Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Note 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations: www.fye.com www.secondspin.com Liquidity: The Company incurred net losses of $97.4 million and $42.6 million for the years ended February 2, 2019 and February 3, 2018, respectively, and has an accumulated deficit of $50.2 million at February 2, 2019. In addition, net cash used in operating activities for the year ended February 2, 2019 was $25.5 million. A noted above, the Company experienced negative cash flows from operations during fiscal 2018 and 2017 and we expect to continue to incur net losses in the foreseeable future. We implemented strategic initiatives on December 11, 2018, aimed at improving organizational efficiency and conserving working capital needed to support the growth of our etailz segment (the “performance improvement plan”). As a result of the initiative, we expect that annual expenses will be reduced by $4.0 to $5.0 million. At February 2, 2019, we had cash and cash equivalents of $4.4 million, net working capital of $65.9 million, and no outstanding borrowings on our revolving credit facility, as further discussed below. This compares to $31.3 million in cash and cash equivalents and net working capital of $92.8 million at February 3, 2018. We anticipate an improvement in cash flows from operations for fiscal year 2019. In January 2017, the Company amended and restated its revolving credit facility (“Credit Facility”). The Credit Facility provides for commitments of $50 million subject to increase up to $75 million during the months of October to December of each year, as needed. The availability under the Credit Facility is subject to limitations based on receivables and inventory levels. The principal amount of all outstanding loans under the Credit Facility together with any accrued but unpaid interest, are due and payable in January 2022, unless otherwise paid earlier pursuant to the terms of the Credit Facility. Payments of amounts due under the Credit Facility are secured by the assets of the Company. During fiscal 2018, the Company exercised the right to increase its availability to $60 million subject to the same limitations noted above. The Company had $30 million available for borrowing under the Credit Facility as of February 2, 2019. The Credit Facility contains customary affirmative and negative covenants, including restrictions on dividends and share repurchases, incurrence of additional indebtedness and acquisitions and covenants around the net number of store closings and restrictions related to the payment of cash dividends and share repurchases, including limiting the amount of dividends to $5 million annually, and not allowing borrowings under the amended facility for the six months before or six months after the dividend payment. On October 29, 2018, the Company entered into a letter agreement with Wells Fargo in accordance with the Credit Facility in which Wells Fargo provided consent to the Company exceeding the permitted number of store closures and related inventory dispositions. The Credit Facility also includes customary events of default, including, among other things, material adverse effect, bankruptcy, and certain changes of control. As of February 2, 2019, the Company was compliant with all covenants. On May 3, 2019, the Company entered into a letter agreement with Wells Fargo in accordance with the Credit Facility in which Wells Fargo provided consent to the Company with respect to late delivery of the Annual Financial Statements. In addition to the aforementioned current sources of existing working capital, the Company may explore certain other strategic alternatives that may become available to the Company, as well continuing our efforts to generate additional sales and increase margins. However, at this time the Company has no commitments to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all, should we require such additional funds. If the Company is unable to improve its operations, it may be required to obtain additional funding, and the Company’s financial condition and results of operations may be materially adversely affected. Furthermore, broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance, and may adversely impact our ability to raise additional funds, should we require such additional funds. Similarly, if our common stock is delisted from the NASDAQ Global Market, it may also limit our ability to raise additional funds. The consolidated financial statements for the fiscal year ended February 2, 2019 were prepared on the basis of a going concern which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The ability of the Company to meet its liabilities and to continue as a going concern is dependent on improved profitability, the performance improvement plan implemented for the etailz segment and the availability of future funding. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Basis of Presentation: Items Affecting Comparability: Concentration of Business Risks: The etailz segment purchases various inventory from numerous suppliers. The segment does not have material long-term purchase contracts; rather, it purchases products from its suppliers on an order-by-order basis. Historically, the etailz segment has not experienced difficulty in obtaining satisfactory sources of supply and management believes that it will continue to have access to adequate sources of supply. etailz generates substantially all of its revenue through the Amazon Marketplace. Therefore, the segment depends in large part on its relationship with Amazon for its continued growth. In particular, the etailz segment depends on its ability to offer products on the Amazon Marketplace and on its timely delivery of products to customers. During fiscal 2018, in response to the general decline in operating results, management implemented certain initiatives directed towards improving the segment’s performance, operations, and cash flow, including Cash and Cash Equivalents: Restricted Cash: Concentration of Credit Risks: Accounts Receivable: Merchandise Inventory and Return Costs: The Company is generally entitled to return merchandise purchased from major music vendors for credit against other purchases from these vendors. Certain vendors reduce the credit with a merchandise return charge which varies depending on the type of merchandise being returned. Certain other vendors charge a handling fee based on units returned. The Company records all merchandise return charges in cost of sales. Fixed Assets and Depreciation: Leasehold improvements Lesser of estimated useful life of the asset or the lease term Fixtures and equipment 3-7 years Major improvements and betterments to existing facilities and equipment are capitalized. Expenditures for maintenance and repairs are expensed as incurred. Goodwill: Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is possible that these judgments and estimates could change in future periods. As a result of the annual impairment review pursuant to FASB ASC 350, Intangibles Goodwill and Other, Long Lived Assets other than Goodwill: During fiscal 2018 and fiscal 2017, the Company concluded, based on continued operating losses within the fye segment driven by lower than expected fourth quarter sales that triggering events had occurred in each respective fiscal year, and pursuant to FASB ASC 360, Property, Plant, and Equipment, During fiscal 2018, the Company concluded, based on continued operating losses for the etailz segment driven by lower than expected operating results culminating in the fourth quarter of fiscal 2018 that a triggering event had occurred, and pursuant to FASB ASC 360, Property, Plant, and Equipment Conditional Asset Retirement Obligations: Commitments and Contingencies: Revenue Recognition: Retail Sales The Company recognizes sales revenue, net of sales taxes and estimated sales returns, at the time it sells merchandise to the customer (point of sale). Internet sales include shipping revenue and are recorded upon shipment to the customer. The Company records shipping and handling costs in cost of sales. Additionally, estimated sales returns are calculated based on expected returns. Membership Fee Revenue The Company recognizes membership fee revenue over the term of the membership, which is typically 12 months for the Company’s Platinum Backstage Pass membership, and 24 months for the Company’s Backstage Pass VIP membership. For the Company’s Platinum Backstage Pass program, the contractual term of the program is 12 months, in which revenue is recognized over that service period. For the Company’s Backstage Pass VIP program, the term of the program is indefinite until a customer cancels the membership. The Company estimates 24 months as the service period based on historical cancellation patterns and recognizes revenue over that service period. Membership in each program provides customers with merchandise discounts and exclusive member-only offers. Total membership fees related to the loyalty programs collected in advance, net of estimated refunds, were as follows: cash received from customers during fiscal 2018 and 2017 was $13.7 million and $16.9 million, respectively. Membership fee revenue recognized was $15.0 million and $17.9 million during fiscal 2018 and 2017, respectively, and recognized on a straight-line basis over the service period. The remaining performance obligation associated with the membership programs was $4.8 million and $6.1 million as of the end of fiscal 2018 and fiscal 2017, respectively. Membership fee revenue is included in Net Sales in the Company’s Consolidated Statements of Operations. Deferred membership revenue is included in Deferred Revenue in the Company’s Consolidated Balance Sheets. Other Revenue The Company recognizes revenue related to commissions earned from third parties. The Company assesses the principal versus agent considerations depending on control of the good or service before it is transferred to the customer. As the Company is the agent and does not have control of the specified good or service, the Company recognizes the fee or commission to which the Company expects to be entitled for the agency service. Commissions earned from third parties were $5.0 million and $5.3 million during fiscal 2018 and fiscal 2017, respectively, and are included in Other Revenue in the Company’s Consolidated Statements of Operations. Gift Cards The Company offers gift cards for sale, which is included in deferred revenue in the Consolidated Balance Sheets. When gift cards are redeemed at the store level, revenue is recorded and the related liability is reduced. Breakage is estimated based on proportion to the pattern of rights exercised by the customer. The Company has the ability to reasonably and reliably estimate the gift card liability based on historical experience with redemption rates associated with a large volume of homogeneous transactions. The Company issued $1.9 million and $2.8 million in gift cards for fiscal 2018 and fiscal 2017, respectively. The Company recognized in revenue for redeemed gift cards of $1.9 million and $2.8 million for fiscal 2018 and fiscal 2017, respectively. The Company recorded breakage on its gift cards for fiscal 2018 and fiscal 2017 in the amount of $0.2 million and $0.4 million, respectively. Gift card breakage is recorded as Other Revenue in the Company’s Consolidated Statements of Operations. The remaining performance obligation associated with our gift cards was $2.0 million and $2.2 million as of the end of fiscal 2018 and fiscal 2017, respectively. Cost of Sales: Selling, General and Administrative Expenses Advertising Costs and Vendor Allowances: Lease Accounting: Store Closing Costs Income Taxes: The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. It is the Company’s practice to recognize interest and penalties related to income tax matters in income tax expense (benefit) in the Consolidated Statements of Operations. Stock-Based Compensation: Comprehensive Income (Loss): Income (Loss) Per Share: Fair Value of Financial Instruments: In determining fair value, the accounting standards establish a three level hierarchy for inputs used in measuring fair value, as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying value of life insurance policies included in other assets approximates fair value based on estimates received from insurance companies and are classified as Level 2 measurements within the hierarchy as defined by applicable accounting standards. The Company had no Level 3 financial assets or liabilities at February 2, 2019 or at February 3, 2018. Recently Adopted Accounting Pronouncements In June 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. On February 4, 2018, the Company adopted Topic 606 using the modified retrospective approach. The new standard states that revenue is recognized when performance obligations are satisfied by transferring goods or services to the customer in an amount that the entity expects to collect in exchange for those goods or services. The satisfaction of a performance obligation with a single customer may occur at a point in time or may occur over time. The significant majority of the Company’s revenue is recognized at a point in time, generally when a customer purchases and takes possession of merchandise through the stores or when merchandise purchased through our e-commerce websites is shipped to a customer. Revenues do not include sales taxes or other taxes collected from customers. The Company has arrangements with customers where the performance obligations are satisfied over time, which primarily relate to the loyalty programs and gift card liabilities. The adoption of Topic 606 impacted the timing of revenue recognition for gift card breakage. Prior to adoption of Topic 606, gift card breakage was recognized at the point gift card redemption became remote. In accordance with the Topic 606, the Company recognizes gift card breakage in proportion to the pattern of rights exercised by the customer. The adoption of Topic 606 also impacted the presentation of the Consolidated Balance Sheets related to sales return reserves to be recorded on a gross basis, consisting of a separate right of return asset and liability. The Company’s evaluation of Topic 606 included a review of certain third-party arrangements to determine whether the Company acts as principal or agent in such arrangements, and such evaluation did not result in any material changes in gross versus net presentation as a result of the adoption of the new standard. The cumulative effect of initially applying Topic 606 was a $0.3 million increase to the opening balance of inventory, a $0.3 million increase to the opening balance of accrued expenses and other liabilities, a $0.5 million increase to the opening balance of deferred revenue, and a $0.5 million decrease to the opening balance of retained earnings as of February 4, 2018. The comparative prior period information continues to be reported under the accounting standards in effect during those periods. Segment Information: (amounts in thousands) Fiscal Year Fiscal Year Total Revenue fye $ 231,290 $ 268,397 etailz 186,900 174,459 Total Company $ 418,190 $ 442,856 Gross Profit fye $ 89,259 $ 104,254 etailz 38,815 39,589 Total Company $ 128,074 $ 143,843 Loss From Operations fye $ (24,455 ) $ (49,261 ) etailz (72,351 ) (2,140 ) Total Company $ (96,806 ) $ (51,401 ) Merchandise Inventory fye $ 69,785 $ 86,217 etailz 25,057 22,895 Total Company $ 94,842 $ 109,112 Total Assets fye $ 101,785 $ 153,050 etailz 36,228 94,856 Total Company $ 138,013 $ 247,906 Other Long Term Liabilities fye $ 24,789 $ 27,777 etailz 78 1,354 Total Company $ 24,867 $ 29,131 Capital Expenditures fye $ 1,242 $ 7,342 etailz 2,447 1,065 Total Company $ 3,689 $ 8,407 |