At Home Group (HOME) Misses Q1 EPS by 19c, Revenues Miss

At Home Group (NYSE: HOME) reported Q1 EPS of ($0.61), $0.19 worse than the analyst estimate of ($0.42). Revenue for the quarter came in at $189.8 million versus the consensus estimate of $194.15 million.

For the Thirteen Weeks Ended April 25, 2020

• The Company opened six new stores in the first quarter of fiscal 2021 and ended the quarter with 218 stores in 39 states. The Company has opened a net 27 stores since the first quarter of fiscal 2020, representing a 14.1% increase.
• Net sales decreased 38.0% to $189.8 million from $306.3 million in the first quarter of fiscal 2020 as a result of temporary store closures due to the COVID-19 pandemic, partially offset by a net increase in the number of stores. Comparable store sales1 decreased 46.5% compared to a decrease of 0.8% in the first quarter of fiscal 2020, as a result of temporary store closures due to the COVID-19 pandemic.
• Gross profit decreased 81.4% to $16.4 million from $88.1 million in the first quarter of fiscal 2020 primarily driven by the decrease in sales due to the COVID-19 pandemic. Gross margin decreased to 8.6% from 28.8% in the prior year period primarily due to deleverage on occupancy costs and depreciation as a result of the sales decline.
• Selling, general and administrative expenses (“SG&A”) decreased 13.6% to $66.5 million from $76.9 million in the first quarter of fiscal 2020 primarily driven by our actions to reduce store-level and home office labor, advertising, and other discretionary expenses in response to the COVID-19 pandemic. Adjusted SG&A1 decreased 12.5% to $66.5 million compared to $76.0 million in the first quarter of fiscal 2020. Adjusted SG&A1 as a percentage of net sales increased to 35.0% from 24.8% primarily due to deleverage on lower sales, partially offset by our successful efforts to reduce operating expenses.
• Operating loss was $(372.1) million compared to operating income of $25.9 million in the first quarter of fiscal 2020 primarily due to a non-cash goodwill impairment charge of $319.7 million recognized in the first quarter of fiscal 2021 and the impact of temporary store closures due to the COVID-19 pandemic. Adjusted operating income1 was a loss of $(52.3) million compared to income of $10.3 million in the first quarter of fiscal 2020. Adjusted operating margin1 was (27.6)% compared to 3.4% in the first quarter of fiscal 2020 driven by the gross margin and adjusted SG&A1 factors described above.
• Interest expense decreased to $7.0 million from $7.8 million in the first quarter of fiscal 2020 due to a year-over-year decrease in average interest rates, partially offset by increased borrowings under our revolving credit facility (“ABL facility”).
• Income tax benefit was $20.1 million compared to income tax expense of $4.2 million in the first quarter of fiscal 2020. The effective tax rate decreased to 5.3% from 23.4% for the first quarter of fiscal 2020 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 was $(358.9) million compared to net income of $13.9 million in the first quarter of fiscal 2020. Adjusted Net income1 was a loss of $(39.2) million compared to income of $1.9 million in the first quarter of fiscal 2020.
• EPS was $(5.60) compared to $0.21 in the first quarter of fiscal 2020. Adjusted EPS1 was $(0.61) compared to $0.03 in the first quarter of fiscal 2020.
• Adjusted EBITDA1 was $(14.6) million compared to $33.8 million in the first quarter of fiscal 2020.

Lee Bird, Chairman and Chief Executive Officer, stated, “Over the last few months, our team has risen to the challenge and focused on prioritizing the health and safety of our team members, customers, and communities. We have focused on preserving liquidity, enhancing financial flexibility, and ensuring At Home can thrive going forward. Prior to the onset of COVID-19, we had seen an improvement in comparable store sales trends. However, as the pandemic escalated and we temporarily closed our stores, sales were materially impacted.”

Mr. Bird continued, “We acted quickly and deliberately to continue serving our customers during a time when they are spending more time at home than ever and to provide them with safe and convenient ways to shop with us. Since early May, as local and state mandates were lifted, we began reopening a majority of our stores. Early results are strong across all markets with initial sales in reopened stores up solid double-digits during their reopening period quarter-to-date. As the low-price leader in our category with a focus on expanding our omnichannel presence, I am confident that At Home is well positioned for both the near and long-term to take additional share of the large and fragmented home furnishings market.”

Outlook & Key Assumptions

Given the unprecedented and continued uncertainty related to COVID-19, the Company is not providing second quarter and fiscal year 2021 guidance at this time.

For earnings history and earnings-related data on At Home Group (HOME) click here.

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