PLANO, Texas -- At Home Group Inc. (NYSE: HOME), the home décor superstore, today announced its financial results for the fourth quarter and fiscal year ended January 30, 2021, both of which contained one additional week (“53rd week")
Lee Bird, chairman and chief executive officer, stated, “The fourth quarter was a very strong finish to a transformational year for At Home. We delivered comps of nearly 31% for the quarter, leading to record-setting full year comps above 19% and free cash flow improvement of more than $400 million. We achieved these results despite unprecedented challenges during the year, including mandated store closures and inventory constraints, a clear testament to our compelling value proposition, competitive positioning and incredibly dedicated team members. Our unmatched breadth and depth of assortment at everyday low prices, low-cost structure and omnichannel focus remain key differentiators for us.”
Bird continued, “As we look forward, we have never been more confident in our ability to capture the large opportunity ahead. We are in the early innings of many exciting initiatives, and we remain focused on delivering strong and consistent results. We are prioritizing our efforts in three key areas: new customer retention and growth, optimizing our inventory position, and the enhanced execution of our At Home 2.0 strategy. With the resumption of new store openings, we have reignited a key growth engine on our long-term journey to 600+ stores. We believe the tailwinds of strong home sales, nesting and de-urbanization are likely to continue over the foreseeable future, and we are excited to be a key player taking share in a large and growing industry.”
For the Fourteen Weeks Ended January 30, 2021
The Company opened no new stores in the fourth quarter of fiscal 2021 and ended the quarter with 219 stores in 40 states. The Company opened a net seven stores since the fourth quarter of fiscal 2020, representing a 3.3% increase.
Net sales increased 41.3% to $562.0 million from $397.7 million in the fourth quarter of fiscal 2020 primarily due to comparable store sales growth and the favorable impact of the 53rd week. Excluding the impact of the 53rd week, fourth quarter fiscal 2021 net sales increased 33.4%. Comparable store sales increased 30.8% driven by strong demand and the continued rollout of our strategic initiatives.
Net sales in the 53rd week of fiscal 2021 were $31.4 million. The Company estimates that the 53rd week contributed $15.9 million to gross profit, $11.6 million to operating income and Adjusted EBITDA1, and $0.14 of EPS to the fourth quarter and fiscal year 2021.
Gross profit increased 91.5% to $218.4 million from $114.1 million in the fourth quarter of fiscal 2020. Gross margin increased 1,020 basis points to 38.9% from 28.7% in the prior year period primarily driven by product margin expansion, leverage on our occupancy costs and depreciation expense as a result of increased sales, and lower freight expenses incurred when stores were closed at the onset of the COVID-19 pandemic.
Selling, general and administrative expenses (“SG&A”) increased 56.9% to $115.9 million from $73.8 million in the prior year period. As a percentage of net sales, SG&A increased 200 basis points to 20.6% from 18.6%, primarily due to increased incentive compensation and advertising expenses year over year, partially offset by operating leverage on higher sales.
Operating income was $100.3 million compared to a $209.1 million operating loss in the fourth quarter of fiscal 2020, which included a non-cash goodwill impairment charge of $250.0 million. Adjusted operating income1 increased to $100.3 million from $38.2 million in the prior year period. Adjusted operating margin1 increased 830 basis points to 17.9% from 9.6% driven by the gross margin and SG&A factors described above, including an estimated 120 basis point favorable impact from the 53rd week.
Interest expense increased to $7.6 million from $7.3 million in the fourth quarter of fiscal 2020, primarily due to the interest incurred on our long-term debt, including our 8.750% Senior Secured Notes due 2025 (the “2025 Notes”), partially offset by the repayment of our term loan and significantly lower borrowings under our revolving credit facility (the “ABL Facility”).
Income tax expense was $20.0 million, and the effective tax rate was 21.6%. In the fourth quarter of fiscal 2020, income tax expense was $7.6 million, and the effective tax rate was (3.5)%.
Net income was $72.7 million compared to a $224.1 million net loss in the fourth quarter of fiscal 2020. Adjusted Net Income1 was $72.6 million compared to $23.9 million in the prior year period.
EPS was $1.08 compared to $(3.50) in the fourth quarter of fiscal 2020. Pro forma adjusted EPS1 was $1.08 compared to $0.37 in the prior year period.
Adjusted EBITDA1 increased 94.4% to $119.6 million compared to $61.5 million in the fourth quarter of fiscal 2020.
For the Fiscal Year Ended January 30, 2021
Net sales increased 27.3% to $1,737.1 million from $1,365.0 million in fiscal 2020, primarily driven by comparable store sales growth and the net increase in open stores. Excluding the impact of the 53rd week in fiscal 2021, net sales increased 25.0%. Comparable store sales increased 19.4% driven by strong demand and the continued rollout of our strategic initiatives, partially offset by lost sales due to mandated store closures related to COVID-19 during the first half of fiscal 2021.
Gross profit increased 55.1% to $601.6 million from $388.0 million in fiscal 2020. Gross margin increased 620 basis points to 34.6% from 28.4% in fiscal 2020 primarily due to leverage on our occupancy costs and depreciation expense as a result of increased sales, product margin expansion and lower freight expenses and distribution center costs incurred when stores were closed at the onset of the COVID-19 pandemic.
SG&A increased 15.2% to $348.2 million compared to $302.3 million in fiscal 2020. Adjusted SG&A1 increased 15.5% to $346.8 million from $300.1 million. As a percentage of net sales, SG&A decreased 210 basis points and adjusted SG&A1 decreased 200 basis points to 20.0% primarily due to lower preopening expenses, reduced spending during the onset of the COVID-19 pandemic and operating leverage, partially offset by increased incentive compensation expense.
Operating loss improved to $75.2 million from $159.5 million in fiscal 2020. Operating losses in both years were primarily driven by non-cash goodwill impairment charges of $319.7 million and $250.0 million recognized in fiscal 2021 and 2020, respectively. Adjusted operating income1 increased to $246.1 million from $80.2 million in fiscal 2020. Adjusted operating margin1 increased 830 basis points to 14.2% from 5.9% driven by the gross margin and adjusted SG&A1 factors described above, including an estimated 50 basis point favorable impact from the 53rd week.
Interest expense decreased 10.4% to $28.5 million from $31.8 million in fiscal 2020 due to reduced average borrowings under our ABL Facility and the repayment of our term loan in full, partially offset by interest incurred on our long-term debt, including our 2025 Notes.
Income tax expense was $42.8 million compared to $23.2 million in fiscal 2020. The effective tax rate was (40.1)% compared to (12.1)% in fiscal 2020. The fiscal 2021 effective tax rate differed from the statutory rate primarily due to the tax impact of the non-cash goodwill impairment charge and net operating loss carryback provisions under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act).
Net loss improved to $149.7 million from $214.4 million in fiscal 2020. Adjusted Net Income1 was $173.6 million compared to $36.9 million in fiscal 2020.
EPS was $(2.32) compared to $(3.35) in fiscal 2020. Pro forma adjusted EPS1 was $2.68 compared to $0.57 in fiscal 2020.
Adjusted EBITDA1 increased 104.4% to $358.4 million from $175.3 million in fiscal 2020.
About At Home Group Inc.
At Home (NYSE:HOME), the home decor superstore, offers more than 50,000 on-trend home products to fit any budget or style, from furniture, mirrors, rugs, art and housewares to tabletop, patio and seasonal decor. At Home is headquartered in Plano, Texas, and currently operates 225 stores in 40 states. For more information, please visit us online at investor.athome.com.