehensive income
Accumulated other comprehensive income	8. Accumulated other comprehensive income Accumulated other comprehensive income (“AOCI”) consists of changes in our foreign currency forward contracts, pension liability adjustment, and foreign currency translation. The components of AOCI, net of tax, are shown below for the thirty-nine weeks ended November 28, 2015: Foreign currency forward contracts Pension liability adjustment Foreign currency translation Total Balance at February 28, 2015 $ $ $ $ Other comprehensive (loss) income before reclassifications, net of tax Amounts reclassified to earnings, net of tax - - Net current period other comprehensive income (loss) Balance at November 28, 2015 $ $ $ $ Amounts reclassified from AOCI to earnings for the foreign currency forward contracts category are generally included in cost of sales in the Company’s consolidated statements of operations. For a description of the Company’s use of foreign currency forward contracts, refer to Note 9.

Foreign currency forward contra

Foreign currency forward contracts	9 Months Ended
	Nov. 28, 2015
Foreign currency forward contracts.
Foreign currency forward contracts	9. Foreign currency forward contracts The Company’s international operations and purchases of inventory products from foreign suppliers are subject to certain opportunities and risks, including foreign currency fluctuations. In the TCS segment, we utilize foreign currency forward contracts in Swedish krona to stabilize our retail gross margins and to protect our domestic operations from downward currency exposure by hedging purchases of inventory from our wholly owned subsidiary, Elfa. Forward contracts in the TCS segment are designated as cash flow hedges, as defined by ASC 815. In the Elfa segment, we utilize foreign currency forward contracts to hedge purchases, primarily of raw materials, that are transacted in currencies other than Swedish krona, which is the functional currency of Elfa. Forward contracts in the Elfa segment are economic hedges and are not designated as cash flow hedges as defined by ASC 815. During the thirty-nine weeks ended November 28, 2015 and November 29, 2014, the TCS segment used forward contracts for 86% and 49% of inventory purchases in Swedish krona each year, respectively. During the thirty-nine weeks ended November 28, 2015 and November 29, 2014, the Elfa segment used forward contracts to purchase U.S. dollars in the amount of $3,580 and $3,500, which represented 58% and 70% of the Elfa segment’s U.S. dollar purchases each year, respectively. Generally, the Company’s foreign currency forward contracts have terms from 1 to 12 months and require the Company to exchange currencies at agreed-upon rates at settlement. The counterparties to the contracts consist of a limited number of major domestic and international financial institutions. The Company does not hold or enter into financial instruments for trading or speculative purposes. The Company records its foreign currency forward contracts on a gross basis and generally does not require collateral from these counterparties because it does not expect any losses from credit exposure. The Company records all foreign currency forward contracts on its consolidated balance sheet at fair value. The Company accounts for its foreign currency hedging instruments in the TCS segment as cash flow hedges, as defined. Changes in the fair value of the foreign currency hedging instruments that are considered to be effective, as defined, are recorded in other comprehensive income (loss) until the hedged item (inventory) is sold to the customer, at which time the deferred gain or loss is recognized through cost of sales. Any portion of a change in the foreign currency hedge instrument’s fair value that is considered to be ineffective, as defined, or that the Company has elected to exclude from its measurement of effectiveness, is immediately recorded in earnings as cost of sales. The Company assessed the effectiveness of the foreign currency hedge instruments and determined the foreign currency hedge instruments were highly effective during the thirty-nine weeks ended November 28, 2015 and November 29, 2014. Forward contracts not designated as hedges in the Elfa segment are adjusted to fair value as selling, general, and administrative expenses on the consolidated statements of operations. During the thirty-nine weeks ended November 28, 2015, the Company recognized a net unrealized loss of $181 associated with the change in fair value of forward contracts not designated as hedging instruments. The Company had $8 in accumulated other comprehensive loss related to foreign currency hedge instruments at November 28, 2015, all of which represents a loss for settled foreign currency hedge instruments related to inventory on hand as of November 28, 2015. The Company expects the loss of $8, net of taxes, to be reclassified into earnings over the next 12 months as the underlying inventory is sold to the end customer. The change in fair value of the Company’s foreign currency hedge instruments that qualify as cash flow hedges and are included in accumulated other comprehensive income (loss), net of taxes, are presented in Note 8 of these financial statements.

Fair value measurements

Fair value measurements	9 Months Ended
	Nov. 28, 2015
Fair value measurements
Fair value measurements	10. Fair value measurements Under generally accepted accounting principles, the Company is required to a) measure certain assets and liabilities at fair value or b) disclose the fair values of certain assets and liabilities recorded at cost. Accounting standards define fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. Fair value is calculated assuming the transaction occurs in the principal or most advantageous market for the asset or liability and includes consideration of non-performance risk and credit risk of both parties. Accounting standards pertaining to fair value establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value. These tiers include: · Level 1—Valuation inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. · Level 2—Valuation inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Valuation inputs are unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. As of November 28, 2015, February 28, 2015 and November 29, 2014, the Company held certain items that are required to be measured at fair value on a recurring basis. These included the nonqualified retirement plan and foreign currency forward contracts. The nonqualified retirement plan consists of investments purchased by employee contributions to retirement savings accounts. The Company’s foreign currency forward contracts consist of over-the-counter (OTC) contracts, which are not traded on a public exchange. See Note 9 for further information on the Company’s foreign currency forward contract activities. The fair values of the nonqualified retirement plan and foreign currency forward contracts are determined based on the market approach which utilizes inputs that are readily available in public markets or can be derived from information available in publicly quoted markets for comparable assets. Therefore, the Company has categorized these items as Level 2. The Company also considers counterparty credit risk and its own credit risk in its determination of all estimated fair values. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of contracts it holds. The following items are measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820 , Fair Value Measurements : November 28, February 28, November 29, Description Balance Sheet Location 2015 2015 2014 Assets Nonqualified retirement plan Level 2 Other current assets $ $ $ Foreign currency forward contracts Level 2 Other current assets - Total assets $ $ $ Liabilities Nonqualified retirement plan Level 2 Accrued liabilities Foreign currency hedge instruments Level 2 Accrued liabilities - Total liabilities $ $ $ The fair value of long-term debt was estimated using quoted prices as well as recent transactions for similar types of borrowing arrangements (level 2 valuations). As of November 28, 2015, February 28, 2015 and November 29, 2014, the estimated fair value of the Company’s long-term debt, including current maturities, was $339,474, $327,830, and $349,545, respectively.

Segment reporting

Segment reporting	9 Months Ended
	Nov. 28, 2015
Segment reporting
Segment reporting	11. Segment reporting The Company’s operating segments were determined on the same basis as how management evaluates performance internally. The Company’s two operating segments consist of TCS and Elfa. The TCS segment includes the Company’s retail stores, website and call center, as well as installation and organizing services. The Elfa segment includes the manufacturing business that produces the elfa® brand products that are sold domestically exclusively through the TCS segment, as well as on a wholesale basis in approximately 30 countries around the world with a concentration in the Nordic region of Europe. The intersegment sales in the Elfa column represent elfa® product sales to the TCS segment. These sales and the related gross margin on merchandise recorded in TCS inventory balances at the end of the period are eliminated for consolidation purposes in the Corporate/Other column. The net sales to third parties in the Elfa column represent sales to customers outside of the United States. Amounts in the Corporate/Other column include unallocated corporate expenses and assets, intersegment eliminations and other adjustments to segment results necessary for the presentation of consolidated financial results in accordance with GAAP. In general, the Company uses the same measurements to calculate earnings or loss before income taxes for operating segments as it does for the consolidated Company. However, interest expense related to the Senior Secured Term Loan Facility and the Revolving Credit Facility is recorded in the Corporate/Other column. Corporate/ Thirteen Weeks Ended November 28, 2015 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net - Income (loss) before taxes Assets(1) Corporate/ Thirteen Weeks Ended November 29, 2014 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes(2) Assets(1) Corporate/ Thirty-Nine Weeks Ended November 28, 2015 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes Assets(1) Corporate/ Thirty-Nine Weeks Ended November 29, 2014 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes(2) Assets(1) (1) Assets in Corporate/Other include assets located in the corporate headquarters and distribution center. Assets in Corporate/Other also include deferred tax assets and the fair value of TCS forward contracts. (2) The Elfa column includes a gain on disposal of subsidiary and real estate of $3,830 for the thirteen and thirty-nine weeks ended November 29, 2014.

Detail of certain balance she19

Detail of certain balance sheet accounts (Tables)	9 Months Ended
	Nov. 28, 2015
Detail of certain balance sheet accounts
Schedule of detail of certain balance sheet accounts	November 28, February 28, November 29, 2015 2015 2014 Inventory: Finished goods $ $ $ Raw materials Work in progress $ $ $ Accrued liabilities: Accrued payroll, benefits, and bonuses $ $ $ Accrued transaction and property tax Gift cards and store credits outstanding Unearned revenue Accrued lease liabilities Accrued interest Other accrued liabilities $ $ $

Net income (loss) per common 20

Net income (loss) per common share (Tables)	9 Months Ended
	Nov. 28, 2015
Net income (loss) per common share
Schedule of reconciliation of net loss and the number of shares used in the basic and diluted net loss per common share calculations	Thirteen Weeks Ended Thirty-Nine Weeks Ended November 28, November 29, November 28, November 29, 2015 2014 2015 2014 Numerator: Net (loss) income $ $ $ $ Denominator: Weighted-average common shares outstanding — basic Weighted-average common shares outstanding — diluted Net (loss) income per common share - basic and diluted $ $ $ $ Antidilutive securities not included: Stock options outstanding

Accumulated other comprehensi21

Accumulated other comprehensive income (Tables)	9 Months Ended
	Nov. 28, 2015
Accumulated other comprehensive income
Schedule of components of AOCI, net of tax	Foreign currency forward contracts Pension liability adjustment Foreign currency translation Total Balance at February 28, 2015 $ $ $ $ Other comprehensive (loss) income before reclassifications, net of tax Amounts reclassified to earnings, net of tax - - Net current period other comprehensive income (loss) Balance at November 28, 2015 $ $ $ $

Fair value measurements (Tables

Fair value measurements (Tables)	9 Months Ended
	Nov. 28, 2015
Fair value measurements
Schedule of items measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820	November 28, February 28, November 29, Description Balance Sheet Location 2015 2015 2014 Assets Nonqualified retirement plan Level 2 Other current assets $ $ $ Foreign currency forward contracts Level 2 Other current assets - Total assets $ $ $ Liabilities Nonqualified retirement plan Level 2 Accrued liabilities Foreign currency hedge instruments Level 2 Accrued liabilities - Total liabilities $ $ $

Segment reporting (Tables)

Segment reporting (Tables)	9 Months Ended
	Nov. 28, 2015
Segment reporting
Schedule of segment reporting	Corporate/ Thirteen Weeks Ended November 28, 2015 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net - Income (loss) before taxes Assets(1) Corporate/ Thirteen Weeks Ended November 29, 2014 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes(2) Assets(1) Corporate/ Thirty-Nine Weeks Ended November 28, 2015 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes Assets(1) Corporate/ Thirty-Nine Weeks Ended November 29, 2014 TCS Elfa Other Total Net sales to third parties $ $ $- $ Intersegment sales - - Interest expense, net Income (loss) before taxes(2) Assets(1) (1) Assets in Corporate/Other include assets located in the corporate headquarters and distribution center. Assets in Corporate/Other also include deferred tax assets and the fair value of TCS forward contracts. (2) The Elfa column includes a gain on disposal of subsidiary and real estate of $3,830 for the thirteen and thirty-nine weeks ended November 29, 2014.

Description of business and b24

Description of business and basis of presentation (Details) $ in Thousands	Nov. 28, 2015USD ($)ft²storestatecountry	Feb. 28, 2015USD ($)	Nov. 29, 2014USD ($)
Description of business and basis of presentation
Number of stores | store	77
Average size of stores (in square feet) | ft²	25,000
Average selling square feet in stores (in square feet) | ft²	19,000
Number of states | state	28
Deferred financing costs, net | $	$ 6,540	$ 7,742	$ 8,231
Senior secured term loan facility
Description of business and basis of presentation
Deferred financing costs, net | $	$ 6,106
Elfa | Elfa
Description of business and basis of presentation
Number of countries in which products are sold on wholesale basis | country	30

Long-term debt and revolving 25

Long-term debt and revolving lines of credit (Details) - USD ($) $ in Thousands	Oct. 08, 2015	Oct. 07, 2015
Long-term debt and revolving lines of credit
Deferred financing costs	$ 258
Revolving credit facility
Long-term debt and revolving lines of credit
Maximum borrowing capacity	100,000	$ 75,000
Amount of increase in commitments upon such request from the Company	50,000	25,000
Swing line advances limit	15,000	7,500
Letter of credit facility sub-limit	$ 40,000	$ 25,000
Revolving credit facility | LIBOR
Long-term debt and revolving lines of credit
Interest rate margin (as a percent)	1.25%
Revolving credit facility | LIBOR | Minimum
Long-term debt and revolving lines of credit
Interest rate margin (as a percent)		1.25%
Revolving credit facility | LIBOR | Maximum
Long-term debt and revolving lines of credit
Interest rate margin (as a percent)		1.75%

Detail of certain balance she26

Detail of certain balance sheet accounts (Details) - USD ($) $ in Thousands	Nov. 28, 2015	Feb. 28, 2015	Nov. 29, 2014
Inventory:
Finished goods	$ 104,538	$ 79,073	$ 98,460
Raw materials	4,416	3,501	4,260
Work in progress	342	1,150	1,130
Inventory	109,296	83,724	103,850
Accrued Liabilities:
Accrued payroll, benefits and bonuses	17,569	20,155	17,865
Accrued transaction and property tax	11,813	8,503	11,083
Gift cards and store credits outstanding	8,158	7,683	8,192
Unearned revenue	5,603	11,385	3,649
Accrued lease liabilities	4,185	3,920	3,658
Accrued interest	2,345	2,333	2,451
Other accrued liabilities	8,071	5,912	7,939
Accrued Liabilities	$ 57,744	$ 59,891	$ 54,837

Net income (loss) per common 27

Net income (loss) per common share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Numerator:
Net (loss) income	$ (1,731)	$ 6,249	$ (4,257)	$ 9,625
Denominator:
Weighted-average common shares outstanding - basic (in shares)	47,986,975	47,979,581	47,985,298	47,967,566
Weighted-average common shares outstanding - diluted (in shares)	47,986,975	48,432,143	47,985,298	48,555,828
Net (loss) income per common share- basic and diluted (in dollars per share)	$ (0.04)	$ 0.13	$ (0.09)	$ 0.20
Antidilutive securities not included:
Stock options outstanding	2,907,034	843,581	2,870,248	812,886

Pension plans (Details)

Pension plans (Details) - Elfa - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Employee benefit plans
Percentage of employees who are plan participants			3.00%
Amount contributed by the Company for defined contribution plans	$ 593	$ 893	$ 1,744	$ 2,207

Income taxes (Details)

Income taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Income taxes
Effective income tax rate (as a percent)	28.60%	34.20%	31.00%	22.50%
Reduction in tax expense recorded				$ 1.8

Commitments and contingencies (

Commitments and contingencies (Details) $ in Thousands	Nov. 28, 2015USD ($)
Standby letters of credit
Commitments and contingencies
Amount outstanding	$ 3,598

Accumulated other comprehensi31

Accumulated other comprehensive income (Details) $ in Thousands	9 Months Ended
	Nov. 28, 2015USD ($)
Rollforward of the amounts included in AOCI, net of taxes
Balance at the beginning of the period	$ (18,342)
Other comprehensive (loss) income before reclassifications, net of tax	(3,214)
Amounts reclassified to earnings, net of tax	969
Net current period other comprehensive income (loss)	(2,245)
Balance at the end of the period	(20,587)
Pension liability adjustment
Rollforward of the amounts included in AOCI, net of taxes
Balance at the beginning of the period	(1,167)
Other comprehensive (loss) income before reclassifications, net of tax	62
Net current period other comprehensive income (loss)	62
Balance at the end of the period	(1,105)
Foreign currency translation
Rollforward of the amounts included in AOCI, net of taxes
Balance at the beginning of the period	(16,293)
Other comprehensive (loss) income before reclassifications, net of tax	(3,181)
Net current period other comprehensive income (loss)	(3,181)
Balance at the end of the period	(19,474)
Foreign currency forward contracts
Rollforward of the amounts included in AOCI, net of taxes
Balance at the beginning of the period	(882)
Other comprehensive (loss) income before reclassifications, net of tax	(95)
Amounts reclassified to earnings, net of tax	969
Net current period other comprehensive income (loss)	874
Balance at the end of the period	$ (8)

Foreign currency forward cont32

Foreign currency forward contracts (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014
Foreign Currency Forward Contracts
Purchase of inventory from use of forward contracts in Swedish krona (as a percent)	86.00%	49.00%
Purchase of U.S. dollars from use of forward contracts	$ 3,580	$ 3,500
Purchase of U.S. dollars from use of forward contracts as a percent of Elfa's U.S. Dollar purchases	58.00%	70.00%
Minimum term period of currency-related hedge instruments	1 month
Maximum term period of currency-related hedge instruments	12 months
Foreign currency forward contracts | Not Designated as Hedging Instrument
Foreign Currency Forward Contracts
Loss associated with the change in fair value of forward contracts not designated as hedging instruments	$ 181
Foreign currency hedge instruments | Designated as Hedging Instrument | Cash Flow Hedging
Foreign Currency Forward Contracts
Accumulated other comprehensive loss	8
Unrealized loss to be reclassified into earnings over the next 12 months	$ 8

Fair value measurements (Detail

Fair value measurements (Details) - Recurring - USD ($) $ in Thousands	Nov. 28, 2015	Feb. 28, 2015	Nov. 29, 2014
Assets
Total assets	$ 4,414	$ 4,437	$ 3,955
Liabilities
Total liabilities	4,132	4,281	4,603
Level 2 | Other current assets
Assets
Nonqualified retirement plan	4,124	3,951	3,955
Level 2 | Accrued liabilities
Liabilities
Nonqualified retirement plan	4,132	3,966	3,962
Designated as Hedging Instrument | Cash Flow Hedging | Foreign currency hedge instruments | Level 2 | Accrued liabilities
Liabilities
Foreign currency hedge instruments		315	$ 641
Not Designated as Hedging Instrument | Foreign currency forward contracts | Level 2 | Other current assets
Assets
Foreign currency forward contracts	$ 290	$ 486

Fair value measurements (Deta34

Fair value measurements (Details 2) - USD ($) $ in Thousands	Nov. 28, 2015	Feb. 28, 2015	Nov. 29, 2014
Fair value
Fair value measurements
Estimated fair value of long-term debt, including current maturities	$ 339,474	$ 327,830	$ 349,545

Segment reporting (Details)

Segment reporting (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015USD ($)country	Nov. 29, 2014USD ($)	Nov. 28, 2015USD ($)segmentcountry	Nov. 29, 2014USD ($)	Feb. 28, 2015USD ($)
Segment reporting
Number of reportable segments | segment			2
Sales	$ 197,241	$ 190,922	$ 562,556	$ 557,607
Interest expense, net	4,213	4,265	12,611	12,950
Income (loss) before taxes	(2,425)	9,491	(6,170)	12,415
Assets1	789,193	789,566	789,193	789,566	$ 769,057
Operating segments | TCS
Segment reporting
Sales	177,638	168,468	509,861	493,011
Interest expense, net		2	6	14
Income (loss) before taxes	1,951	9,161	11,114	24,500
Assets1	650,223	638,235	650,223	638,235
Operating segments | Elfa
Segment reporting
Sales	19,603	22,454	52,695	64,596
Interest expense, net	76	130	269	537
Income (loss) before taxes	4,268	10,207	3,240	10,245
Assets1	104,937	125,925	104,937	125,925
Corporate/other
Segment reporting
Interest expense, net	4,137	4,133	12,336	12,399
Income (loss) before taxes	(8,644)	(9,877)	(20,524)	(22,330)
Assets1	34,033	25,406	34,033	25,406
lntersegment
Segment reporting
Sales	(21,147)	(24,776)	(40,155)	(45,924)
lntersegment | Elfa
Segment reporting
Sales	$ 21,147	$ 24,776	$ 40,155	$ 45,924
Elfa | Elfa
Segment reporting
Number of countries in which products are sold on wholesale basis | country	30		30

Segment reporting (Details 2)

Segment reporting (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 28, 2015	Nov. 29, 2014	Nov. 28, 2015	Nov. 29, 2014
Disposal of subsidiary and real estate
Gain on disposal of assets	$ (52)	$ 3,879	$ (64)	$ 3,665
Elfa
Disposal of subsidiary and real estate
Gain on disposal of assets		$ 3,830		$ 3,830