(MENAFNEditorial) PLANO, Texas, March 22, 2018 /PRNewswire/ --
Q4 net sales increased 25%; comparable store sales increased 5.7% Q4 EPS of $0.15; pro forma adjusted EPS(1) increased 79% to $0.50 Fiscal 2018net sales increased 24%; comparable store sales increased 6.5% Fiscal 2018 EPS increased to $0.50; pro forma adjusted EPS(1) increased 59% to $0.94 Fiscal 2019 outlook at the midpoint assumes 22% net sales growth, 144% net income growth and 33% pro forma adjusted net income(1) growth At Home Group Inc. (NYSE: HOME), the home décor superstore, today announced its financial results for the fourth quarter and fiscal year ended January 27, 2018. Lee Bird, Chairman and Chief Executive Officer, stated: "We ended fiscal 2018 on a very strong note, delivering our 15th consecutive quarter of over 20 percent net sales growth and our 16th consecutive quarter of positive comparable store sales increases. Our full year net sales growth of 24% was propelled by the record performance of our fiscal 2018 class of new stores and a comparable store sales increase of 6.5%. Our merchandising and marketing initiatives, along with the broad appeal of our value price points, continue to resonate with customers. In addition to our top line performance, we invested in our top priorities of marketing and new store growth while driving consistent gross margins and meaningful adjusted operating margin1 expansion.
We expect fiscal 2019 to be another great year for At Home from both a top and bottom line perspective. With the potential to grow to four times our current footprint, we are in the early innings of progress on many long-term opportunities. As we further expand across both new and existing markets, we remain committed to executing on our strategies to increase brand awareness, elevate our in-store experience, and provide customers with fresh, trend-right home décor at a great value."
For the Thirteen Weeks Ended January 27, 2018
Net sales increased 25.2% to $293.7 million from $234.5 million in the quarter ended January 28, 2017 driven by the net addition of 26 stores since the fourth quarter of fiscal 2017 and a comparable store sales increase of 5.7%. We expanded our store footprint by opening five new stores in the fourth quarter of fiscal 2018. We ended the quarter with 149 stores in 34 states, which represents a 21.1% increase in store count since January 28, 2017. Gross profit increased 31.2% to $99.4 million from $75.7 million in the fourth quarter of fiscal 2017. Gross margin expanded by 150 basis points to 33.8% from 32.3% in the prior year period as we delivered product margin improvement and leveraged store occupancy costs through higher sales growth. The fourth quarter of fiscal 2017 included a reduction in product-related costs partially offset by distribution costs associated with inventory investments. Selling, general and administrative expenses ("SG & A") increased 30.4% to $58.9 million from $45.2 million in the prior year period primarily due to the net addition of 26 stores, a $2.2 million increase in advertising costs as we continue to grow consumer brand awareness, and a $1.7 million increase in preopening expenses related to the number and timing of new store openings. Adjusted SG & A1 increased 29.6% to $55.1 million compared to $42.5 million in the fourth quarter of fiscal 2017. Adjusted SG & A1 as a percentage of net sales increased 60 basis points to 18.7% primarily due to increases in advertising costs, preopening expenses, and incentive compensation that were partially offset by corporate overhead expense leverage. Operating income increased to $36.5 million compared to $29.3 million in the fourth quarter of fiscal 2017. Operating margin decreased 10 basis points to 12.4% of net sales as a result of increased advertising costs, preopening expenses, and stock-based compensation costs related to our initial public offering ("IPO"), as well as an impairment charge following the resolution of a legal matter. We offset most of these costs through gross margin expansion and corporate overhead expense leverage. Adjusted operating income1 increased 33.8% to $42.7 million from $31.9 million in the fourth quarter of fiscal 2017. We expanded adjusted operating margin1 by 100 basis points to 14.6% of net sales primarily through gross margin expansion and corporate overhead expense leverage that were partially offset by increased advertising costs and preopening expenses. Interest expense increased to $5.8 million from $5.3 million in the fourth quarter of fiscal 2017 due to increased borrowings in fiscal 2018 to support our growth strategies. Income tax expense was $20.8 million compared to $8.7 million in the fourth quarter of fiscal 2017. A revaluation of net deferred tax assets related to the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), partially offset by excess tax benefits recognized from adopting new accounting guidance for the treatment of stock-based compensation ("ASU 2016-09"), increased our effective tax rate to 67.9% from 36.4% in the fourth quarter of fiscal 2017. Net income was $9.9 million in the fourth quarter of fiscal 2018, which included non-cash charges of $16.7 million in tax expense triggered by the Tax Act and a $2.4 million pre-tax impairment. Net income was $15.3 million in the fourth quarter of fiscal 2017. Pro forma adjusted net income1 grew 85.6% to $32.3 million from $17.4 million in the fourth quarter of fiscal 2017. EPS was $0.15 compared to $0.25 in the fourth quarter of fiscal 2017. Pro forma adjusted EPS1 grew 78.6% to $0.50 from $0.28 in the fourth quarter of fiscal 2017. As a result of the implementation of ASU 2016-09, exercises of stock-based awards triggered excess tax benefits of $5.7 million during the fourth quarter of fiscal 2018. Net of payroll taxes incurred, exercises contributed $5.6 million to net income, $7.0 million to pro forma adjusted net income1, $0.09 to EPS, and $0.11 to pro forma adjusted EPS1. Adjusted EBITDA1 increased 35.6% to $58.1 million from $42.8 million in the fourth quarter of fiscal 2017. For the Fiscal Year Ended January 27, 2018
Net sales increased 24.1% to $950.5 million from $765.6 million in fiscal 2017 driven by the net addition of 26 stores and a comparable store sales increase of 6.5%. Gross profit increased 24.0% to $307.0 million in fiscal 2018 from $247.5 million in fiscal 2017. Gross margin of 32.3% was consistent in both fiscal years. In fiscal 2018, we delivered product margin improvement and leveraged store occupancy costs through higher sales growth. These improvements offset increases in distribution costs associated with inventory investments and occupancy costs resulting from third quarter fiscal 2017 and 2018 sale-leaseback transactions. SG & A increased 23.7% to $211.1 million from $170.6 million in fiscal 2017 primarily due to the net addition of 26 stores as well as increased advertising costs, IPO-related stock-based compensation costs, and preopening expenses. Adjusted SG & A1 increased 20.6% to $198.3 million compared to $164.4 million in fiscal 2017. We improved adjusted SG & A1 as a percentage of net sales by 60 basis points to 20.9% primarily through leverage of labor and corporate overhead expenses that was partially offset by increased advertising costs and preopening expenses. Operating income increased to $87.4 million compared to $72.7 million in fiscal 2017. Operating margin decreased 30 basis points to 9.2% of net sales as a result of increased advertising costs, preopening expenses, and IPO-related stock-based compensation costs, as well as an impairment charge following the resolution of a legal matter. We partially offset these costs through leverage of labor and corporate overhead expenses. Adjusted operating income1 increased 30.1% to $102.5 million from $78.8 million in fiscal 2017. We expanded adjusted operating margin1 by 50 basis points to 10.8% of net sales through leverage of labor and corporate overhead expenses that was partially offset by increased advertising costs and preopening expenses. Interest expense improved to $21.7 million from $27.2 million in fiscal 2017 primarily due to the repayment in full of our $130.0 million second lien term loan in fiscal 2017 utilizing net proceeds from our IPO that was partially offset by increased borrowings in fiscal 2018 to support our growth strategies. Income tax expense was $33.8 million compared to $15.7 million in fiscal 2017. A revaluation of deferred tax assets related to the Tax Act, partially offset by excess tax benefits recognized from adopting ASU 2016-09, increased our effective tax rate to 51.5% from 36.7% in fiscal 2017. Net income was $31.8 million in fiscal 2018, which included non-cash charges of $16.7 million in tax expense triggered by the Tax Act and a $2.4 million pre-tax impairment. Net income was $27.1 million in fiscal 2017. Pro forma adjusted net income1 grew 64.0% to $59.8 million in fiscal 2018 from $36.5 million in fiscal 2017. EPS increased to $0.50 from $0.48 in fiscal 2017. Pro forma adjusted EPS1 increased by 59.3% to $0.94 in fiscal 2018 compared to $0.59 in fiscal 2017. As a result of the implementation of ASU 2016-09, exercises of stock-based awards triggered excess tax benefits of $5.8 million during fiscal 2018. Net of payroll taxes incurred, exercises contributed $5.6 million to net income, $7.0 million to pro forma adjusted net income1, $0.09 to EPS, and $0.11 to pro forma adjusted EPS1. Adjusted EBITDA1 increased 27.3% to $160.8 million from $126.3 million in fiscal 2017. Balance Sheet Highlights as of January 27, 2018
Net inventories increased 10.7% to $269.8 million compared to $243.8 million as of January 28, 2017, primarily due to a 21.1% increase in the number of open stores. Total liquidity (cash plus $77.8 million of availability under our revolving credit facility ("ABL Facility")) was $86.3 million. Total debt was $299.5 million compared to $310.2 million as of January 28, 2017. There was $162.0 million outstanding under the ABL Facility as of January 27, 2018. Subsequent Events
In February 2018, we entered into a sale-leaseback transaction pursuant to which we sold four properties for a total of $50.3 million and contemporaneously leased them back for cumulative initial annual rent of $3.4 million, subject to annual escalations. Outlook & Key Assumptions
Chief Financial Officer Judd Nystrom stated: "We look forward to delivering another strong year of growth and progress on our strategic initiatives in fiscal 2019. Our outlook assumes net sales growth of 21% to 22%, pro forma adjusted net income growth of 30% to 36%, and a 20% effective tax rate driven by the recent changes to tax legislation and the accounting treatment for stock-based compensation. We expect that direct sourcing benefits, coupled with the fixed cost leverage inherent in our high-growth financial model, will enable us to invest in the future of our business through lower prices, incremental store labor, enhanced marketing programs, the largest planned new store class in our history, and a second distribution center to support our long-term plans." Below is an overview of our outlook and related assumptions for selected first quarter and fiscal year 2019 financial data.
For fiscal 2019, we expect:
Net sales of $1.154 billion to $1.161 billion, representing annual growth of 21 to 22%, based on 35 gross and 31 net new store openings and an assumed comparable store sales increase of 2.5% to 3.5%, which would represent a 9.0% to 10.0% increase on a two-year comparable store sales basis. Slight adjusted operating margin1, 2 expansion driven by gross margin improvement Interest expense of approximately $25 million. An effective tax rate of 20%, which includes an estimated 400 basis point rate benefit related to changes in the accounting for stock-based compensation. Net income of $76.0 million to $79.5 million and EPS of $1.15 to $1.20 based on an assumed 66.0 million diluted weighted average shares outstanding. Pro forma adjusted net income1, 2 of $78.0 million to $81.5 million, representing annual growth of 30% to 36%, and pro forma adjusted EPS1 of $1.18 to $1.24. Net capital expenditures of $170 million to $190 million, net of approximately $110 million of assumed sale-leaseback proceeds. For the first quarter of fiscal 2019, we expect:
Net sales of $254 million to $257 million based on 9 gross and 7 net new store openings and an assumed comparable store sales increase of 1.5% to 2.0%, which would represent an 7.3% to 7.8% increase on a two-year comparable store sales basis. Modest gross margin contraction due to increased occupancy costs as a result of sale-leaseback transactions. Interest expense of $5.6 million. An effective tax rate of 16.5%, which includes an estimated 750 basis point rate benefit related to changes in the accounting for stock-based compensation. Net income of $15.4 million to $16.4 million and EPS of $0.24 to $0.25 based 65.5 million diluted weighted average shares outstanding. Pro forma adjusted net income1, 2 of $16.4 million to $17.4 million, representing growth of 37% to 45% over the first quarter of fiscal 2018, and pro forma adjusted EPS1 of $0.25 to $0.27. Sale-leaseback proceeds of $50.3 million. MENAFN2203201800701241ID1096639423
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