At Home Group Inc. filed a Current Report on Form 8-K pursuant to the Order of the Securities and Exchange Commission, issued on March 4, 2020 and as revised on March 25, 2020 pursuant to Section 36 of the Exchange Act, granting exemptions from specified provisions of the Exchange Act and certain rules thereunder (Release No. 34-88465). In reliance on the Order, the Company will delay the filing of its Quarterly Report on Form 10-Q for the quarterly period ended April 25, 2020, originally due on June 4, 2020. The Company anticipates filing the Quarterly Report with the SEC on or before July 20, 2020.
“The Company requires additional time to finalize its Quarterly Report due to circumstances related to the global pandemic of the novel coronavirus disease (“COVID-19″). We have experienced significant disruptions to our business due to COVID-19 and related mandated social distancing and shelter-in-place orders, resulting in the previously disclosed temporary closures of our stores during the period covered by the Quarterly Report. The impact of the COVID-19 pandemic on the Company’s operations, and the uncertainty related thereto, including the impact of store closures, has adversely affected the Company’s ability to finalize its Quarterly Report. The considerable effect of the COVID-19 pandemic has triggered the need to perform additional impairment assessments of our property and equipment, goodwill and other intangible assets. Due to the effect of the COVID-19 pandemic, we are currently anticipating recognizing a material goodwill impairment charge of up to the full carrying amount totaling approximately $320 million. These assessments represent a substantial undertaking due to the need to develop and analyze several best estimates and assumptions, compounded by the additional difficulty in forecasting results of operations during the COVID-19 pandemic. The Company is working diligently to address these issues to permit the Quarterly Report to be filed on or before July 20, 2020,” the Company stated in the SEC filing.
Additional Risk Factor Disclosure
In light of the ongoing global pandemic of COVID-19, the Company will be including the following updated risk factor in its Quarterly Report, as may be further updated to reflect subsequent events impacting the Company:
“The current global COVID-19 pandemic, has substantially impacted and will continue to negatively affect our business, results of operations, financial condition and cash flows.
“The global COVID-19 pandemic has resulted in significant disruptions to the global economy, and has been substantially impacting our business, results of operations and financial condition.
“Following government mandates in certain locations as well as increasing advice from the Centers for Disease Control and Prevention for persons in the United States to take extraordinary health precautions, on March 20, 2020 we announced that we would temporarily close all of our stores nationwide for one week, after which we began to reopen stores in regions that were not required to remain closed by state or local mandates. At this time, the COVID-19 pandemic and resulting store closures have caused a decline in revenue and cash flow from operations, adverse effects on store traffic, supply chain disruption, and have resulted in incremental costs which have disrupted our operations and adversely affected our business, results of operations and financial condition in fiscal year 2021 to date. In addition, due to the effect of the COVID-19 pandemic, we are currently anticipating recognizing a material goodwill impairment charge in the first quarter of fiscal 2021, which would negatively impact our results of operations. While we have plans for fully reopening our remaining stores in the future, these plans depend on a number of factors, including applicable regulatory restrictions, and there is substantial uncertainty regarding the manner and timing in which we can return some or all of our business to more normal operations.
“The temporary closure of our stores and decline in store traffic due to the COVID-19 pandemic has resulted in significantly reduced cash flows from operations. There can be no assurance that we will not be required by landlords or authorities at the local, state or federal level to reinstate or extend store closures, or as to how long any such closure would continue. In general, during any such closure, we would still be obligated to make payments to landlords and for routine operating costs, such as utilities and insurance. There can be no assurance that we will have sufficient cash flows from operations or other sources of liquidity to continue making such payments when due, or that efforts to reduce, offset or defer such obligations, such as entering into deferral agreements with landlords or other creditors, will be successful. On March 12, 2020, as a precautionary measure to provide more financial flexibility and maintain liquidity in response to the COVID-19 pandemic, we elected to borrow an additional $55 million under our asset-based revolving line of credit (the “ABL Facility”). Additionally, we are seeking to amend our ABL Facility to provide for further incremental borrowings but there is no assurance that we will be successful in borrowing such incremental funds and such additional borrowings may lead to fees, increased interest rates and interest expense, and additional restrictive covenants and other lender protections.
“Our customers may also be negatively affected by layoffs, work reductions or financial hardship as a result of the global outbreak of COVID-19, which could negatively impact demand for our products as customers delay or reduce discretionary purchases. Even once we are able to fully reopen all of our stores, health concerns could continue and could cause employees or customers to avoid gathering in public places, which could have an adverse effect on store traffic or the ability to adequately staff our stores. Any significant reduction in customer visits to, and spending at, our stores caused directly or indirectly by COVID-19 would continue to result in a loss of revenue and profits and could result in other material adverse effects.
“The negative impact of the outbreak of COVID-19 could result in an adverse impact to manufacturing activity and supply chains, including as a result of work stoppages, factory and other business closings, slowdowns or delays, or if we fail to make timely payments to our suppliers. In addition, there may be restrictions and limitations placed on workers and factories, including shelter-in-place and stay-at-home orders and other limitations on the ability to travel and return to work, which could result in shortages or delays in production or shipment of products.
“The extent of the impact of COVID-19 on our business, results of operations and financial results will depend largely on future developments, including the duration and spread of the outbreak within the United States and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted at this time. While we continue to explore all options for preserving and increasing sources of liquidity, such as potential increases in our existing financing facilities or entry into new facilities, expense reduction initiatives, and negotiation with counterparties such as landlords and suppliers to extend or otherwise revise payment terms, we do not expect that such efforts will fully offset the adverse impact on us of a prolonged disruption to our business. The ultimate extent to which the outbreak of COVID-19 may impact our business is uncertain and the full effect it may have on our financial performance cannot be quantified at this time. Accordingly, our historical financial information may not be indicative of our future performance, financial condition and results of operations.”
About At Home Group Inc.
At Home (NYSE: HOME), is a home decor retailer offering 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 218 stores in 39 states.
At Home recorded a net loss of $214.43 million for the year ended Jan. 25, 2020, compared to net income of $48.99 million for the year ended Jan. 26, 2019. As of Jan. 25, 2020, the Company had $2.68 billion in total assets, $2.07 billion in total liabilities, and $608.61 million in total shareholders’ equity.
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As reported by the TCR on April 1, 2020, S&P Global Ratings lowered its issuer credit rating on At Home Group Inc. by two notches to ‘CCC+’ from ‘B’. “The downgrade reflects our view that At Home’s operating performance will be substantially weakened this year due to the coronavirus pandemic following a challenging fiscal year 2020.