Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Sep. 30, 2023 | Oct. 27, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36161 | |
Entity Registrant Name | Container Store Group, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-0565401 | |
Entity Address, Address Line One | 500 Freeport Parkway | |
Entity Address, City or Town | Coppell | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75019 | |
City Area Code | 972 | |
Local Phone Number | 538-6000 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | TCS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Common Stock Outstanding | 51,722,131 | |
Entity Central Index Key | 0001411688 | |
Current Fiscal Year End Date | --03-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated balance sheets
Consolidated balance sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 |
Current assets: | |||
Cash | $ 10,195 | $ 6,958 | $ 19,814 |
Accounts receivable, net | 24,857 | 25,870 | 28,624 |
Inventory | 173,438 | 170,637 | 190,142 |
Prepaid expenses | 12,986 | 14,989 | 17,474 |
Income taxes receivable | 1,091 | 858 | 1,309 |
Other current assets | 9,189 | 10,914 | 9,639 |
Total current assets | 231,756 | 230,226 | 267,002 |
Noncurrent assets: | |||
Property and equipment, net | 158,740 | 158,702 | 147,302 |
Noncurrent operating lease right-of-use assets | 355,863 | 347,959 | 356,605 |
Goodwill | 23,447 | 221,159 | |
Trade names | 219,558 | 221,278 | 218,882 |
Deferred financing costs, net | 123 | 150 | 176 |
Noncurrent deferred tax assets, net | 432 | 568 | 471 |
Other assets | 3,037 | 2,844 | 2,062 |
Total noncurrent assets | 737,753 | 754,948 | 946,657 |
Total assets | 969,509 | 985,174 | 1,213,659 |
Current liabilities: | |||
Accounts payable | 65,275 | 52,637 | 79,892 |
Accrued liabilities | 71,362 | 74,673 | 79,447 |
Current borrowings on revolving lines of credit | 2,820 | 2,423 | 13,660 |
Current portion of long-term debt | 2,060 | 2,063 | 2,066 |
Current operating lease liabilities | 61,533 | 57,201 | 56,204 |
Income taxes payable | 912 | 1,318 | 218 |
Total current liabilities | 203,962 | 190,315 | 231,487 |
Noncurrent liabilities: | |||
Long-term debt | 168,321 | 163,385 | 158,465 |
Noncurrent operating lease liabilities | 323,230 | 314,100 | 322,830 |
Noncurrent deferred tax liabilities, net | 43,790 | 49,338 | 49,804 |
Other long-term liabilities | 5,793 | 5,851 | 6,393 |
Total noncurrent liabilities | 541,134 | 532,674 | 537,492 |
Total liabilities | 745,096 | 722,989 | 768,979 |
Shareholders' equity: | |||
Common stock, $0.01 par value, 250,000,000 shares authorized; 49,591,111 shares issued at September 30, 2023; 49,181,562 shares issued at April 1, 2023; 50,104,829 shares issued at October 1, 2022 | 496 | 492 | 501 |
Additional paid-in capital | 873,149 | 872,204 | 875,550 |
Accumulated other comprehensive loss | (35,740) | (32,509) | (38,451) |
Retained deficit | (613,492) | (578,002) | (392,920) |
Total shareholders' equity | 224,413 | 262,185 | 444,680 |
Total liabilities and shareholders' equity | $ 969,509 | $ 985,174 | $ 1,213,659 |
Consolidated balance sheets (Pa
Consolidated balance sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 |
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 | 49,591,111 | 49,181,562 | 50,104,829 |
Consolidated statements of oper
Consolidated statements of operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Consolidated statements of operations | ||||
Net sales | $ 219,731 | $ 272,672 | $ 426,843 | $ 535,306 |
Cost of sales (excluding depreciation and amortization) | 93,064 | 118,242 | 185,627 | 230,788 |
Gross profit | 126,667 | 154,430 | 241,216 | 304,518 |
Selling, general, and administrative expenses (excluding depreciation and amortization) | 109,270 | 118,655 | 220,650 | 240,564 |
Impairment charges | 23,447 | 23,447 | ||
Stock-based compensation | 615 | 536 | 1,089 | 1,737 |
Pre-opening costs | 549 | 583 | 734 | 619 |
Depreciation and amortization | 10,383 | 9,549 | 20,895 | 18,555 |
Other expenses | 7 | 2,460 | ||
Loss on disposal of assets | 220 | 80 | 221 | 81 |
(Loss) income from operations | (17,824) | 25,027 | (28,280) | 42,962 |
Interest expense, net | 5,238 | 3,783 | 10,205 | 7,006 |
(Loss) income before taxes | (23,062) | 21,244 | (38,485) | 35,956 |
Provision (benefit) for income taxes | 591 | 5,497 | (2,995) | 9,730 |
Net (loss) income | $ (23,653) | $ 15,747 | $ (35,490) | $ 26,226 |
Net (loss) income per common share - basic | $ (0.48) | $ 0.31 | $ (0.72) | $ 0.53 |
Net (loss) income per common share - diluted | $ (0.48) | $ 0.31 | $ (0.72) | $ 0.52 |
Weighted-average common shares - basic | 49,461,590 | 50,000,945 | 49,357,218 | 49,860,252 |
Weighted-average common shares - diluted | 49,461,590 | 50,350,549 | 49,357,218 | 50,324,456 |
Consolidated statements of comp
Consolidated statements of comprehensive (loss) income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Consolidated statements of comprehensive income | ||||
Net (loss) income | $ (23,653) | $ 15,747 | $ (35,490) | $ 26,226 |
Unrealized gain (loss) on financial instruments, net of tax provision (benefit) of $0, $20, $0 and ($19) | 80 | (33) | ||
Pension liability adjustment | 15 | 178 | 74 | 392 |
Foreign currency translation adjustment | (1,642) | (5,468) | (3,305) | (11,366) |
Comprehensive (loss) income | $ (25,280) | $ 10,537 | $ (38,721) | $ 15,219 |
Consolidated statements of co_2
Consolidated statements of comprehensive income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2023 | Oct. 01, 2022 | Jul. 02, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Consolidated statements of comprehensive income | |||||
Unrealized gain (loss) on financial instruments, net of tax provision (benefit) of $0, $20, $0 and ($19) | $ 0 | $ 20 | $ (39) | $ 0 | $ (19) |
Consolidated statements of cash
Consolidated statements of cash flows - USD ($) $ in Thousands | 6 Months Ended | |
Sep. 30, 2023 | Oct. 01, 2022 | |
Operating activities | ||
Net (loss) income | $ (35,490) | $ 26,226 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 20,895 | 18,555 |
Stock-based compensation | 1,089 | 1,737 |
Impairment charges | 23,447 | |
Loss on disposal of assets | 221 | 81 |
Deferred tax (benefit) expense | (4,603) | 396 |
Non-cash interest | 942 | 942 |
Other | 176 | 492 |
Changes in operating assets and liabilities | ||
Accounts receivable | (25) | (2,655) |
Inventory | (3,827) | (935) |
Prepaid expenses and other assets | 2,539 | (5,685) |
Accounts payable and accrued liabilities | 10,776 | (6,713) |
Net change in lease assets and liabilities | 5,574 | 102 |
Income taxes | (684) | (5,600) |
Other noncurrent liabilities | (339) | (153) |
Net cash (used in) provided by operating activities | 20,691 | 26,790 |
Investing activities | ||
Additions to property and equipment | 22,037 | 32,047 |
Investments in non-qualified plan trust | (177) | (879) |
Proceeds from non-qualified plan trust redemptions | 472 | 467 |
Proceeds from sale of property and equipment | 1 | 34 |
Net cash used in investing activities | (21,741) | (32,425) |
Financing activities | ||
Borrowings on revolving lines of credit | 27,177 | 44,104 |
Payments on revolving lines of credit | (26,649) | (30,855) |
Borrowings on long-term debt | 20,000 | 15,000 |
Payments on long-term debt | (16,032) | (16,053) |
Payment of taxes with shares withheld upon restricted stock vesting | (140) | (712) |
Proceeds from the exercise of stock options | 340 | |
Net cash provided by financing activities | 4,356 | 11,824 |
Effect of exchange rate changes on cash | (69) | (627) |
Net increase in cash | 3,237 | 5,562 |
Cash at beginning of fiscal period | 6,958 | 14,252 |
Cash at end of fiscal period | 10,195 | 19,814 |
Supplemental information: | ||
Purchases of property and equipment (included in accounts payable) | 3,014 | 6,223 |
Cash paid for amounts included in the measurement of operating lease liabilities | 47,160 | 44,980 |
Additions to right-of-use assets in exchange for operating lease liabilities | $ 36,066 | $ 34,938 |
Consolidated statements of shar
Consolidated statements of shareholders' equity - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained deficit | Total |
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Balance at the beginning of period at Apr. 02, 2022 | $ 496 | $ 874,190 | $ (27,444) | $ (419,146) | $ 428,096 |
Balance (in shares) at Apr. 02, 2022 | 49,635,447 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | 10,479 | 10,479 | |||
Stock-based compensation | 1,201 | 1,201 | |||
Stock options exercises | $ 1 | 339 | 340 | ||
Stock option exercises (in shares) | 73,594 | ||||
Vesting of restricted stock awards | $ 2 | (2) | |||
Vesting of restricted stock awards (in shares) | 232,295 | ||||
Taxes related to net share settlement of restricted stock awards | (712) | (712) | |||
Foreign currency translation adjustment | (5,898) | (5,898) | |||
Unrealized (loss) gain on financial instruments, net of tax | (113) | (113) | |||
Pension liability adjustment | 214 | 214 | |||
Balance at the end of period at Jul. 02, 2022 | $ 499 | 875,016 | (33,241) | (408,667) | 433,607 |
Balance (in shares) at Jul. 02, 2022 | 49,941,336 | ||||
Balance at the beginning of period at Apr. 02, 2022 | $ 496 | 874,190 | (27,444) | (419,146) | 428,096 |
Balance (in shares) at Apr. 02, 2022 | 49,635,447 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | 26,226 | ||||
Foreign currency translation adjustment | (11,366) | ||||
Unrealized (loss) gain on financial instruments, net of tax | (33) | ||||
Pension liability adjustment | 392 | ||||
Balance at the end of period at Oct. 01, 2022 | $ 501 | 875,550 | (38,451) | (392,920) | $ 444,680 |
Balance (in shares) at Oct. 01, 2022 | 50,104,829 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Balance at the beginning of period at Jul. 02, 2022 | $ 499 | 875,016 | (33,241) | (408,667) | $ 433,607 |
Balance (in shares) at Jul. 02, 2022 | 49,941,336 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | 15,747 | 15,747 | |||
Stock-based compensation | 536 | 536 | |||
Vesting of restricted stock awards | $ 2 | (2) | |||
Vesting of restricted stock awards (in shares) | 163,493 | ||||
Foreign currency translation adjustment | (5,468) | (5,468) | |||
Unrealized (loss) gain on financial instruments, net of tax | 80 | 80 | |||
Pension liability adjustment | 178 | 178 | |||
Balance at the end of period at Oct. 01, 2022 | $ 501 | 875,550 | (38,451) | (392,920) | $ 444,680 |
Balance (in shares) at Oct. 01, 2022 | 50,104,829 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Balance at the beginning of period at Apr. 01, 2023 | $ 492 | 872,204 | (32,509) | (578,002) | $ 262,185 |
Balance (in shares) at Apr. 01, 2023 | 49,181,562 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | (11,837) | (11,837) | |||
Stock-based compensation | 474 | 474 | |||
Vesting of restricted stock awards | $ 2 | (2) | |||
Vesting of restricted stock awards (in shares) | 209,320 | ||||
Taxes related to net share settlement of restricted stock awards | (140) | (140) | |||
Foreign currency translation adjustment | (1,663) | (1,663) | |||
Pension liability adjustment | 59 | 59 | |||
Balance at the end of period at Jul. 01, 2023 | $ 494 | 872,536 | (34,113) | (589,839) | 249,078 |
Balance (in shares) at Jul. 01, 2023 | 49,390,882 | ||||
Balance at the beginning of period at Apr. 01, 2023 | $ 492 | 872,204 | (32,509) | (578,002) | 262,185 |
Balance (in shares) at Apr. 01, 2023 | 49,181,562 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | (35,490) | ||||
Foreign currency translation adjustment | (3,305) | ||||
Pension liability adjustment | 74 | ||||
Balance at the end of period at Sep. 30, 2023 | $ 496 | 873,149 | (35,740) | (613,492) | $ 224,413 |
Balance (in shares) at Sep. 30, 2023 | 49,591,111 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Balance at the beginning of period at Jul. 01, 2023 | $ 494 | 872,536 | (34,113) | (589,839) | $ 249,078 |
Balance (in shares) at Jul. 01, 2023 | 49,390,882 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net (loss) income | (23,653) | (23,653) | |||
Stock-based compensation | 615 | 615 | |||
Vesting of restricted stock awards | $ 2 | (2) | |||
Vesting of restricted stock awards (in shares) | 200,229 | ||||
Foreign currency translation adjustment | (1,642) | (1,642) | |||
Pension liability adjustment | 15 | 15 | |||
Balance at the end of period at Sep. 30, 2023 | $ 496 | $ 873,149 | $ (35,740) | $ (613,492) | $ 224,413 |
Balance (in shares) at Sep. 30, 2023 | 49,591,111 | ||||
Common stock, par value (in dollars per share) | $ 0.01 |
Consolidated statements of sh_2
Consolidated statements of shareholders' equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Sep. 30, 2023 | Oct. 01, 2022 | Jul. 02, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | Jul. 01, 2023 | Apr. 01, 2023 | Apr. 02, 2022 | |
Consolidated statements of shareholders' equity | ||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Unrealized loss on financial instruments, net of tax benefit | $ 0 | $ 20 | $ (39) | $ 0 | $ (19) |
Description of business and bas
Description of business and basis of presentation | 6 Months Ended |
Sep. 30, 2023 | |
Nature of business and summary of significant accounting policies | |
Description of business and basis of presentation | The Container Store Group, Inc. Notes to consolidated financial statements (unaudited) (In thousands, except share amounts and unless otherwise stated) September 30, 2023 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 April 1, 2023, filed with the Securities and Exchange Commission (“SEC”) on May 26, 2023 (the “2022 Annual Report on Form 10-K”). 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. Certain items in these consolidated financial statements have been reclassified to conform to the current period presentation. All references herein to “fiscal 2023” refer to the 52-week fiscal year ending March 30, 2024, and “fiscal 2022” refer to the 52-week fiscal year ended April 1, 2023. Description of business Our operations consist of two reportable segments: The Container Store, Inc. (“TCS”) : Today, TCS includes The Container Store Custom Spaces (“Custom Spaces”) consisting of our elfa® Classic, elfa® Décor, Avera® and Preston TM deepen our relationship with our customers, expand our reach and strengthen our capabilities, all while transforming lives through the power of organization. The Container Store, Inc. consists of our retail stores, website and call center (which includes business sales), as well as our in-home services business. As of September 30, 2023, we operated 98 stores with an average size of approximately 24,000 square feet (18,000 selling square feet) in 34 states and the District of Columbia. The Container Store, Inc. also offers all of its products directly to its customers, through its website, responsive mobile site and app, call center, in-home design specialists and in-home design organizers. We operate the C Studio manufacturing facility in Elmhurst, Illinois, which designs and manufactures the Company’s premium wood-based custom space product offering, and is included in the TCS reportable segment. Elfa : ® Seasonality Our unique offering of organizing solutions, custom spaces, and in-home services makes us less susceptible to holiday season shopping patterns than many retailers. Our quarterly results fluctuate, depending upon a variety of factors, including our product offerings, promotional events, store openings, the weather, remodeling or relocations, shifts in the timing of holidays, timing of delivery of orders, competitive factors and general economic conditions, including economic downturns as a result of unforeseen events such as pandemics, inflation, and supply chain disruptions, among other things. Accordingly, our results of operations may fluctuate on a seasonal and quarterly basis, relative to corresponding periods in prior years. In addition, we may take certain pricing or marketing actions that could have a disproportionate effect on our business, financial condition and results of operations in a particular quarter or selling season. |
Goodwill and trade names
Goodwill and trade names | 6 Months Ended |
Sep. 30, 2023 | |
Goodwill and trade names | |
Goodwill and trade names | 2. Goodwill and trade names The estimated goodwill and trade name fair values are computed using estimates as of the measurement date, which is defined as the first day of the fiscal fourth quarter or as of an interim assessment date. The Company makes estimates and assumptions about sales, gross margins, selling, general and administrative percentages and profit margins, based on budgets and forecasts, business plans, economic projections, anticipated future cash flows, and marketplace data. Assumptions are also made for varying perpetual growth rates for periods beyond the long-term business plan period and our estimated weighted average cost of capital. There are inherent uncertainties related to these factors and management’s judgment in applying these factors. Another estimate using different, but still reasonable, assumptions could produce different results. Due to certain indicators identified during the second quarter of fiscal 2023, we completed an interim assessment of our goodwill balance as of September 30, 2023 in accordance with the Financial Accounting Standard Board Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and other We also conducted an interim assessment of our trade name balances on September 30, 2023 in accordance with ASC 350 which did not result in an impairment. Goodwill Trade names Balance at April 1, 2023 Gross balance 428,811 252,812 Accumulated impairment charges (405,364) (31,534) Total, net $ 23,447 $ 221,278 Foreign currency translation adjustments — (1,720) Balance at September 30, 2023 Gross balance 428,811 251,092 Impairment charges (23,447) — Accumulated impairment charges (405,364) (31,534) Total, net $ — $ 219,558 |
Detail of certain balance sheet
Detail of certain balance sheet accounts | 6 Months Ended |
Sep. 30, 2023 | |
Detail of certain balance sheet accounts | |
Detail of certain balance sheet accounts | 3. Detail of certain balance sheet accounts September 30, April 1, October 1, 2023 2023 2022 Accounts receivable, net: Trade receivables, net $ 15,350 $ 18,269 $ 18,191 Credit card receivables 7,670 6,165 8,779 Other receivables 1,837 1,436 1,654 $ 24,857 $ 25,870 $ 28,624 Inventory: Finished goods $ 163,024 $ 160,108 $ 181,422 Raw materials 9,213 9,289 8,175 Work in progress 1,201 1,240 545 $ 173,438 $ 170,637 $ 190,142 Accrued liabilities: Accrued payroll, benefits and bonuses $ 19,985 $ 24,224 $ 21,658 Unearned revenue 18,339 15,700 22,124 Accrued transaction and property tax 12,299 14,072 14,930 Gift cards and store credits outstanding 12,926 13,002 12,274 Accrued sales returns 2,655 3,366 3,985 Accrued interest 158 189 197 Other accrued liabilities 5,000 4,120 4,279 $ 71,362 $ 74,673 $ 79,447 Contract balances as a result of transactions with customers primarily consist of trade receivables included in accounts receivable, net, unearned revenue, and gift cards and store credits outstanding included in accrued liabilities in the Company’s consolidated balance sheets. Unearned revenue was $15,700 as of April 1, 2023, and $13,795 was subsequently recognized into revenue for the twenty-six weeks ended September 30, 2023. Gift cards and store credits outstanding was $13,002 as of April 1, 2023, and $2,386 was subsequently recognized into revenue for the twenty-six weeks ended September 30, 2023. See Note 10 for disaggregated revenue disclosures. |
Leases
Leases | 6 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 4. Leases We conduct all of our U.S. operations from leased facilities that include our support center, distribution centers, manufacturing facilities, and 98 store locations. The support center, distribution centers, manufacturing facilities, and stores are leased under operating leases that generally expire over the next 1 to 15 years. We also lease computer hardware under operating leases that generally expire over the next few years. In most cases, management expects that in the normal course of business, leases will be renewed or replaced by other leases. The Company also has finance leases at our Elfa segment which are immaterial. Lease expense on operating leases is recorded on a straight-line basis over the term of the lease, commencing on the date the Company takes possession of the leased property and is recorded in selling, general and administrative expenses (“SG&A”). We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from our calculation of lease liabilities. Our variable lease payments include lease payments that are based on a percentage of sales. Upon lease commencement, we recognize the lease liability measured at the present value of the fixed future minimum lease payments. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a change to our future minimum lease payments occurs. Key assumptions and judgments included in the determination of the lease liability include the discount rate applied to present value of the future lease payments and the exercise of renewal options. Many of our leases contain renewal options. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement as exercise of the options is not reasonably certain. We remeasure the lease liability and right-of-use asset when we are reasonably certain to exercise a renewal option. Discount Rate Our leases do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. The components of lease costs for the thirteen and twenty-six weeks ended September 30, 2023 and October 1, 2022 were as follows: Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Operating lease costs $ 23,529 $ 22,678 $ 46,813 $ 45,182 Variable lease costs 208 379 371 749 Total lease costs $ 23,737 $ 23,057 $ 47,184 $ 45,931 We do not have sublease income and do not recognize lease assets or liabilities for short-term leases, defined as operating leases with initial terms of less than 12 months. Our short-term lease costs were not material for the thirteen and twenty-six weeks ended September 30, 2023 and October 1, 2022. Weighted average remaining operating lease term and incremental borrowing rate as of September 30, 2023 and October 1, 2022 were as follows: Twenty-Six Weeks Ended September 30, 2023 October 1, 2022 Weighted average remaining lease term (years) 6.3 6.7 Weighted average incremental borrowing rate 10.1 % 10.7 % As of September 30, 2023, future minimum lease payments under our operating lease liabilities were as follows: Operating leases (1) Within 1 year (remaining) $ 47,724 2 years 94,630 3 years 86,281 4 years 76,419 5 years 64,127 Thereafter 151,304 Total lease payments $ 520,485 Less amount representing interest 135,722 Total lease liability $ 384,763 Less current lease liability 61,533 Total noncurrent lease liability $ 323,230 (1) Operating lease payments exclude approximately $62,809 of legally binding minimum lease payments for eight leases signed but not yet commenced. |
Net (loss) income per common sh
Net (loss) income per common share | 6 Months Ended |
Sep. 30, 2023 | |
Net (loss) income per common share | |
Net (loss) income per common share | 5. Net (loss) income per common share Basic net (loss) income per common share is computed as net (loss) income divided by the weighted-average number of common shares for the period. Net (loss) income per common share - diluted is computed as net (loss) income divided by the weighted-average number of common shares 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 net (loss) income per common share - diluted if their effect is anti-dilutive. The following is a reconciliation of net (loss) income and the number of shares used in the basic and diluted net (loss) income per common share calculations: Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, October 1, September 30, October 1, 2023 2022 2023 2022 Numerator: Net (loss) income $ (23,653) $ 15,747 $ (35,490) $ 26,226 Denominator: Weighted-average common shares — basic 49,461,590 50,000,945 49,357,218 49,860,252 Nonvested restricted stock awards and other dilutive securities — 349,604 — 464,204 Weighted-average common shares — diluted 49,461,590 50,350,549 49,357,218 50,324,456 Net (loss) income per common share — basic $ (0.48) $ 0.31 $ (0.72) $ 0.53 Net (loss) income per common share — diluted $ (0.48) $ 0.31 $ (0.72) $ 0.52 Antidilutive securities not included: Stock options outstanding 1,643,930 1,439,607 1,677,588 1,506,588 Nonvested restricted stock awards 481,215 366,695 712,203 347,020 |
Income taxes
Income taxes | 6 Months Ended |
Sep. 30, 2023 | |
Income taxes | |
Income taxes | 6. Income taxes The provision for income taxes in the thirteen weeks ended September 30, 2023 was $591 as compared to a provision of $5,497 in the thirteen weeks ended October 1, 2022. The effective tax rate was ( 2.6 )% in the second quarter of fiscal 2023, as compared to 25.9% in the second quarter of fiscal 2022. During the thirteen weeks ended September 30, 2023, the effective tax rate was lower than the U.S. statutory rate of 21% , primarily due to the tax impacts of goodwill impairment and share-based compensation on a pre-tax loss. The benefit for income taxes in the twenty-six weeks ended September 30, 2023 was $2,995 as compared to a provision of , the effective tax rate was lower than the U.S. statutory rate of 21%, primarily due to the tax impacts of goodwill impairment and share-based compensation on a pre-tax loss. |
Commitments and contingencies
Commitments and contingencies | 6 Months Ended |
Sep. 30, 2023 | |
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 $3,886 as of September 30, 2023. The Company is subject to ordinary litigation and routine reviews by regulatory bodies that are incidental to its business. The Company has recorded accruals with respect to these matters, where appropriate, which are reflected in the Company's unaudited condensed consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. No material amounts were accrued at September 30, 2023, April 1, 2023, or October 1, 2022 pertaining to legal proceedings or other contingencies. Rashon Hayes v. The Container Store, Inc. The Company was named as a defendant in a putative class action and representative action was filed on February 10, 2020 in Santa Clara Superior Court by Rashon Hayes (“Plaintiff”), a former, hourly-paid employee of TCS who was employed from April 2019 to June 2019. The First Amended Complaint was filed on August 3, 2020 and alleges eleven causes of action: (1) unpaid overtime, (2) unpaid meal period premiums, (3) unpaid rest period premiums, (4) unpaid minimum wages, (5) final wages not timely paid, (6) wages not timely paid during employment, (7) non-compliant wage statements, (8) failure to keep requisite payroll records, (9) unreimbursed business expenses, (10) violation of California Business and Professions Code section 17200, and (11) violation of the California Private Attorneys General Act. The lawsuit seeks restitution of unpaid wages for plaintiff and other class members, pre-judgement interest, appointment of class administrator, and attorney's fees and costs. TCS denies the allegations and will continue to defend the case. The parties are currently engaged in the discovery process and have agreed to participate in a mediation on February 21, 2024. Based on information currently available, the Company does not believe that its pending legal matters, either on an individual basis or in the aggregate, will have a material adverse effect on the Company’s consolidated financial statements as a whole. However, litigation and other legal matters involve an element of uncertainty. Adverse decisions and settlements, including any required changes to the Company's business, or other developments in such matters could affect our operating results in future periods or result in a liability or other amounts material to the Company's annual consolidated financial statements. |
Accumulated other comprehensive
Accumulated other comprehensive loss | 6 Months Ended |
Sep. 30, 2023 | |
Accumulated other comprehensive loss | |
Accumulated other comprehensive loss | 8. Accumulated other comprehensive loss Accumulated other comprehensive loss (“AOCL”) consists of changes in our foreign currency forward contracts, pension liability adjustment, and foreign currency translation. The components of AOCL, net of tax, are shown below for the twenty-six weeks ended September 30, 2023: Pension Foreign liability currency adjustment translation Total Balance at April 1, 2023 $ (1,117) $ (31,392) $ (32,509) Other comprehensive income (loss) before reclassifications, net of tax 74 (3,305) (3,231) Amounts reclassified to earnings, net of tax — — — Net current period other comprehensive income (loss) 74 (3,305) (3,231) Balance at September 30, 2023 $ (1,043) $ (34,697) $ (35,740) |
Fair value measurements
Fair value measurements | 6 Months Ended |
Sep. 30, 2023 | |
Fair value measurements | |
Fair value measurements | 9. Fair value measurements Under GAAP, the Company is required to a) measure certain assets and liabilities at fair value and 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 September 30, 2023, April 1, 2023 and October 1, 2022, the Company held certain items that are required to be measured at fair value on a recurring basis. These items are included in the The following items are measured at fair value on a recurring basis, subject to the requirements of ASC 820, Fair Value Measurements September 30, April 1, October 1, Description Balance Sheet Location 2023 2023 2022 Assets Nonqualified retirement plan N/A Other current assets $ 3,587 $ 3,743 $ 3,401 Total assets $ 3,587 $ 3,743 $ 3,401 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 September 30, 2023, April 1, 2023 and October 1, 2022, the estimated fair value of the Company’s long-term debt, including current maturities, was as follows: September 30, April 1, October 1, 2023 2023 2022 Senior secured term loan facility $ 148,873 $ 153,915 $ 155,261 Revolving credit facility 10,000 5,000 — 2019 Elfa revolving facilities 2,820 2,423 13,660 Obligations under finance leases 154 136 135 Total fair value of debt $ 161,847 $ 161,474 $ 169,056 |
Segment reporting
Segment reporting | 6 Months Ended |
Sep. 30, 2023 | |
Segment reporting | |
Segment reporting | 10. Segment reporting The Company’s reportable segments were determined on the same basis as how management evaluates performance internally by the Chief Operating Decision Maker (“CODM”). The Company has determined that the Chief Executive Officer is the CODM and the Company’s two reportable segments consist of TCS and Elfa. The TCS segment includes the Company’s retail stores, website and call center, as well as in-home services. We operate the C Studio manufacturing facility in Elmhurst, Illinois, which designs and manufactures the Company’s premium wood-based custom space product offering. We determined that TCS and C Studio have similar economic characteristics and meet the aggregation criteria set forth in ASC 280, Segment Reporting. Therefore, we have combined these two operating segments into the TCS reportable segment. The Elfa segment includes the manufacturing business that produces 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 Eliminations column. The net sales to third parties in the Elfa column represent sales to customers outside of the United States. The Company has determined that adjusted earnings before interest, tax, depreciation, and amortization (“Adjusted EBITDA”) is the profit or loss measure that the CODM uses to make resource allocation decisions and evaluate segment performance. Adjusted EBITDA assists management in comparing our performance on a consistent basis for purposes of business decision-making by removing the impact of certain items that management believes do not directly reflect our core operations and, therefore, are not included in measuring segment performance. Adjusted EBITDA is calculated in accordance with the Senior Secured Term Loan Facility and the Revolving Credit Facility and we define Adjusted EBITDA as net (loss) income before interest, taxes, depreciation and amortization, certain non-cash items, and other adjustments that we do not consider in our evaluation of ongoing operating performance from period to period. Thirteen Weeks Ended September 30, 2023 TCS Elfa Eliminations Total Net sales to third parties $ 208,525 $ 11,206 $ — $ 219,731 Intersegment sales — 10,041 (10,041) — Adjusted EBITDA 14,278 1,335 1,413 17,026 Interest expense, net 5,141 97 — 5,238 Assets (1) 880,587 96,370 (7,448) 969,509 Thirteen Weeks Ended October 1, 2022 TCS Elfa Eliminations Total Net sales to third parties $ 259,872 $ 12,800 $ — $ 272,672 Intersegment sales — 19,989 (19,989) — Adjusted EBITDA 34,888 2,902 (1,879) 35,911 Interest expense, net 3,626 157 — 3,783 Assets (1) 1,127,469 91,396 (5,206) 1,213,659 Twenty-Six Weeks Ended September 30, 2023 TCS Elfa Eliminations Total Net sales to third parties $ 403,652 $ 23,191 $ — $ 426,843 Intersegment sales — 22,593 (22,593) — Adjusted EBITDA 15,052 3,288 1,605 19,945 Interest expense, net 10,027 178 — 10,205 Assets (1) 880,587 96,370 (7,448) 969,509 Twenty-Six Weeks Ended October 1, 2022 TCS Elfa Eliminations Total Net sales to third parties $ 506,643 $ 28,663 $ — $ 535,306 Intersegment sales — 31,709 (31,709) — Adjusted EBITDA 59,985 6,153 (2,039) 64,099 Interest expense, net 6,760 246 — 7,006 Assets (1) 1,127,469 91,396 (5,206) 1,213,659 (1) Tangible assets in the Elfa column are located outside of the United States. A reconciliation of (loss) income before taxes to Adjusted EBITDA is set forth below: Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, October 1, September 30, October 1, 2023 2022 2023 2022 (Loss) income before taxes $ (23,062) $ 21,244 $ (38,485) $ 35,956 Add: Depreciation and amortization 10,383 9,549 20,895 18,555 Interest expense, net 5,238 3,783 10,205 7,006 Pre-opening costs (a) 549 583 734 619 Non-cash lease expense (b) (155) 137 (329) 171 Impairment charges (c) 23,447 — 23,447 — Stock-based compensation (d) 615 536 1,089 1,737 Foreign exchange losses (gains) (e) 2 16 (73) (8) Acquisition-related costs (f) — 63 — 63 Severance charges (g) 9 — 2,462 — Adjusted EBITDA $ 17,026 $ 35,911 $ 19,945 $ 64,099 (a) Non-capital expenditures associated with opening new stores and relocating stores, including marketing expenses, travel and relocation costs, and training costs. We adjust for these costs to facilitate comparisons of our performance from period to period. (b) Reflects the extent to which our annual GAAP operating lease expense has been above or below our cash operating lease payments. The amount varies depending on the average age of our lease portfolio (weighted for size), as our GAAP operating lease expense on younger leases typically exceeds our cash operating lease payments, while our GAAP operating lease expense on older leases is typically less than our cash operating lease payments. (c) Non-cash goodwill impairment charge recognized in the second quarter of fiscal 2023, which we do not consider in our evaluation of ongoing performance. (d) Non-cash charges related to stock-based compensation programs, which vary from period to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period to period. (e) Realized foreign exchange transactional gains/losses our management does not consider in our evaluation of ongoing performance. (f) Includes legal costs incurred in the second quarter of fiscal 2022 associated with the acquisition of Closet Works, all of which are recorded as selling, general and administrative expenses, which we do not consider in our evaluation of ongoing performance. (g) Severance charges associated with the elimination of certain positions recorded in other expenses in the first and second quarters of fiscal 2023, which we do not consider in our evaluation of ongoing performance. |
Description of business and b_2
Description of business and basis of presentation (Policies) | 6 Months Ended |
Sep. 30, 2023 | |
Nature of business and summary of significant accounting policies | |
Seasonality | Seasonality Our unique offering of organizing solutions, custom spaces, and in-home services makes us less susceptible to holiday season shopping patterns than many retailers. Our quarterly results fluctuate, depending upon a variety of factors, including our product offerings, promotional events, store openings, the weather, remodeling or relocations, shifts in the timing of holidays, timing of delivery of orders, competitive factors and general economic conditions, including economic downturns as a result of unforeseen events such as pandemics, inflation, and supply chain disruptions, among other things. Accordingly, our results of operations may fluctuate on a seasonal and quarterly basis, relative to corresponding periods in prior years. In addition, we may take certain pricing or marketing actions that could have a disproportionate effect on our business, financial condition and results of operations in a particular quarter or selling season. |
Goodwill and trade names (Table
Goodwill and trade names (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Goodwill and trade names | |
Schedule of changes in the carrying amount of goodwill and trade names | Goodwill Trade names Balance at April 1, 2023 Gross balance 428,811 252,812 Accumulated impairment charges (405,364) (31,534) Total, net $ 23,447 $ 221,278 Foreign currency translation adjustments — (1,720) Balance at September 30, 2023 Gross balance 428,811 251,092 Impairment charges (23,447) — Accumulated impairment charges (405,364) (31,534) Total, net $ — $ 219,558 |
Detail of certain balance she_2
Detail of certain balance sheet accounts (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Detail of certain balance sheet accounts | |
Schedule of detail of certain balance sheet accounts | September 30, April 1, October 1, 2023 2023 2022 Accounts receivable, net: Trade receivables, net $ 15,350 $ 18,269 $ 18,191 Credit card receivables 7,670 6,165 8,779 Other receivables 1,837 1,436 1,654 $ 24,857 $ 25,870 $ 28,624 Inventory: Finished goods $ 163,024 $ 160,108 $ 181,422 Raw materials 9,213 9,289 8,175 Work in progress 1,201 1,240 545 $ 173,438 $ 170,637 $ 190,142 Accrued liabilities: Accrued payroll, benefits and bonuses $ 19,985 $ 24,224 $ 21,658 Unearned revenue 18,339 15,700 22,124 Accrued transaction and property tax 12,299 14,072 14,930 Gift cards and store credits outstanding 12,926 13,002 12,274 Accrued sales returns 2,655 3,366 3,985 Accrued interest 158 189 197 Other accrued liabilities 5,000 4,120 4,279 $ 71,362 $ 74,673 $ 79,447 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Leases | |
Schedule of components of lease costs | The components of lease costs for the thirteen and twenty-six weeks ended September 30, 2023 and October 1, 2022 were as follows: Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Operating lease costs $ 23,529 $ 22,678 $ 46,813 $ 45,182 Variable lease costs 208 379 371 749 Total lease costs $ 23,737 $ 23,057 $ 47,184 $ 45,931 |
Schedule of weighted average remaining operating lease term and incremental borrowing rate | Weighted average remaining operating lease term and incremental borrowing rate as of September 30, 2023 and October 1, 2022 were as follows: Twenty-Six Weeks Ended September 30, 2023 October 1, 2022 Weighted average remaining lease term (years) 6.3 6.7 Weighted average incremental borrowing rate 10.1 % 10.7 % |
Schedule of future minimum lease payments under our operating lease liabilities | Operating leases (1) Within 1 year (remaining) $ 47,724 2 years 94,630 3 years 86,281 4 years 76,419 5 years 64,127 Thereafter 151,304 Total lease payments $ 520,485 Less amount representing interest 135,722 Total lease liability $ 384,763 Less current lease liability 61,533 Total noncurrent lease liability $ 323,230 (1) Operating lease payments exclude approximately $62,809 of legally binding minimum lease payments for eight leases signed but not yet commenced. |
Net (loss) income per common _2
Net (loss) income per common share (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Net (loss) income per common share | |
Schedule of reconciliation of net (loss) income and the number of shares used in the basic and diluted net income per common share calculations: | Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, October 1, September 30, October 1, 2023 2022 2023 2022 Numerator: Net (loss) income $ (23,653) $ 15,747 $ (35,490) $ 26,226 Denominator: Weighted-average common shares — basic 49,461,590 50,000,945 49,357,218 49,860,252 Nonvested restricted stock awards and other dilutive securities — 349,604 — 464,204 Weighted-average common shares — diluted 49,461,590 50,350,549 49,357,218 50,324,456 Net (loss) income per common share — basic $ (0.48) $ 0.31 $ (0.72) $ 0.53 Net (loss) income per common share — diluted $ (0.48) $ 0.31 $ (0.72) $ 0.52 Antidilutive securities not included: Stock options outstanding 1,643,930 1,439,607 1,677,588 1,506,588 Nonvested restricted stock awards 481,215 366,695 712,203 347,020 |
Accumulated other comprehensi_2
Accumulated other comprehensive loss (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Accumulated other comprehensive loss | |
Schedule of components of AOCL, net of tax | Pension Foreign liability currency adjustment translation Total Balance at April 1, 2023 $ (1,117) $ (31,392) $ (32,509) Other comprehensive income (loss) before reclassifications, net of tax 74 (3,305) (3,231) Amounts reclassified to earnings, net of tax — — — Net current period other comprehensive income (loss) 74 (3,305) (3,231) Balance at September 30, 2023 $ (1,043) $ (34,697) $ (35,740) |
Fair value measurements (Tables
Fair value measurements (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Fair value measurements | |
Schedule of items measured at fair value on a recurring basis, subject to the disclosure requirements of ASC 820 | September 30, April 1, October 1, Description Balance Sheet Location 2023 2023 2022 Assets Nonqualified retirement plan N/A Other current assets $ 3,587 $ 3,743 $ 3,401 Total assets $ 3,587 $ 3,743 $ 3,401 |
Schedule of estimated fair values of the Company's long-term debt, including current maturities | September 30, April 1, October 1, 2023 2023 2022 Senior secured term loan facility $ 148,873 $ 153,915 $ 155,261 Revolving credit facility 10,000 5,000 — 2019 Elfa revolving facilities 2,820 2,423 13,660 Obligations under finance leases 154 136 135 Total fair value of debt $ 161,847 $ 161,474 $ 169,056 |
Segment reporting (Tables)
Segment reporting (Tables) | 6 Months Ended |
Sep. 30, 2023 | |
Segment reporting | |
Schedule of segment reporting | Thirteen Weeks Ended September 30, 2023 TCS Elfa Eliminations Total Net sales to third parties $ 208,525 $ 11,206 $ — $ 219,731 Intersegment sales — 10,041 (10,041) — Adjusted EBITDA 14,278 1,335 1,413 17,026 Interest expense, net 5,141 97 — 5,238 Assets (1) 880,587 96,370 (7,448) 969,509 Thirteen Weeks Ended October 1, 2022 TCS Elfa Eliminations Total Net sales to third parties $ 259,872 $ 12,800 $ — $ 272,672 Intersegment sales — 19,989 (19,989) — Adjusted EBITDA 34,888 2,902 (1,879) 35,911 Interest expense, net 3,626 157 — 3,783 Assets (1) 1,127,469 91,396 (5,206) 1,213,659 Twenty-Six Weeks Ended September 30, 2023 TCS Elfa Eliminations Total Net sales to third parties $ 403,652 $ 23,191 $ — $ 426,843 Intersegment sales — 22,593 (22,593) — Adjusted EBITDA 15,052 3,288 1,605 19,945 Interest expense, net 10,027 178 — 10,205 Assets (1) 880,587 96,370 (7,448) 969,509 Twenty-Six Weeks Ended October 1, 2022 TCS Elfa Eliminations Total Net sales to third parties $ 506,643 $ 28,663 $ — $ 535,306 Intersegment sales — 31,709 (31,709) — Adjusted EBITDA 59,985 6,153 (2,039) 64,099 Interest expense, net 6,760 246 — 7,006 Assets (1) 1,127,469 91,396 (5,206) 1,213,659 (1) Tangible assets in the Elfa column are located outside of the United States. |
Summary of reconciliation of (loss) income before taxes to Adjusted EBITDA | A reconciliation of (loss) income before taxes to Adjusted EBITDA is set forth below: Thirteen Weeks Ended Twenty-Six Weeks Ended September 30, October 1, September 30, October 1, 2023 2022 2023 2022 (Loss) income before taxes $ (23,062) $ 21,244 $ (38,485) $ 35,956 Add: Depreciation and amortization 10,383 9,549 20,895 18,555 Interest expense, net 5,238 3,783 10,205 7,006 Pre-opening costs (a) 549 583 734 619 Non-cash lease expense (b) (155) 137 (329) 171 Impairment charges (c) 23,447 — 23,447 — Stock-based compensation (d) 615 536 1,089 1,737 Foreign exchange losses (gains) (e) 2 16 (73) (8) Acquisition-related costs (f) — 63 — 63 Severance charges (g) 9 — 2,462 — Adjusted EBITDA $ 17,026 $ 35,911 $ 19,945 $ 64,099 (a) Non-capital expenditures associated with opening new stores and relocating stores, including marketing expenses, travel and relocation costs, and training costs. We adjust for these costs to facilitate comparisons of our performance from period to period. (b) Reflects the extent to which our annual GAAP operating lease expense has been above or below our cash operating lease payments. The amount varies depending on the average age of our lease portfolio (weighted for size), as our GAAP operating lease expense on younger leases typically exceeds our cash operating lease payments, while our GAAP operating lease expense on older leases is typically less than our cash operating lease payments. (c) Non-cash goodwill impairment charge recognized in the second quarter of fiscal 2023, which we do not consider in our evaluation of ongoing performance. (d) Non-cash charges related to stock-based compensation programs, which vary from period to period depending on volume and vesting timing of awards. We adjust for these charges to facilitate comparisons from period to period. (e) Realized foreign exchange transactional gains/losses our management does not consider in our evaluation of ongoing performance. (f) Includes legal costs incurred in the second quarter of fiscal 2022 associated with the acquisition of Closet Works, all of which are recorded as selling, general and administrative expenses, which we do not consider in our evaluation of ongoing performance. (g) Severance charges associated with the elimination of certain positions recorded in other expenses in the first and second quarters of fiscal 2023, which we do not consider in our evaluation of ongoing performance. |
Description of business and b_3
Description of business and basis of presentation - Fiscal year (Details) - segment | 6 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Mar. 30, 2024 | Apr. 01, 2023 | |
Fiscal year | |||
Length of fiscal year | 364 days | 364 days | |
Number of Reportable Segments | 2 |
Description of business and b_4
Description of business and basis of presentation (Details) | Sep. 30, 2023 ft² state store | Apr. 03, 2021 |
Description of business and basis of presentation | ||
Number of stores | store | 98 | |
Average size of stores (in square feet) | 24,000 | |
Average selling square feet in stores (in square feet) | 18,000 | |
Number of states | state | 34 | |
LGP | Maximum | ||
Description of business and basis of presentation | ||
Ownership percentage | 50% |
Goodwill and indefinite-lived i
Goodwill and indefinite-lived intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Goodwill and indefinite-lived intangible assets | ||
Impairment charges | $ 23,447 | $ 23,447 |
Goodwill and trade names - Carr
Goodwill and trade names - Carrying amounts of goodwill and trade names (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2023 | Jul. 01, 2023 | |
Changes in the carrying amount of goodwill | ||
Gross balance at the beginning of the period | $ 428,811 | |
Accumulated impairment charges at the beginning of the period | (405,364) | |
Total, net balance at the beginning of the period | 23,447 | $ 23,447 |
Gross balance at the end of the period | 428,811 | 428,811 |
Impairment charges | (23,447) | |
Accumulated impairment charges at the end of the period | (405,364) | (405,364) |
Total, net balance at the end of the period | 23,447 | |
Trade names | ||
Changes in the carrying amount of trade names | ||
Gross balance at the beginning of the period | 252,812 | |
Accumulated impairment charges at the beginning of the period | (31,534) | |
Total, net balance at the beginning of the period | 221,278 | |
Foreign currency translation adjustments | (1,720) | |
Gross balance at the end of the period | 251,092 | 252,812 |
Accumulated impairment charges at the end of the period | (31,534) | (31,534) |
Total, net balance at the end of the period | $ 219,558 | $ 221,278 |
Detail of certain balance she_3
Detail of certain balance sheet accounts (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 | |
Detail of certain balance sheet accounts | |||
Revenue recognized included in unearned revenue | $ 13,795 | ||
Revenue recognized included in Gift cards and store credits outstanding | 2,386 | ||
Accounts receivable, net: | |||
Trade receivables, net | 15,350 | $ 18,269 | $ 18,191 |
Credit card receivables | 7,670 | 6,165 | 8,779 |
Other receivables | 1,837 | 1,436 | 1,654 |
Accounts receivable, net | 24,857 | 25,870 | 28,624 |
Inventory: | |||
Finished goods | 163,024 | 160,108 | 181,422 |
Raw materials | 9,213 | 9,289 | 8,175 |
Work in progress | 1,201 | 1,240 | 545 |
Inventory | 173,438 | 170,637 | 190,142 |
Property and equipment, net | |||
Property and equipment, net | 158,740 | 158,702 | 147,302 |
Accrued Liabilities: | |||
Accrued payroll, benefits and bonuses | 19,985 | 24,224 | 21,658 |
Unearned revenue | 18,339 | 15,700 | 22,124 |
Accrued transaction and property tax | 12,299 | 14,072 | 14,930 |
Gift cards and store credits outstanding | 12,926 | 13,002 | 12,274 |
Accrued sales returns | 2,655 | 3,366 | 3,985 |
Accrued interest | 158 | 189 | 197 |
Other accrued liabilities | 5,000 | 4,120 | 4,279 |
Accrued liabilities | $ 71,362 | $ 74,673 | $ 79,447 |
Leases (Details)
Leases (Details) | Sep. 30, 2023 store |
Leases | |
Number of store locations | 98 |
Minimum | |
Leases | |
Expiration term | 1 year |
Maximum | |
Leases | |
Expiration term | 15 years |
Leases - Components of lease co
Leases - Components of lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Lease costs | ||||
Operating lease costs | $ 23,529 | $ 22,678 | $ 46,813 | $ 45,182 |
Variable lease costs | 208 | 379 | 371 | 749 |
Total lease costs | $ 23,737 | $ 23,057 | $ 47,184 | $ 45,931 |
Leases - Weighted average remai
Leases - Weighted average remaining operating lease term and incremental borrowing rate (Details) | Sep. 30, 2023 | Apr. 01, 2023 |
Leases | ||
Weighted average remaining lease term (years) | 6 years 3 months 18 days | 6 years 8 months 12 days |
Weighted average incremental borrowing rate | 10.10% | 10.70% |
Leases - Future minimum lease p
Leases - Future minimum lease payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) lease | Apr. 01, 2023 USD ($) | Oct. 01, 2022 USD ($) |
Operating leases | |||
Within 1 year (remaining) | $ 47,724 | ||
2 years | 94,630 | ||
3 years | 86,281 | ||
4 years | 76,419 | ||
5 years | 64,127 | ||
Thereafter | 151,304 | ||
Total lease payments | 520,485 | ||
Less amount representing interest | 135,722 | ||
Total lease liability | 384,763 | ||
Current operating lease liabilities | 61,533 | $ 57,201 | $ 56,204 |
Total non-current lease liability | 323,230 | $ 314,100 | $ 322,830 |
Amount of minimum lease payments for leases signed but not yet commenced | $ 62,809 | ||
Future minimum lease payments due under noncancellable capital leases: | |||
Number Of Leases Signed Not Commenced | lease | 8 |
Net (loss) income per common _3
Net (loss) income per common share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Sep. 30, 2023 | Jul. 01, 2023 | Oct. 01, 2022 | Jul. 02, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Numerator: | ||||||
Net (loss) income | $ (23,653) | $ (11,837) | $ 15,747 | $ 10,479 | $ (35,490) | $ 26,226 |
Denominator: | ||||||
Weighted-average common shares - diluted | 49,461,590 | 50,350,549 | 49,357,218 | 50,324,456 | ||
Nonvested restricted stock awards and other dilutive securities | 349,604 | 464,204 | ||||
Weighted-average common shares - basic | 49,461,590 | 50,000,945 | 49,357,218 | 49,860,252 | ||
Net (loss) income per common share - basic | $ (0.48) | $ 0.31 | $ (0.72) | $ 0.53 | ||
Net (loss) income per common share - diluted | $ (0.48) | $ 0.31 | $ (0.72) | $ 0.52 | ||
Employee Stock Option [Member] | ||||||
Antidilutive securities not included: | ||||||
Antidilutive securities | 1,643,930 | 1,439,607 | 1,677,588 | 1,506,588 | ||
Nonvested restricted stock awards | ||||||
Antidilutive securities not included: | ||||||
Antidilutive securities | 481,215 | 366,695 | 712,203 | 347,020 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Income taxes | ||||
Provision (benefit) for income taxes | $ 591 | $ 5,497 | $ (2,995) | $ 9,730 |
Effective income tax rate (as a percent) | (2.60%) | 25.90% | 7.80% | 27.10% |
U.S. federal corporate tax rate | 21% | 21% | 21% | 21% |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 |
Commitments and contingencies | |||
Loss Contingency Accrual | $ 0 | $ 0 | $ 0 |
Standby letters of credit | |||
Commitments and contingencies | |||
Amount outstanding | $ 3,886 |
Accumulated other comprehensi_3
Accumulated other comprehensive loss (Details) $ in Thousands | 6 Months Ended |
Sep. 30, 2023 USD ($) | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance beginning of period | $ (32,509) |
Other comprehensive income (loss) before reclassifications, net of tax | (3,231) |
Net current period other comprehensive income (loss) | (3,231) |
Balance end of period | (35,740) |
Minimum pension liability | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance beginning of period | (1,117) |
Other comprehensive income (loss) before reclassifications, net of tax | 74 |
Net current period other comprehensive income (loss) | 74 |
Balance end of period | (1,043) |
Foreign currency translation | |
Rollforward of the amounts included in AOCI, net of taxes | |
Balance beginning of period | (31,392) |
Other comprehensive income (loss) before reclassifications, net of tax | (3,305) |
Net current period other comprehensive income (loss) | (3,305) |
Balance end of period | $ (34,697) |
Fair value measurements (Detail
Fair value measurements (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 |
Assets | |||
Total assets | $ 3,587 | $ 3,743 | $ 3,401 |
Other current assets | |||
Assets | |||
Nonqualified retirement plan | $ 3,587 | $ 3,743 | $ 3,401 |
Fair value measurements - Estim
Fair value measurements - Estimated fair value of long-term debt, including current maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Apr. 01, 2023 | Oct. 01, 2022 |
Fair value measurements | |||
Total fair value of debt | $ 161,847 | $ 161,474 | $ 169,056 |
The 2019 Elfa Revolving Credit Facility | |||
Fair value measurements | |||
Total fair value of debt | 2,820 | 2,423 | 13,660 |
Revolving credit facility | |||
Fair value measurements | |||
Total fair value of debt | 10,000 | 5,000 | |
Senior secured term loan facility | |||
Fair value measurements | |||
Total fair value of debt | 148,873 | 153,915 | 155,261 |
Obligations under finance leases | |||
Fair value measurements | |||
Total fair value of debt | $ 154 | $ 136 | $ 135 |
Segment reporting - (Details)
Segment reporting - (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Sep. 30, 2023 USD ($) country | Oct. 01, 2022 USD ($) | Sep. 30, 2023 USD ($) segment country | Oct. 01, 2022 USD ($) | Jul. 01, 2023 USD ($) | Apr. 01, 2023 USD ($) | |
Segment reporting | ||||||
Number of reportable segments | segment | 2 | |||||
Segment reporting | ||||||
Net sales to third party | $ 219,731 | $ 272,672 | $ 426,843 | $ 535,306 | ||
Adjusted EBITDA | 17,026 | 35,911 | 19,945 | 64,099 | ||
Depreciation and amortization | (10,383) | (9,549) | (20,895) | (18,555) | ||
Interest expense, net | 5,238 | 3,783 | 10,205 | 7,006 | ||
Goodwill | 221,159 | 221,159 | $ 23,447 | $ 23,447 | ||
Trade names | 219,558 | 218,882 | 219,558 | 218,882 | 221,278 | |
Assets | $ 969,509 | 1,213,659 | $ 969,509 | 1,213,659 | $ 985,174 | |
Elfa | ||||||
Segment reporting | ||||||
Number of countries in which products are sold on wholesale basis | country | 30 | 30 | ||||
Operating segments | TCS | ||||||
Segment reporting | ||||||
Net sales to third party | $ 208,525 | 259,872 | $ 403,652 | 506,643 | ||
Adjusted EBITDA | 14,278 | 34,888 | 15,052 | 59,985 | ||
Interest expense, net | 5,141 | 3,626 | 10,027 | 6,760 | ||
Assets | 880,587 | 1,127,469 | 880,587 | 1,127,469 | ||
Operating segments | Elfa | ||||||
Segment reporting | ||||||
Net sales to third party | 11,206 | 12,800 | 23,191 | 28,663 | ||
Adjusted EBITDA | 1,335 | 2,902 | 3,288 | 6,153 | ||
Interest expense, net | 97 | 157 | 178 | 246 | ||
Assets | 96,370 | 91,396 | 96,370 | 91,396 | ||
lntersegment | ||||||
Segment reporting | ||||||
Net sales to third party | (10,041) | (19,989) | (22,593) | (31,709) | ||
Adjusted EBITDA | 1,413 | (1,879) | 1,605 | (2,039) | ||
Assets | (7,448) | (5,206) | (7,448) | (5,206) | ||
lntersegment | Elfa | ||||||
Segment reporting | ||||||
Net sales to third party | $ 10,041 | $ 19,989 | $ 22,593 | $ 31,709 |
Segment reporting - Reconciliat
Segment reporting - Reconciliation of EBITDA (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2023 | Oct. 01, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Segment reporting | ||||
(Loss) income before taxes | $ (23,062) | $ 21,244 | $ (38,485) | $ 35,956 |
Depreciation and amortization | 10,383 | 9,549 | 20,895 | 18,555 |
Interest expense, net | 5,238 | 3,783 | 10,205 | 7,006 |
Pre-opening costs | 549 | 583 | 734 | 619 |
Non-cash lease expense | (155) | 137 | (329) | 171 |
Impairment charges | 23,447 | 23,447 | ||
Stock-based compensation | 615 | 536 | 1,089 | 1,737 |
Foreign exchange (gains) | 2 | 16 | (73) | (8) |
Acquisition-related costs | 63 | 63 | ||
Elfa severance charges | 9 | 2,462 | ||
Total Adjusted EBITDA | $ 17,026 | $ 35,911 | $ 19,945 | $ 64,099 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Sep. 30, 2023 | Jul. 01, 2023 | Oct. 01, 2022 | Jul. 02, 2022 | Sep. 30, 2023 | Oct. 01, 2022 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ (23,653) | $ (11,837) | $ 15,747 | $ 10,479 | $ (35,490) | $ 26,226 |
Insider Trading Arrangements
Insider Trading Arrangements | 6 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |