Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 27, 2019 | Sep. 03, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 27, 2019 | |
Entity File Number | 001-37849 | |
Entity Registrant Name | AT HOME GROUP INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-3229563 | |
Entity Address, Address Line One | 1600 East Plano Parkway | |
Entity Address, City or Town | Plano | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75074 | |
City Area Code | 972 | |
Local Phone Number | 265-6227 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | HOME | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 64,078,097 | |
Current Fiscal Year End Date | --01-25 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001646228 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 13,106 | $ 10,951 | $ 10,385 |
Inventories, net | 436,692 | 382,023 | 331,476 |
Prepaid expenses | 9,750 | 7,949 | 9,433 |
Other current assets | 19,803 | 13,626 | 14,975 |
Total current assets | 479,351 | 414,549 | 366,269 |
Operating lease right-of-use assets | 1,083,554 | ||
Property and equipment, net | 730,786 | 682,663 | 568,771 |
Goodwill | 569,732 | 569,732 | 569,732 |
Trade name | 1,458 | 1,458 | 1,458 |
Debt issuance costs, net | 1,455 | 1,539 | 1,758 |
Restricted cash | 2,515 | 2,515 | 2,515 |
Noncurrent deferred tax asset | 21,204 | 52,805 | 50,688 |
Other assets | 957 | 945 | 784 |
Total assets | 2,891,012 | 1,726,206 | 1,561,975 |
Current liabilities: | |||
Accounts payable | 136,297 | 115,821 | 91,493 |
Accrued and other current liabilities | 122,394 | 117,508 | 111,719 |
Revolving line of credit | 276,390 | 221,010 | 195,530 |
Current portion of operating lease liabilities | 61,617 | ||
Current portion of deferred rent | 11,364 | 11,195 | |
Current portion of long-term debt | 3,970 | 4,049 | 3,485 |
Total current liabilities | 600,668 | 469,752 | 413,422 |
Operating lease liabilities | 1,097,376 | ||
Long-term debt | 336,261 | 336,435 | 288,906 |
Financing obligations | 9,326 | 35,038 | 28,303 |
Deferred rent | 169,339 | 162,063 | |
Other long-term liabilities | 3,974 | 4,556 | 5,278 |
Total liabilities | 2,047,605 | 1,015,120 | 897,972 |
Shareholders' Equity | |||
Common stock; $0.01 par value; 500,000,000 shares authorized; 64,046,808, 63,609,684 and 63,236,161 shares issued and outstanding, respectively | 640 | 636 | 632 |
Additional paid-in capital | 653,135 | 643,677 | 637,301 |
Retained earnings | 189,632 | 66,773 | 26,070 |
Total shareholders' equity | 843,407 | 711,086 | 664,003 |
Total liabilities and shareholders' equity | $ 2,891,012 | $ 1,726,206 | $ 1,561,975 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 |
Condensed Consolidated Balance Sheets | |||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 64,046,808 | 63,609,684 | 63,236,161 |
Common stock, outstanding shares | 64,046,808 | 63,609,684 | 63,236,161 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
Condensed Consolidated Statements of Operations | ||||
Net sales | $ 342,321 | $ 288,493 | $ 648,585 | $ 544,654 |
Cost of sales | 241,923 | 191,115 | 460,136 | 362,032 |
Gross profit | 100,398 | 97,378 | 188,449 | 182,622 |
Operating expenses | ||||
Selling, general and administrative expenses | 76,716 | 107,591 | 153,645 | 167,056 |
Depreciation and amortization | 1,869 | 1,615 | 3,630 | 3,194 |
Total operating expenses | 78,585 | 109,206 | 157,275 | 170,250 |
Gain on sale-leaseback | 16,528 | |||
Operating income (loss) | 21,813 | (11,828) | 47,702 | 12,372 |
Interest expense, net | 8,235 | 6,680 | 16,004 | 12,458 |
Income (loss) before income taxes | 13,578 | (18,508) | 31,698 | (86) |
Income tax provision (benefit) | 3,196 | (8,440) | 7,433 | (8,379) |
Net income (loss) | $ 10,382 | $ (10,068) | $ 24,265 | $ 8,293 |
Net income (loss) per common share: | ||||
Basic | $ 0.16 | $ (0.16) | $ 0.38 | $ 0.13 |
Diluted | $ 0.16 | $ (0.16) | $ 0.37 | $ 0.13 |
Weighted average shares outstanding: | ||||
Basic | 64,040,467 | 62,891,024 | 63,856,645 | 62,329,061 |
Diluted | 64,660,121 | 62,891,024 | 65,264,232 | 66,323,662 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common StockPreviously reported | Common StockAs adjusted | Common Stock | Additional Paid-in CapitalPreviously reported | Additional Paid-in CapitalAs adjusted | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit)Previously reported | Retained Earnings (Accumulated Deficit)As adjusted | Retained Earnings (Accumulated Deficit) | Previously reported | As adjusted | Total |
Balance - Stockholder's Equity at Jan. 27, 2018 | $ 614 | $ 572,488 | $ 17,777 | $ 590,879 | ||||||||
Balance - Stockholder's Equity (in shares) at Jan. 27, 2018 | 61,423,398 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Stock-based compensation | 2,128 | 2,128 | ||||||||||
Exercise of stock options and other awards | $ 10 | 9,221 | 9,231 | |||||||||
Exercise of stock options and other awards (in shares) | 930,703 | |||||||||||
Net income (loss) | 18,361 | 18,361 | ||||||||||
Balance - Stockholder's Equity at Apr. 28, 2018 | $ 624 | 583,837 | 36,138 | 620,599 | ||||||||
Balance - Stockholder's Equity (in shares) at Apr. 28, 2018 | 62,354,101 | |||||||||||
Balance - Stockholder's Equity at Jan. 27, 2018 | $ 614 | 572,488 | 17,777 | 590,879 | ||||||||
Balance - Stockholder's Equity (in shares) at Jan. 27, 2018 | 61,423,398 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) | 8,293 | |||||||||||
Balance - Stockholder's Equity at Jul. 28, 2018 | $ 632 | 637,301 | 26,070 | 664,003 | ||||||||
Balance - Stockholder's Equity (in shares) at Jul. 28, 2018 | 63,236,161 | |||||||||||
Balance - Stockholder's Equity at Jan. 27, 2018 | $ 614 | 572,488 | 17,777 | 590,879 | ||||||||
Balance - Stockholder's Equity (in shares) at Jan. 27, 2018 | 61,423,398 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Adoption of ASU No. 2016-02, Leases | ASU 2016-02 | 98,594 | 98,594 | ||||||||||
Balance - Stockholder's Equity at Jan. 26, 2019 | $ 636 | $ 636 | $ 643,677 | $ 643,677 | $ 66,773 | $ 165,367 | $ 711,086 | $ 809,680 | 711,086 | |||
Balance - Stockholder's Equity (in shares) at Jan. 26, 2019 | 63,609,684 | 63,609,684 | ||||||||||
Balance - Stockholder's Equity at Apr. 28, 2018 | $ 624 | 583,837 | 36,138 | 620,599 | ||||||||
Balance - Stockholder's Equity (in shares) at Apr. 28, 2018 | 62,354,101 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Stock-based compensation | 44,584 | 44,584 | ||||||||||
Exercise of stock options and other awards | $ 8 | 8,880 | 8,888 | |||||||||
Exercise of stock options and other awards (in shares) | 882,060 | |||||||||||
Net income (loss) | (10,068) | (10,068) | ||||||||||
Balance - Stockholder's Equity at Jul. 28, 2018 | $ 632 | 637,301 | 26,070 | 664,003 | ||||||||
Balance - Stockholder's Equity (in shares) at Jul. 28, 2018 | 63,236,161 | |||||||||||
Balance - Stockholder's Equity at Jan. 26, 2019 | $ 636 | $ 636 | 643,677 | 643,677 | 66,773 | 165,367 | 711,086 | 809,680 | 711,086 | |||
Balance - Stockholder's Equity (in shares) at Jan. 26, 2019 | 63,609,684 | 63,609,684 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Stock-based compensation | 1,848 | 1,848 | ||||||||||
Exercise of stock options and other awards | $ 4 | 4,761 | 4,765 | |||||||||
Exercise of stock options and other awards (in shares) | 349,722 | |||||||||||
Net income (loss) | 13,883 | 13,883 | ||||||||||
Balance - Stockholder's Equity at Apr. 27, 2019 | $ 640 | 650,286 | 179,250 | 830,176 | ||||||||
Balance - Stockholder's Equity (in shares) at Apr. 27, 2019 | 63,959,406 | |||||||||||
Balance - Stockholder's Equity at Jan. 26, 2019 | $ 636 | $ 636 | $ 643,677 | $ 643,677 | $ 66,773 | $ 165,367 | $ 711,086 | $ 809,680 | 711,086 | |||
Balance - Stockholder's Equity (in shares) at Jan. 26, 2019 | 63,609,684 | 63,609,684 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) | 24,265 | |||||||||||
Balance - Stockholder's Equity at Jul. 27, 2019 | $ 640 | 653,135 | 189,632 | 843,407 | ||||||||
Balance - Stockholder's Equity (in shares) at Jul. 27, 2019 | 64,046,808 | |||||||||||
Balance - Stockholder's Equity at Apr. 27, 2019 | $ 640 | 650,286 | 179,250 | 830,176 | ||||||||
Balance - Stockholder's Equity (in shares) at Apr. 27, 2019 | 63,959,406 | |||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Stock-based compensation | 1,637 | 1,637 | ||||||||||
Exercise of stock options and other awards | 1,212 | 1,212 | ||||||||||
Exercise of stock options and other awards (in shares) | 87,402 | |||||||||||
Net income (loss) | 10,382 | 10,382 | ||||||||||
Balance - Stockholder's Equity at Jul. 27, 2019 | $ 640 | $ 653,135 | $ 189,632 | $ 843,407 | ||||||||
Balance - Stockholder's Equity (in shares) at Jul. 27, 2019 | 64,046,808 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 27, 2019 | Jul. 28, 2018 | |
Operating Activities | ||
Net income | $ 24,265 | $ 8,293 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 33,831 | 25,930 |
Non-cash interest expense | 1,128 | 1,024 |
Gain on sale-leaseback | (16,528) | |
Amortization of deferred gain on sale-leaseback | (4,130) | |
Deferred income taxes | (1,142) | (17,127) |
Stock-based compensation | 3,485 | 46,712 |
Other non-cash losses, net | 956 | 20 |
Changes in operating assets and liabilities: | ||
Inventories | (54,669) | (61,632) |
Prepaid expenses and other current assets | (9,672) | (1,844) |
Other assets | (12) | (468) |
Accounts payable | 10,081 | 5,934 |
Accrued liabilities | 2,877 | 8,680 |
Operating lease assets and liabilities | 16,767 | |
Deferred rent | 10,934 | |
Net cash provided by operating activities | 11,367 | 22,326 |
Investing Activities | ||
Purchase of property and equipment | (141,515) | (160,408) |
Net proceeds from sale of property and equipment | 63,808 | 92,645 |
Net cash used in investing activities | (77,707) | (67,763) |
Financing Activities | ||
Payments under lines of credit | (404,670) | (306,447) |
Proceeds from lines of credit | 460,050 | 339,977 |
Payment of debt issuance costs | (397) | |
Payments on financing obligations | (60) | (179) |
Proceeds from financing obligations | 9,571 | |
Payments on long-term debt | (1,976) | (1,658) |
Proceeds from exercise of stock options | 5,977 | 18,119 |
Net cash provided by financing activities | 68,495 | 49,812 |
Increase in cash, cash equivalents and restricted cash | 2,155 | 4,375 |
Cash, cash equivalents and restricted cash, beginning of period | 13,466 | 8,525 |
Cash, cash equivalents and restricted cash, end of period | 15,621 | 12,900 |
Supplemental Cash Flow Information | ||
Cash paid for interest | 14,449 | 10,591 |
Cash paid for income taxes | 16,131 | 8,468 |
Supplemental Information for Non-cash Investing and Financing Activities | ||
Increase in current liabilities of property and equipment | $ 11,822 | 18,706 |
Property and equipment reduction due to sale-leaseback | (59,294) | |
Property and equipment additions due to build-to-suit lease transactions | $ 8,660 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 27, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation These The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information in accordance with Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been included. The condensed consolidated balance sheets as of July 27, 2019 and July 28, 2018, the condensed consolidated statements of operations for the thirteen and twenty-six weeks ended July 27, 2019 and July 28, 2018, the condensed consolidated statements of shareholders’ equity ending July 27, 2019 and July 28, 2018 and the condensed consolidated statements of cash flows for the twenty-six weeks ended July 27, 2019 and July 28, 2018 have been prepared by the Company and are unaudited. The consolidated balance sheet as of January 26, 2019 has been derived from the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 26, 2019 as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2019 (the “Annual Report”), but does not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal years ended January 26, 2019 and January 27, 2018 and the related notes thereto included in the Annual Report. The Company does not have any components of other comprehensive income recorded within its condensed consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its condensed consolidated financial statements. Fiscal Year We report on the basis of a 52- or 53-week fiscal year, which ends on the last Saturday in January. References to a fiscal year mean the year in which that fiscal year ends. References herein to “second fiscal quarter 2020” relate to the thirteen weeks ended July 27, 2019 and references to “second fiscal quarter 2019” relate to the thirteen weeks ended July 28, 2018. References herein to “the six months ended July 27, 2019” relate to the twenty-six weeks ended July 27, 2019 and references to “the six months ended July 28, 2018” relate to the twenty-six weeks ended July 28, 2018. Consolidation The accompanying condensed consolidated financial statements include the accounts of At Home Group Inc. and its consolidated wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Reclassification Certain prior period amounts have been reclassified to conform with the current period presentation within the condensed consolidated statement of cash flows. These reclassifications had no effect on previously reported results of operations or retained earnings. Seasonality Our business is moderately seasonal in nature and, therefore, the results of operations for the thirteen and twenty-six weeks ended July 27, 2019 are not necessarily indicative of the operating results that may be expected for a full fiscal year. Historically, our business has realized a slightly higher portion of net sales and operating income in the second and fourth fiscal quarters attributable primarily to the impact of summer and the year-end holiday decorating seasons, respectively. Restricted Cash Restricted cash consists of cash and cash equivalents reserved for a specific purpose that is not readily available for immediate or general business use. Our restricted cash balance as of July 27, 2019 consists primarily of cash equivalents held for use in the purchase of property and equipment. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 January 27, 2018 Cash and cash equivalents $ 13,106 $ 10,951 $ 10,385 $ 8,525 Restricted cash 2,515 2,515 2,515 — Cash, cash equivalents and restricted cash $ 15,621 $ 13,466 $ 12,900 $ 8,525 Recent Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, “ Simplifying the Test for Goodwill Impairment ” (“ASU 2017-04”). ASU 2017-04 simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under ASU 2017-04, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The standard is to be applied on a prospective basis. We do not anticipate a material impact to the consolidated financial statements once implemented. Recently Adopted Accounting Standards On January 27, 2019, we adopted ASU No. 2018-15, “ Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ” (“ASU 2018-15”) using the prospective method. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As of July 27, 2019, we have not incurred material implementation costs related to a hosting arrangement that is a service contract that would meet our capitalization policy. On January 27, 2019, we adopted ASU No. 2016-02 “ Leases ”, which supersedes ASC 840 “ Leases ” and creates a new topic, ASC 842 “ Leases ” (“ASU 2016-02” or “ASC 842”), using the modified retrospective approach. For more information, see Note 10 – Commitments and Contingencies. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 27, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 2 . Fair Value Measurements We follow the provisions of Accounting Standards Codification (“ASC”) 820 (Topic 820, “Fair Value Measurements and Disclosures” ● Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that we have the ability to access. ● Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable ( e.g. , interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. ● Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect our own assumptions about the assumptions that market participants would use. ASC 820 requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument is categorized based upon the lowest level of input that is significant to the fair value calculation. The fair value of all current financial instruments approximates carrying value because of the short-term nature of these instruments. We have variable and fixed rates on our long-term debt. The fair value of long-term debt with variable rates approximates carrying value as the interest rates of these amounts approximate market rates. We determine fair value on our fixed rate debt by using quoted market prices and current interest rates. At July 27, 2019, the fair value of our fixed rate mortgage due August 22, 2022 was $6.0 million, which was approximately $0.1 million above the carrying value of $5.9 million. Fair value for the fixed rate mortgage was determined using Level 2 inputs. |
Sale-Leaseback Transactions
Sale-Leaseback Transactions | 6 Months Ended |
Jul. 27, 2019 | |
Sale-Leaseback Transactions | |
Sale-Leaseback Transactions | 3. Sale-Leaseback Transactions In March 2019, we sold five of our properties in Frederick, Maryland; Live Oak, Texas; Mansfield, Texas; Plano, Texas; and Whitehall, Pennsylvania for a total of $74.7 million, resulting in a net gain of $16.5 million. Contemporaneously with the closing of the sale, we entered into a lease pursuant to which we leased back the properties for cumulative initial annual rent of $5.0 million, subject to annual escalations. The lease is being accounted for as an operating lease other than the land of Frederick, Maryland, which is being accounted for as a financing transaction in accordance with ASC 842 due to an option to repurchase a portion of the asset. In July 2018, we sold three of our properties in Clarksville, Tennessee; Shreveport, Louisiana; and Wixom, Michigan for a total of $43.6 million, resulting in a net gain of $10.7 million. Contemporaneously with the closing of the sale, we entered into a lease pursuant to which we leased back the properties for cumulative initial annual rent of $3.0 million, subject to annual escalations. The lease is being accounted for as an operating lease. Prior to the adoption of ASC 842, we deferred the net gain on the sale of the properties and included the deferred rent liabilities on our condensed consolidated balance sheet. We amortized the gain to rent expense on a straight line basis. Upon adoption of ASC 842, the remaining deferred net gain has been recognized as a cumulative-effect adjustment to opening retained earnings for fiscal year 2020. In February 2018, we sold four of our properties in Blaine, Minnesota; Fort Worth, Texas; Jackson, Mississippi; and Memphis, Tennessee for a total of $50.3 million, resulting in a net gain of $22.6 million. Contemporaneously with the closing of the sale, we entered into a lease pursuant to which we leased back the properties for cumulative initial annual rent of $3.4 million, subject to annual escalations. The lease is being accounted for as an operating lease. Prior to the adoption of ASC 842, we deferred the net gain on the sale of the properties and included the deferred rent liabilities on our condensed consolidated balance sheet. We amortized the gain to rent expense on a straight line basis. Upon adoption of ASC 842, the remaining deferred net gain has been recognized as a cumulative-effect adjustment to opening retained earnings for fiscal year 2020. |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 6 Months Ended |
Jul. 27, 2019 | |
Accrued and Other Current Liabilities | |
Accrued and Other Current Liabilities | 4. Accrued and Other Current Liabilities Accrued and other current liabilities consist of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Inventory in-transit $ 19,326 $ 20,591 $ 17,684 Accrued payroll and other employee-related liabilities 11,977 18,306 11,740 Accrued taxes, other than income 24,512 14,194 19,165 Accrued interest 6,182 5,756 5,016 Insurance liabilities 1,295 539 1,976 Gift card liability 7,700 7,784 6,199 Construction costs 16,991 14,548 20,695 Accrued inbound freight 14,184 15,236 10,195 Sales returns reserve 3,427 2,448 2,817 Other 16,800 18,106 16,232 Total accrued liabilities $ 122,394 $ 117,508 $ 111,719 |
Revolving Line of Credit
Revolving Line of Credit | 6 Months Ended |
Jul. 27, 2019 | |
Revolving Line of Credit | |
Revolving Line of Credit | 5. Revolving Line of Credit Interest on borrowings under our $425.0 million senior secured asset-based revolving credit facility (“ABL Facility”) is computed based on our average daily availability, at our option, of: (x) the higher of (i) the Federal Funds Rate plus 1/2 of 1.00%, (ii) the agent bank's prime rate and (iii) the London Interbank Offered Rate (“LIBOR”) plus 1.00%, plus in each case, an applicable margin of 0.25% to 0.75% or (y) the agent bank's LIBOR plus an applicable margin of 1.25% to 1.75%. The effective interest rate was approximately 4.40% and 3.80% during the thirteen weeks ended July 27, 2019 and July 28, 2018, respectively, and approximately 4.30% and 3.60% during the twenty-six weeks ended July 27, 2019 and July 28, 2018, respectively. In June 2019, in connection with the agreement governing the ABL Facility (the “ABL Credit Agreement”), we entered into a letter agreement with certain of the Lenders party to the ABL Credit Agreement (the “Commitment Increase Letter Agreement”) pursuant to which such Lenders agreed to increase their respective commitments by $75.0 million in the aggregate, with effect from June 14, 2019 (the “ABL Commitment Increase”). Following the ABL Commitment Increase, the amount of aggregate commitments available under the ABL Credit Agreement is $425.0 million. The other terms of the ABL Facility were not changed by the Commitment Increase Letter Agreement. We have amended the ABL Credit Agreement from time to time. After giving effect to such amendments and the ABL Commitment Increase, as of July 27, 2019, the amount of aggregate commitments available under the ABL Credit Agreement is $425.0 million, with a sublimit for the issuance of letters of credit of $50.0 million and a sublimit for the issuance of swingline loans of $20.0 million. In July 2017, in connection with the Seventh Amendment to the ABL Credit Agreement (the “ABL Amendment”), the maturity of the ABL Facility was extended to the earlier of July 27, 2022 and the date that is 91 days prior to the maturity date of the term loan entered into on June 5, 2015 under a first lien credit agreement (the “First Lien Agreement”) (as such date may be extended). As of July 27, 2019, approximately $276.4 million was outstanding under the ABL Facility, approximately $0.4 million in face amount of letters of credit had been issued and we had availability of approximately $133.1 million. As of July 27, 2019, we were in compliance with all covenants prescribed in the ABL Facility. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jul. 27, 2019 | |
Long-Term Debt | |
Long-Term Debt | 6. Long-Term Debt Long-term debt consists of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Term Loan $ 337,741 $ 339,500 $ 291,000 Note payable, bank (a) 5,897 5,969 6,038 Obligations under finance leases 1,683 733 823 Total debt 345,321 346,202 297,861 Less: current maturities 3,970 3,846 3,322 Less: unamortized deferred debt issuance costs 5,090 5,921 5,633 Long-term debt $ 336,261 $ 336,435 $ 288,906 (a) Matures August 22, 2022; $34.5 payable monthly, including interest at 4.50% with the remaining balance due at maturity; secured by the location’s land and building. On June 5, 2015, our indirect wholly owned subsidiary, At Home Holding III Inc. (the “Borrower”), entered into the First Lien Agreement, by and among the Borrower, At Home Holding II Inc. (“At Home II”), a direct wholly owned subsidiary of At Home Group Inc., as guarantor, certain indirect subsidiaries of At Home II, various lenders and Bank of America, N.A., as administrative agent and collateral agent. We have subsequently amended our First Lien Agreement from time to time. After giving effect to such amendments, the First Lien Agreement provides for a term loan in an aggregate principal amount of $350.0 million (the “Term Loan”). The Term Loan will mature on June 3, 2022, and is repayable in equal quarterly installments of approximately $0.9 million for an annual aggregate amount equal to 1% of the principal amount. The Borrower has the option of paying interest on a 1-month, 2-month or quarterly basis on the Term Loan at an annual rate of LIBOR (subject to a 1% floor) plus 4.00%, subject to a 0.50% reduction if the Borrower achieves a specified secured net leverage ratio level, which was met during the fiscal year ended January 28, 2017 and for which the Borrower has continued to qualify during the thirteen and twenty-six weeks ended July 27, 2019. The Term Loan is prepayable, in whole or in part, without premium at our option. On July 27, 2017, the Borrower entered into a First Amendment to the First Lien Agreement to permit the incurrence of additional indebtedness pursuant to the ABL Amendment and to make certain technical changes to conform to the terms of the ABL Amendment. On November 27, 2018, At Home II and the Borrower entered into the Second Amendment (the “Term Loan Amendment”) with the lenders party thereto and Bank of America, N.A., as administrative agent and as collateral agent, which amended the First Lien Agreement, as amended by the First Amendment dated July 27, 2017. Pursuant to the Term Loan Amendment, among other things, the Borrower borrowed an additional $50.0 million in incremental term loans, increasing the principal amount outstanding under the First Lien Agreement on such date to $339.5 million. Net proceeds from the incremental term loans were used to repay approximately $49.6 million of borrowings under the ABL Facility. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 27, 2019 | |
Related Party Transactions | |
Related Party Transactions | 7. Related Party Transactions Merry Mabbett Inc. (“MMI”) is owned by Merry Mabbett Dean, who is the mother of Lewis L. Bird III, our Chief Executive Officer. During the thirteen and twenty-six weeks ended July 27, 2019 and July 28, 2018, through MMI, we purchased certain fixtures, furniture and equipment that is now owned and used by us in our home office, new store offices or in the product vignettes in the stores. In addition, Ms. Dean, through MMI, provided certain design services to us, including design for our home office, as well as design in our stores. During the thirteen weeks ended July 27, 2019 and July 28, 2018, we paid MMI a nominal amount and approximately $0.1 million, respectively, primarily for fixtures, furniture and equipment. During the twenty-six weeks ended July 27, 2019 and July 28, 2018, we paid MMI approximately $0.2 million and $0.3 million, respectively, for fixtures, furniture and equipment. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jul. 27, 2019 | |
Revenue Recognition | |
Revenue Recognition | 8. Revenue Recognition We sell a broad assortment of home décor, including home furnishings and accent décor, and recognize revenue when the customer takes possession or control of goods at the time the sale is completed at the store register. Accordingly, we implicitly enter into a contract with customers at the point of sale. In addition to retail store sales, we also generate revenue through the sale of gift cards and through incentive arrangements associated with our credit card program. As noted in the segment information in the notes to the consolidated financial statements included in our Annual Report, our business consists of one reportable segment. In accordance with ASC 606, we disaggregate net sales into the following product categories: Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 28, 2018 July 27, 2019 July 28, 2018 Home furnishings 53 % 54 % 53 % 53 % Accent décor 43 42 44 43 Other 4 4 3 4 Total 100 % 100 % 100 % 100 % Contract liabilities are recognized primarily for gift card sales. Cash received from the sale of gift cards is recorded as a contract liability in accrued and other current liabilities, and we recognize revenue upon the customer’s redemption of the gift card. Gift card breakage is recognized as revenue in proportion to the pattern of customer redemptions by applying an estimated breakage rate that takes into account historical patterns of redemptions and deactivations of gift cards. We recognized approximately $4.1 million and $4.2 million in gift card redemption revenue for the thirteen weeks ended July 27, 2019 and July 28, 2018, respectively, and recognized an immaterial amount in gift card breakage revenue for each of the thirteen weeks ended July 27, 2019 and July 28, 2018. Of the total gift card redemption revenue, approximately $1.4 million for each of the thirteen weeks ended July 27, 2019 and July 28, 2018 related to gift cards issued in prior periods. We recognized approximately $7.8 million and $7.9 million in gift card redemption revenue for the twenty-six weeks ended July 27, 2019 and July 28, 2018, respectively, and recognized an immaterial amount in gift card breakage revenue for each of the twenty-six weeks ended July 27, 2019 and July 28, 2018. Of the total gift card redemption revenue, approximately $2.5 million and $2.2 million for the twenty-six weeks ended July 27, 2019 and July 28, 2018, respectively, related to gift cards issued in prior periods. We had outstanding gift card liabilities of $7.7 million, $7.8 million and $6.2 million as of July 27, 2019, January 26, 2019 and July 28, 2018, respectively, which are included in accrued and other current liabilities. In fiscal year 2018, we launched a credit card program by which credit is extended to eligible customers through private label and co-branded credit cards with Synchrony Bank (“Synchrony”). Through the launch of the credit card program, we received reimbursement of costs associated with the launch of the credit card program as well as a one-time payment which has been deferred over the initial seven-year term of the agreement with Synchrony. We receive ongoing payments from Synchrony based on sales transacted on our credit cards and for reimbursement of joint marketing and advertising activities. During each of the thirteen weeks ended July 27, 2019 and July 28, 2018, we recognized approximately $0.7 million in revenue from our credit card program within net sales when earned. During the twenty-six weeks ended July 27, 2019 and July 28, 2018, we recognized approximately $1.7 million and $1.4 million, respectively, in revenue from our credit card program within net sales when earned. Customers may return purchased items for an exchange or refund. We utilize the expected value methodology in which different scenarios, including current sales return data and historical quarterly sales return rates, are used to develop an estimated sales return rate. We present the sales returns reserve within other current liabilities and the estimated value of the inventory that will be returned within other current assets in the condensed consolidated balance sheets. The components of the sales returns reserve reflected in the condensed consolidated balance sheets consist of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Accrued and other current liabilities $ 3,427 $ 2,448 $ 2,817 Other current assets 1,543 1,129 1,255 Sales returns reserve, net $ 1,884 $ 1,319 $ 1,562 |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 27, 2019 | |
Income Taxes | |
Income Taxes | 9. Income Taxes Our effective tax rate for the thirteen weeks ended July 27, 2019 was 23.5% compared to 45.6% for the thirteen weeks ended July 28, 2018. Our effective tax rate for the twenty-six weeks ended July 27, 2019 was 23.4% compared to 9,687.5 % for the twenty-six weeks ended July 28, 2018. The effective tax rate for the thirteen and twenty-six weeks ended July 27, 2019 differs from the federal statutory rate primarily due to the impact of state and local income taxes. The effective tax rate for the thirteen weeks ended July 28, 2018 differs from the federal statutory rate primarily due to the recognition of $4.1 million of excess tax benefit related to stock option exercises and the impact of state and local income taxes. The effective tax rate for the twenty-six weeks ended July 28, 2018 differs from the federal statutory rate primarily due to our recognition for the period of a loss before income taxes of $0.1 million as well as the impact of $8.3 million of excess tax benefit realized in connection with stock option exercises and, to a lesser extent, the impact of state and local income taxes. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 27, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 10. Commitments and Contingencies Leases In February 2016, the FASB issued ASU 2016-02 which supersedes ASC 840 We adopted the provisions of ASC 842 effective January 27, 2019, using the modified retrospective adoption method, which resulted in an adjustment to opening retained earnings of $98.6 million. We utilized the simplified transition option available in ASC 842, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. Related to the adoption of ASC 842, our policy elections were as follows: Package of practical expedients ● ● ● Separation of lease and non-lease components ● Short-term leases ● ● ● In addition, ASC 842 eliminated the previous sale-leaseback and build-to-suit lease accounting guidance, which resulted in the derecognition of (i) deferred gains on sale-leasebacks, (ii) build-to-suit assets and related financing obligation liabilities that remained on the balance sheet after the end of the construction period and (iii) the related deferred taxes. For leases with terms of 12 months and greater, an asset and liability are initially recorded at an amount equal to the present value of the unpaid lease payments over the lease term. In determining the lease term for each lease, we include options to extend the lease when it is reasonably certain that we will exercise that option. We use the interest rate implicit in the lease, when known, or its estimated incremental borrowing rate, which is derived from information available at the lease commencement date including prevailing financial market conditions, in determining the present value of the unpaid lease payments. We assess whether a contract contains a lease on its execution date. If the contract contains a lease, lease classification is assessed upon its commencement date under ASC 842. For leases that are determined to qualify for treatment as operating leases, rent expense is recognized on a straight-line basis over the lease term. Leases that are determined to qualify for treatment as finance leases recognize interest expense as determined using the effective interest method with corresponding amortization of the right-of-use assets. We enter into leases primarily for real estate assets to support our operations in the normal course of business. As of July 27, 2019, our material operating leases consist of our corporate headquarters, distribution centers and the majority of our store properties. We also have two real estate leases for store properties that qualify for treatment as finance leases. Our leases generally have terms of 5 to 20 years , with renewal options that generally range from 5 to 20 years in the aggregate and are subject to escalating rent increases. Our leases may include variable charges at the discretion of the lessor. Certain of our leases include rent escalations based on inflation indexes and/or contingent rental provisions that include a fixed base rent plus an additional percentage of the stores’ sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at the commencement of the lease. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease cost were as follows (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 27, 2019 Operating lease cost (a) $ 34,974 $ 68,019 Variable lease cost 6,116 11,233 Finance lease cost Amortization of right-of-use assets 75 149 Interest on lease liabilities 34 68 Total lease cost (b) $ 41,199 $ 79,469 (a) Net of an immaterial amount of sublease income. (b) Short-term lease cost for the thirteen and twenty-six weeks ended July 27, 2019 was immaterial. The table below presents additional information related to our leases as of July 27, 2019. Weighted average remaining lease term Operating leases 12.6 years Finance leases 5.1 years Weighted average discount rate Operating leases 6.37 % Finance leases 8.14 % Supplemental disclosures of cash flow information related to leases were as follows (in thousands): Twenty-six Weeks Ended July 27, 2019 Cash paid for operating lease liabilities $ 70,620 Right-of-use assets obtained in exchange for operating lease liabilities $ 180,097 Cash paid for finance lease liabilities $ 144 Maturities of lease liabilities were as follows as of July 27, 2019 (in thousands): Financing Operating Leases Finance Leases Obligations Total Remainder of 2020 $ 66,305 $ 212 $ 321 $ 66,838 2021 134,998 423 652 136,073 2022 134,063 424 665 135,152 2023 131,399 390 678 132,467 2024 131,297 239 692 132,228 Thereafter 1,112,383 405 7,868 1,120,656 Total lease payments 1,710,445 2,093 10,876 1,723,414 Amount representing interest (551,452) (410) (9,214) (561,076) Remaining non-cash obligation - - 7,664 7,664 Present value of lease liabilities 1,158,993 1,683 9,326 1,170,002 Less current obligations (61,617) (305) - (61,922) Long-term lease obligations $ 1,097,376 $ 1,378 $ 9,326 $ 1,108,080 As of July 27, 2019, operating lease payments excluded approximately $105.0 million of legally binding minimum lease payments for leases signed but not yet commenced. We have one sale-leaseback transaction which does not qualify for sale-leaseback accounting due to an option to repurchase a portion of the asset. This transaction is accounted for under the financing method. Under the financing method, the assets remain on the condensed consolidated balance sheet and the proceeds from the transactions are recorded as financing obligations. A portion of lease payments are applied as payments of deemed principal and imputed interest. Litigation We are subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jul. 27, 2019 | |
Earnings Per Share | |
Earnings Per Share | 11. Earnings Per Share In accordance with ASC 260, (Topic 260, “Earnings Per Share” The following table sets forth the calculation of basic and diluted earnings per share for the thirteen and twenty-six weeks ended July 27, 2019 and July 28, 2018 as follows (dollars in thousands, except share and per share data): Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 28, 2018 July 27, 2019 July 28, 2018 Numerator: Net income (loss) $ 10,382 $ (10,068) $ 24,265 $ 8,293 Denominator: Weighted average common shares outstanding-basic 64,040,467 62,891,024 63,856,645 62,329,061 Effect of dilutive securities: Stock options and restricted stock units 619,654 — 1,407,587 3,994,601 Weighted average common shares outstanding-diluted 64,660,121 62,891,024 65,264,232 66,323,662 Net income (loss) per common share: Basic $ 0.16 $ (0.16) $ 0.38 $ 0.13 Diluted $ 0.16 $ (0.16) $ 0.37 $ 0.13 For the thirteen weeks ended July 27, 2019 and July 28, 2018, approximately 5,778,531 and 7,593,459, respectively, of stock options and restricted stock units were excluded from the calculation of diluted net income (loss) per common share since their effect was anti-dilutive, of which 3,789,341 stock options and restricted stock units would have been included as dilutive had we not recognized a net loss for the thirteen weeks ended July 28, 2018. For the twenty-six weeks ended July 27, 2019 and July 28, 2018, approximately 3,433,576 and 982,300, respectively, of stock options and restricted stock units were excluded from the calculation of diluted net income per common share since their effect was anti-dilutive. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 27, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 12. Stock-Based Compensation On March 28, 2019, we made a grant of 469,756 options to members of our senior management team and 130,695 restricted stock units to our independent directors and members of our senior management team under the 2016 Equity Plan. Non-cash, stock-based compensation expense associated with the grant of options is approximately $3.5 million, which will be expensed over the requisite service period of three years. Non-cash, stock-based compensation expense associated with the grant of restricted stock units is approximately $2.2 million, which will be expensed over the requisite service period of one to three years. Forfeiture assumptions for the grants were estimated based on historical experience. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 27, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation These The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information in accordance with Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been included. The condensed consolidated balance sheets as of July 27, 2019 and July 28, 2018, the condensed consolidated statements of operations for the thirteen and twenty-six weeks ended July 27, 2019 and July 28, 2018, the condensed consolidated statements of shareholders’ equity ending July 27, 2019 and July 28, 2018 and the condensed consolidated statements of cash flows for the twenty-six weeks ended July 27, 2019 and July 28, 2018 have been prepared by the Company and are unaudited. The consolidated balance sheet as of January 26, 2019 has been derived from the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 26, 2019 as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2019 (the “Annual Report”), but does not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the fiscal years ended January 26, 2019 and January 27, 2018 and the related notes thereto included in the Annual Report. The Company does not have any components of other comprehensive income recorded within its condensed consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income in its condensed consolidated financial statements. |
Fiscal Year | Fiscal Year We report on the basis of a 52- or 53-week fiscal year, which ends on the last Saturday in January. References to a fiscal year mean the year in which that fiscal year ends. References herein to “second fiscal quarter 2020” relate to the thirteen weeks ended July 27, 2019 and references to “second fiscal quarter 2019” relate to the thirteen weeks ended July 28, 2018. References herein to “the six months ended July 27, 2019” relate to the twenty-six weeks ended July 27, 2019 and references to “the six months ended July 28, 2018” relate to the twenty-six weeks ended July 28, 2018. |
Consolidation | Consolidation The accompanying condensed consolidated financial statements include the accounts of At Home Group Inc. and its consolidated wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassification | Reclassification Certain prior period amounts have been reclassified to conform with the current period presentation within the condensed consolidated statement of cash flows. These reclassifications had no effect on previously reported results of operations or retained earnings. |
Seasonality | Seasonality Our business is moderately seasonal in nature and, therefore, the results of operations for the thirteen and twenty-six weeks ended July 27, 2019 are not necessarily indicative of the operating results that may be expected for a full fiscal year. Historically, our business has realized a slightly higher portion of net sales and operating income in the second and fourth fiscal quarters attributable primarily to the impact of summer and the year-end holiday decorating seasons, respectively. |
Restricted Cash | Restricted Cash Restricted cash consists of cash and cash equivalents reserved for a specific purpose that is not readily available for immediate or general business use. Our restricted cash balance as of July 27, 2019 consists primarily of cash equivalents held for use in the purchase of property and equipment. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 January 27, 2018 Cash and cash equivalents $ 13,106 $ 10,951 $ 10,385 $ 8,525 Restricted cash 2,515 2,515 2,515 — Cash, cash equivalents and restricted cash $ 15,621 $ 13,466 $ 12,900 $ 8,525 |
Recent Accounting Pronouncements and Recently Adopted Accounting Standards | Recent Accounting Pronouncements In January 2017, the FASB issued ASU No. 2017-04, “ Simplifying the Test for Goodwill Impairment ” (“ASU 2017-04”). ASU 2017-04 simplifies the measurement of goodwill impairment by removing the second step of the goodwill impairment test, which requires the determination of the fair value of individual assets and liabilities of a reporting unit. Under ASU 2017-04, goodwill impairment is to be measured as the amount by which a reporting unit’s carrying value exceeds its fair value with the loss recognized not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The standard is to be applied on a prospective basis. We do not anticipate a material impact to the consolidated financial statements once implemented. Recently Adopted Accounting Standards On January 27, 2019, we adopted ASU No. 2018-15, “ Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract ” (“ASU 2018-15”) using the prospective method. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). As of July 27, 2019, we have not incurred material implementation costs related to a hosting arrangement that is a service contract that would meet our capitalization policy. On January 27, 2019, we adopted ASU No. 2016-02 “ Leases ”, which supersedes ASC 840 “ Leases ” and creates a new topic, ASC 842 “ Leases ” (“ASU 2016-02” or “ASC 842”), using the modified retrospective approach. For more information, see Note 10 – Commitments and Contingencies. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of cash, cash equivalents and restricted cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 January 27, 2018 Cash and cash equivalents $ 13,106 $ 10,951 $ 10,385 $ 8,525 Restricted cash 2,515 2,515 2,515 — Cash, cash equivalents and restricted cash $ 15,621 $ 13,466 $ 12,900 $ 8,525 |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Accrued and Other Current Liabilities | |
Schedule of accrued and other current liabilities | Accrued and other current liabilities consist of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Inventory in-transit $ 19,326 $ 20,591 $ 17,684 Accrued payroll and other employee-related liabilities 11,977 18,306 11,740 Accrued taxes, other than income 24,512 14,194 19,165 Accrued interest 6,182 5,756 5,016 Insurance liabilities 1,295 539 1,976 Gift card liability 7,700 7,784 6,199 Construction costs 16,991 14,548 20,695 Accrued inbound freight 14,184 15,236 10,195 Sales returns reserve 3,427 2,448 2,817 Other 16,800 18,106 16,232 Total accrued liabilities $ 122,394 $ 117,508 $ 111,719 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Long-Term Debt | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Term Loan $ 337,741 $ 339,500 $ 291,000 Note payable, bank (a) 5,897 5,969 6,038 Obligations under finance leases 1,683 733 823 Total debt 345,321 346,202 297,861 Less: current maturities 3,970 3,846 3,322 Less: unamortized deferred debt issuance costs 5,090 5,921 5,633 Long-term debt $ 336,261 $ 336,435 $ 288,906 (a) Matures August 22, 2022; $34.5 payable monthly, including interest at 4.50% with the remaining balance due at maturity; secured by the location’s land and building. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | In accordance with ASC 606, we disaggregate net sales into the following product categories: Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 28, 2018 July 27, 2019 July 28, 2018 Home furnishings 53 % 54 % 53 % 53 % Accent décor 43 42 44 43 Other 4 4 3 4 Total 100 % 100 % 100 % 100 % |
Schedule of components of the sale returns | The components of the sales returns reserve reflected in the condensed consolidated balance sheets consist of the following (in thousands): July 27, 2019 January 26, 2019 July 28, 2018 Accrued and other current liabilities $ 3,427 $ 2,448 $ 2,817 Other current assets 1,543 1,129 1,255 Sales returns reserve, net $ 1,884 $ 1,319 $ 1,562 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Commitments and Contingencies | |
Schedule of lease costs | The components of lease cost were as follows (in thousands): Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 27, 2019 Operating lease cost (a) $ 34,974 $ 68,019 Variable lease cost 6,116 11,233 Finance lease cost Amortization of right-of-use assets 75 149 Interest on lease liabilities 34 68 Total lease cost (b) $ 41,199 $ 79,469 (a) Net of an immaterial amount of sublease income. (b) Short-term lease cost for the thirteen and twenty-six weeks ended July 27, 2019 was immaterial. |
Schedule of weighted average remaining lease term and discount rate | The table below presents additional information related to our leases as of July 27, 2019. Weighted average remaining lease term Operating leases 12.6 years Finance leases 5.1 years Weighted average discount rate Operating leases 6.37 % Finance leases 8.14 % |
Schedule of supplemental cash flow information | Supplemental disclosures of cash flow information related to leases were as follows (in thousands): Twenty-six Weeks Ended July 27, 2019 Cash paid for operating lease liabilities $ 70,620 Right-of-use assets obtained in exchange for operating lease liabilities $ 180,097 Cash paid for finance lease liabilities $ 144 |
Schedule of maturities of lease liabilities | Maturities of lease liabilities were as follows as of July 27, 2019 (in thousands): Financing Operating Leases Finance Leases Obligations Total Remainder of 2020 $ 66,305 $ 212 $ 321 $ 66,838 2021 134,998 423 652 136,073 2022 134,063 424 665 135,152 2023 131,399 390 678 132,467 2024 131,297 239 692 132,228 Thereafter 1,112,383 405 7,868 1,120,656 Total lease payments 1,710,445 2,093 10,876 1,723,414 Amount representing interest (551,452) (410) (9,214) (561,076) Remaining non-cash obligation - - 7,664 7,664 Present value of lease liabilities 1,158,993 1,683 9,326 1,170,002 Less current obligations (61,617) (305) - (61,922) Long-term lease obligations $ 1,097,376 $ 1,378 $ 9,326 $ 1,108,080 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jul. 27, 2019 | |
Earnings Per Share | |
Schedule of calculation of basic and diluted earnings per share | The following table sets forth the calculation of basic and diluted earnings per share for the thirteen and twenty-six weeks ended July 27, 2019 and July 28, 2018 as follows (dollars in thousands, except share and per share data): Thirteen Weeks Ended Twenty-six Weeks Ended July 27, 2019 July 28, 2018 July 27, 2019 July 28, 2018 Numerator: Net income (loss) $ 10,382 $ (10,068) $ 24,265 $ 8,293 Denominator: Weighted average common shares outstanding-basic 64,040,467 62,891,024 63,856,645 62,329,061 Effect of dilutive securities: Stock options and restricted stock units 619,654 — 1,407,587 3,994,601 Weighted average common shares outstanding-diluted 64,660,121 62,891,024 65,264,232 66,323,662 Net income (loss) per common share: Basic $ 0.16 $ (0.16) $ 0.38 $ 0.13 Diluted $ 0.16 $ (0.16) $ 0.37 $ 0.13 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 | Jan. 27, 2018 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 13,106 | $ 10,951 | $ 10,385 | $ 8,525 |
Restricted cash | 2,515 | 2,515 | 2,515 | |
Cash, cash equivalents and restricted cash | $ 15,621 | $ 13,466 | $ 12,900 | $ 8,525 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Level 2 - Fixed rate mortgage $ in Millions | 6 Months Ended |
Jul. 27, 2019USD ($) | |
Fair Value Measurements | |
Fair value of fixed rate mortgage | $ 6 |
Difference of carrying value and fair value | 0.1 |
Carrying value of fixed rate mortgage | $ 5.9 |
Sale-Leaseback Transactions (De
Sale-Leaseback Transactions (Details) $ in Millions | 1 Months Ended | ||
Mar. 31, 2019USD ($)property | Jul. 31, 2018USD ($)property | Feb. 28, 2018USD ($)property | |
Sale-Leaseback Transactions | |||
Number of properties sold | property | 5 | 3 | 4 |
Proceeds from sale of properties | $ 74.7 | $ 43.6 | $ 50.3 |
Net gain | 16.5 | 10.7 | 22.6 |
Cumulative initial annual rent | $ 5 | $ 3 | $ 3.4 |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 |
Accrued and Other Current Liabilities | |||
Inventory in-transit | $ 19,326 | $ 20,591 | $ 17,684 |
Accrued payroll and other employee-related liabilities | 11,977 | 18,306 | 11,740 |
Accrued taxes, other than income | 24,512 | 14,194 | 19,165 |
Accrued interest | 6,182 | 5,756 | 5,016 |
Insurance liabilities | 1,295 | 539 | 1,976 |
Gift card liability | 7,700 | 7,784 | 6,199 |
Construction costs | 16,991 | 14,548 | 20,695 |
Accrued inbound freight | 14,184 | 15,236 | 10,195 |
Sales returns reserve | 3,427 | 2,448 | 2,817 |
Other | 16,800 | 18,106 | 16,232 |
Total accrued liabilities | $ 122,394 | $ 117,508 | $ 111,719 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - USD ($) $ in Thousands | Jun. 01, 2019 | Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | Jan. 26, 2019 |
Revolving Line of Credit | ||||||
Outstanding under the ABL credit agreement | $ 276,390 | $ 195,530 | $ 276,390 | $ 195,530 | $ 221,010 | |
ABL Credit Facility | ||||||
Revolving Line of Credit | ||||||
Maximum borrowing capacity | $ 425,000 | $ 425,000 | $ 425,000 | |||
Increase in commitment | $ 75,000 | |||||
Effective interest rate (as a percent) | 4.40% | 3.80% | 4.30% | 3.60% | ||
Outstanding under the ABL credit agreement | $ 276,400 | $ 276,400 | ||||
Available borrowing capacity | 133,100 | $ 133,100 | ||||
ABL Credit Facility | Federal Funds Rate | ||||||
Revolving Line of Credit | ||||||
Basis spread on variable rate | 0.50% | |||||
ABL Credit Facility | Federal Funds Rate | Minimum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.25% | |||||
ABL Credit Facility | Federal Funds Rate | Maximum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.75% | |||||
ABL Credit Facility | LIBOR | ||||||
Revolving Line of Credit | ||||||
Basis spread on variable rate | 1.00% | |||||
ABL Credit Facility | LIBOR | Minimum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.25% | |||||
Applicable margin on bank's LIBOR | 1.25% | |||||
ABL Credit Facility | LIBOR | Maximum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.75% | |||||
Applicable margin on bank's LIBOR | 1.75% | |||||
ABL Credit Facility | Bank's Prime rate | Minimum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.25% | |||||
ABL Credit Facility | Bank's Prime rate | Maximum | ||||||
Revolving Line of Credit | ||||||
Applicable margin | 0.75% | |||||
Letters of Credit | ||||||
Revolving Line of Credit | ||||||
Maximum borrowing capacity | 50,000 | $ 50,000 | ||||
Outstanding under the ABL credit agreement | 400 | 400 | ||||
Swingline loan | ||||||
Revolving Line of Credit | ||||||
Maximum borrowing capacity | $ 20,000 | $ 20,000 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) - USD ($) | 6 Months Ended | ||
Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 | |
Long-Term Debt | |||
Total debt | $ 345,321,000 | $ 346,202,000 | $ 297,861,000 |
Obligations under finance leases | 1,683,000 | ||
Less: current maturities | 3,970,000 | 3,846,000 | 3,322,000 |
Less: unamortized deferred debt issuance costs | 5,090,000 | 5,921,000 | 5,633,000 |
Long-term debt | 336,261,000 | 336,435,000 | 288,906,000 |
Term Loan | |||
Long-Term Debt | |||
Total debt | 337,741,000 | 339,500,000 | 291,000,000 |
Note payable, bank | |||
Long-Term Debt | |||
Total debt | 5,897,000 | 5,969,000 | 6,038,000 |
Installment payable | $ 34,500 | ||
Interest rate, stated percentage | 4.50% | ||
Obligations under finance leases | |||
Long-Term Debt | |||
Obligations under finance leases | $ 1,683,000 | $ 733,000 | $ 823,000 |
Long-Term Debt - First Lien and
Long-Term Debt - First Lien and Second Lien Agreement (Details) - Term Loan - First Lien Agreement $ in Millions | Jun. 05, 2015USD ($) |
Long-Term Debt | |
Debt instrument, face value | $ 350 |
Installment payable | $ 0.9 |
Percentage of annual aggregate amount of principal amount | 1.00% |
Interest rate reduction, related to net leverage ratio | 0.50% |
LIBOR | |
Long-Term Debt | |
Floor rate | 1.00% |
Basis spread (as a percent) | 4.00% |
Long-Term Debt - Senior Notes (
Long-Term Debt - Senior Notes (Details) - USD ($) $ in Thousands | Nov. 27, 2018 | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 |
Long-term Debt, by Current and Noncurrent [Abstract] | ||||
Outstanding principal amount | $ 345,321 | $ 346,202 | $ 297,861 | |
First Lien Agreement | ||||
Long-term Debt, by Current and Noncurrent [Abstract] | ||||
Outstanding principal amount | $ 339,500 | |||
Term Loan | ||||
Long-term Debt, by Current and Noncurrent [Abstract] | ||||
Additional borrowings | 50,000 | |||
Outstanding principal amount | $ 337,741 | $ 339,500 | $ 291,000 | |
Repayment of borrowings | $ 49,600 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
MMI | |||
Related Party Transactions | |||
Payments to related party | $ 0.1 | $ 0.2 | $ 0.3 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of revenue (Details) - segment | 3 Months Ended | 6 Months Ended | ||
Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
Revenue Recognition | ||||
Number of reportable segments | 1 | |||
Revenue percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Home furnishings | ||||
Revenue Recognition | ||||
Revenue percentage | 53.00% | 54.00% | 53.00% | 53.00% |
Accent decor | ||||
Revenue Recognition | ||||
Revenue percentage | 43.00% | 42.00% | 44.00% | 43.00% |
Other | ||||
Revenue Recognition | ||||
Revenue percentage | 4.00% | 4.00% | 3.00% | 4.00% |
Revenue Recognition - Narrative
Revenue Recognition - Narratives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | Jan. 26, 2019 | |
Revenue Recognition | |||||
Revenue | $ 342,321 | $ 288,493 | $ 648,585 | $ 544,654 | |
Gift card liability | $ 7,700 | 6,199 | $ 7,700 | 6,199 | $ 7,784 |
Synchrony Bank | |||||
Revenue Recognition | |||||
Amortization period of capitalized contract costs | 7 years | 7 years | |||
Gift Card Redemption | |||||
Revenue Recognition | |||||
Revenue | $ 4,100 | 4,200 | $ 7,800 | 7,900 | |
Revenue recognized | 1,400 | 1,400 | 2,500 | 2,200 | |
Credit Card Program | |||||
Revenue Recognition | |||||
Revenue | $ 700 | $ 700 | $ 1,700 | $ 1,400 |
Revenue Recognition - Component
Revenue Recognition - Components of Sales Returns Reserve (Details) - USD ($) $ in Thousands | Jul. 27, 2019 | Jan. 26, 2019 | Jul. 28, 2018 |
Contract with Customer, Right of Return | |||
Accrued and other current liabilities | $ 3,427 | $ 2,448 | $ 2,817 |
Other current assets | 1,543 | 1,129 | 1,255 |
Sales returns reserve, net | $ 1,884 | $ 1,319 | $ 1,562 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
Income Taxes | ||||
Effective income tax rate | 23.50% | 45.60% | 23.40% | 9687.50% |
Net federal excess tax benefit related to options exercised | $ 4,100 | |||
Loss before income taxes | $ (13,578) | $ 18,508 | $ (31,698) | $ 86 |
Excess tax benefit realized in connection with stock options exercises | $ 8,300 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 27, 2019USD ($)lease | Jul. 27, 2019USD ($)lease | Jan. 27, 2019USD ($) | Jan. 26, 2019USD ($) | Jul. 28, 2018USD ($) | |
Retained earnings | $ 189,632 | $ 189,632 | $ 66,773 | $ 26,070 | |
Number of real estate leases for store properties that qualify for treatment as finance leases | lease | 2 | 2 | |||
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | ||||
Weighted average remaining lease term -Operating leases (years) | 12 years 7 months 6 days | 12 years 7 months 6 days | |||
Weighted average remaining lease term - Finance leases (years) | 5 years 1 month 6 days | 5 years 1 month 6 days | |||
Weighted average discount rate - Operating leases | 6.37% | 6.37% | |||
Weighted average discount rate - Finance leases | 8.14% | 8.14% | |||
Lease cost | |||||
Operating lease cost | $ 34,974 | $ 68,019 | |||
Variable lease cost | 6,116 | 11,233 | |||
Amortization of right-of-use assets | 75 | 149 | |||
Interest on lease liabilities | 34 | 68 | |||
Total lease cost | 41,199 | 79,469 | |||
Supplemental disclosures of cash flow information related to leases | |||||
Cash paid for operating lease liabilities | 70,620 | ||||
Right-of-use assets obtained in exchange for operating lease liabilities | 180,097 | ||||
Cash paid for finance lease liabilities | 144 | ||||
Minimum lease payments for leases signed but not yet commenced | $ 105,000 | $ 105,000 | |||
Minimum | |||||
Lease term | 5 years | 5 years | |||
Renewal term | 5 years | 5 years | |||
Maximum | |||||
Lease term | 20 years | 20 years | |||
Renewal term | 20 years | 20 years | |||
ASU 2016-02 | |||||
Retained earnings | $ 98,600 |
Commitments and Contingencies -
Commitments and Contingencies - Maturities of lease liabilities (Details) $ in Thousands | Jul. 27, 2019USD ($) |
Operating Leases | |
Remainder of 2020 | $ 66,305 |
2021 | 134,998 |
2022 | 134,063 |
2023 | 131,399 |
2024 | 131,297 |
Thereafter | 1,112,383 |
Total lease payments | 1,710,445 |
Amount representing interest | (551,452) |
Present value of lease liabilities | 1,158,993 |
Less current obligations | (61,617) |
Long-term lease obligations | 1,097,376 |
Finance Leases | |
Remainder of 2020 | 212 |
2021 | 423 |
2022 | 424 |
2023 | 390 |
2024 | 239 |
Thereafter | 405 |
Total lease payments | 2,093 |
Less: amount representing interest | (410) |
Present value of lease liabilities | 1,683 |
Less current obligations | (305) |
Long-term lease obligations | 1,378 |
Financing Obligations | |
Remainder of 2020 | 321 |
2021 | 652 |
2022 | 665 |
2023 | 678 |
2024 | 692 |
Thereafter | 7,868 |
Total lease payments | 10,876 |
Amount representing interest | (9,214) |
Remaining non-cash obligation | 7,664 |
Present value of lease liabilities | 9,326 |
Long-term lease obligations | 9,326 |
Total | |
Remainder of 2020 | 66,838 |
2021 | 136,073 |
2022 | 135,152 |
2023 | 132,467 |
2024 | 132,228 |
Thereafter | 1,120,656 |
Total minimum lease payments | 1,723,414 |
Less: amount representing interest | (561,076) |
Remaining non-cash obligation | 7,664 |
Present value of lease liabilities | 1,170,002 |
Less current obligations | (61,922) |
Long-term lease obligations | $ 1,108,080 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 27, 2019 | Apr. 27, 2019 | Jul. 28, 2018 | Apr. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
Numerator: | ||||||
Net income (loss) | $ 10,382 | $ 13,883 | $ (10,068) | $ 18,361 | $ 24,265 | $ 8,293 |
Denominator: | ||||||
Weighted average common shares outstanding-basic | 64,040,467 | 62,891,024 | 63,856,645 | 62,329,061 | ||
Effect of dilutive securities: | ||||||
Stock options and restricted stock units | 619,654 | 1,407,587 | 3,994,601 | |||
Weighted average common shares outstanding-diluted | 64,660,121 | 62,891,024 | 65,264,232 | 66,323,662 | ||
Per common share: | ||||||
Basic net income (loss) per common share (in dollars per share) | $ 0.16 | $ (0.16) | $ 0.38 | $ 0.13 | ||
Diluted net income (loss) per common share (in dollars per share) | $ 0.16 | $ (0.16) | $ 0.37 | $ 0.13 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 27, 2019 | Jul. 28, 2018 | Jul. 27, 2019 | Jul. 28, 2018 | |
Antidilutive securities excluded from computation of earnings per share | ||||
Included as dilutive | 619,654 | 1,407,587 | 3,994,601 | |
Stock option | ||||
Antidilutive securities excluded from computation of earnings per share | ||||
Antidilutive shares excluded from calculation of diluted net income per common share | 5,778,531 | 7,593,459 | 3,433,576 | 982,300 |
Included as dilutive | 3,789,341 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - 2016 Equity Plan $ in Millions | Mar. 28, 2019USD ($)shares |
Stock option | Senior management | |
Stock-Based Compensation | |
Number of units granted | shares | 469,756 |
Stock-based compensation expense | $ | $ 3.5 |
Expense period | 3 years |
RSUs | Independent Directors and Senior Management | |
Stock-Based Compensation | |
Number of units granted | shares | 130,695 |
Stock-based compensation expense | $ | $ 2.2 |
RSUs | Independent Directors and Senior Management | Minimum | |
Stock-Based Compensation | |
Expense period | 1 year |
RSUs | Independent Directors and Senior Management | Maximum | |
Stock-Based Compensation | |
Expense period | 3 years |