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v3.19.1

Significant Accounting Policies (Tables) | 12 Months Ended
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Feb. 02, 2019
Summary of Condensed Consolidated Balance Sheets Illustrating Effect of Revision | The following are selected line items from the Company’s consolidated balance sheets and consolidated statements of stockholders’ equity (deficit) illustrating the effect of the revision (in thousands):
|  | Consolidated Balance Sheets |
|  | February 3, 2018 |
|  | As Reported |  |  | Adjustment |  |  | As Revised |
Stockholders’ deficit: |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |
Additional paid-in capital |  |  | 860,288 |  |  |  | (19,523 | ) |  |  | 840,765 |
Accumulated other comprehensive income |  |  | (171 | ) |  |  | — |  |  |  | (171 | )
Retained earnings |  |  | 152,394 |  |  |  | — |  |  |  | 152,394 |
Treasury stock |  |  | (1,019,849 | ) |  |  | 19,523 |  |  |  | (1,000,326 | )
Total stockholders’ deficit |  | $ | (7,336 | ) |  | $ | — |  |  | $ | (7,336 | )
|  | Unaudited Condensed Consolidated Balance Sheets |
|  | May 5, 2018 |
|  | As Reported |  |  | Adjustment |  |  | As Revised |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |
Additional paid-in capital |  |  | 870,751 |  |  |  | (19,523 | ) |  |  | 851,228 |
Accumulated other comprehensive income |  |  | (1,436 | ) |  |  | — |  |  |  | (1,436 | )
Retained earnings |  |  | 159,417 |  |  |  | — |  |  |  | 159,417 |
Treasury stock |  |  | (1,020,092 | ) |  |  | 19,523 |  |  |  | (1,000,569 | )
Total stockholders’ equity |  | $ | 8,642 |  |  | $ | — |  |  | $ | 8,642 |
|  | Unaudited Condensed Consolidated Balance Sheets |
|  | August 4, 2018 |
|  | As Reported |  |  | Adjustment |  |  | As Revised |
Stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |
Additional paid-in capital |  |  | 944,610 |  |  |  | (19,523 | ) |  |  | 925,087 |
Accumulated other comprehensive income |  |  | (1,918 | ) |  |  | — |  |  |  | (1,918 | )
Retained earnings |  |  | 223,459 |  |  |  | — |  |  |  | 223,459 |
Treasury stock |  |  | (1,020,092 | ) |  |  | 19,523 |  |  |  | (1,000,569 | )
Total stockholders’ equity |  | $ | 146,061 |  |  | $ | — |  |  | $ | 146,061 |
Schedule of Product Recall Adjustments Effect on Income Before Taxes | Product recalls had the following effect on the Company’s income before income taxes (in thousands):
|  | Year Ended |
|  | February 2, |  |  | February 3, |  |  | January 28, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Reduction of net revenues |  | $ | 4,733 |  |  | $ | 3,207 |  |  | $ | 3,441 |
Impact on cost of goods sold |  |  | (4,139 | ) |  |  | 4,315 |  |  |  | 535 |
Impact on gross profit |  |  | 594 |  |  |  | 7,522 |  |  |  | 3,976 |
Incremental selling, general and administrative expenses |  |  | 1,025 |  |  |  | 185 |  |  |  | 639 |
Impact on income before income taxes |  | $ | 1,619 |  |  | $ | 7,707 |  |  | $ | 4,615 |
Schedule of Property and Equipment Useful Lives | Property and equipment is recorded at cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method, generally using the following useful lives:
Category of Property and Equipment |  | Useful Life
Building and building improvements |  | 40 years
Machinery, equipment and aircraft |  | 3 to 10 years
Furniture, fixtures and equipment |  | 3 to 7 years
Computer software |  | 3 to 10 years
Summary of RHCA liability for lease loss | The RHCA lease loss liability activity in fiscal 2018 and fiscal 2017 was as follows (in thousands):
|  | Year Ended |
|  | February 2, |  |  | February 3, |
|  | 2019 |  |  | 2018 |
Balance at beginning of fiscal year |  | $ | 7,100 |  |  | $ | 3,188 |
Lease loss liability remeasurement |  |  | 3,411 |  |  |  | 4,417 |
Payments made under lease agreement |  |  | (2,249 | ) |  |  | (1,699 | )
Payments received under sublease agreement |  |  | 1,138 |  |  |  | 1,003 |
Interest |  |  | 415 |  |  |  | 191 |
Balance at end of fiscal year |  | $ | 9,815 |  |  | $ | 7,100 |
Summary of Allowance for Sales Returns | A summary of the allowance for sales returns is as follows (in thousands):
|  | Year Ended |
|  | February 2, |  |  | February 3, |  |  | January 28, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of fiscal year |  | $ | 10,565 |  |  | $ | 10,077 |  |  | $ | 12,688 |
Waterworks acquisition—beginning balance |  |  | — |  |  |  | — |  |  |  | 523 |
Impact of Topic 606 adoption |  |  | 5,862 |  |  |  | — |  |  |  | — |
Provision for sales returns |  |  | 112,218 |  |  |  | 108,134 |  |  |  | 106,508 |
Actual sales returns |  |  | (108,824 | ) |  |  | (107,646 | ) |  |  | (109,642 | )
Balance at end of fiscal year |  | $ | 19,821 |  |  | $ | 10,565 |  |  | $ | 10,077 |
Summary of Impact of Adopting Topic 606 Condensed Consolidated Statements of Income and Balance Sheets | The following tables summarize the impact of adopting Topic 606 on the Company’s consolidated statement of income (in thousands):
|  | Year Ended February 2, 2019 |
|  | As Reported |  |  | Adjustments |  |  | Balances without Adoption of Topic 606 |
Net revenues |  | $ | 2,505,653 |  |  | $ | (9,868 | ) |  | $ | 2,495,785 |
Cost of goods sold |  |  | 1,504,806 |  |  |  | (3,485 | ) |  |  | 1,501,321 |
Gross profit |  |  | 1,000,847 |  |  |  | (6,383 | ) |  |  | 994,464 |
Selling, general and administrative expenses |  |  | 711,617 |  |  |  | (2,616 | ) |  |  | 709,001 |
Income from operations |  |  | 289,230 |  |  |  | (3,767 | ) |  |  | 285,463 |
Other expenses |  |  |  |  |  |  |  |  |  |  |  |
Interest expense—net |  |  | 75,074 |  |  |  | — |  |  |  | 75,074 |
Goodwill and tradename impairment |  |  | 32,086 |  |  |  | — |  |  |  | 32,086 |
Loss on extinguishment of debt |  |  | 917 |  |  |  | — |  |  |  | 917 |
Total other expenses |  |  | 108,077 |  |  |  | — |  |  |  | 108,077 |
Income before income taxes |  |  | 181,153 |  |  |  | (3,767 | ) |  |  | 177,386 |
Income tax expense |  |  | 30,514 |  |  |  | (3,945 | ) |  |  | 26,569 |
Net income |  | $ | 150,639 |  |  | $ | 178 |  |  | $ | 150,817 |
The following table summarizes the impact of adopting Topic 606 on certain line items of the Company’s consolidated balance sheet (in thousands):
|  | As of February 2, 2019 |
|  | As Reported |  |  | Adjustments |  |  | Balances without Adoption of Topic 606 |
Prepaid expense and other current assets |  | $ | 104,719 |  |  | $ | 33,587 |  |  | $ | 138,306 |
Deferred tax assets |  |  | 30,033 |  |  |  | (6,561 | ) |  |  | 23,472 |
Accounts payable and accrued expenses |  |  | 320,441 |  |  |  | (686 | ) |  |  | 319,755 |
Deferred revenue and customer deposits |  |  | 152,595 |  |  |  | 9,304 |  |  |  | 161,899 |
Other current liabilities |  |  | 101,347 |  |  |  | (2,806 | ) |  |  | 98,541 |
Accumulated deficit |  |  | (376,810 | ) |  |  | 21,214 |  |  |  | (355,596 | )
As mentioned above, the adoption of the ASUs will result in the derecognition of the build-to-suit property asset (included in property and equipment—net) and the financing obligations under build-to-suit lease transactions on the consolidated balance sheets as follows (in thousands):
|  | February 2, |  |  | February 3, |
|  | 2019 |  |  | 2018 |
Build-to-suit property |  | $ | 245,217 |  |  | $ | 237,909 |
Financing obligations under build-to-suit lease transactions |  |  | 228,928 |  |  |  | 229,323 |
The Company preliminarily expects the adoption to result in the following amounts being recorded on its consolidated balance sheets for its operating and finance leases (in millions):
|  | February 2, |  | February 3,
|  | 2019 |  | 2018
ROU assets |  | $1,090 - $1,190 |  | $930 - $1,030
Lease liabilities |  | $880 - $980 |  | $750 - $850
Distribution Center Closures [Member] |
Summary of Distribution Center Lease Loss Liability Activity | The distribution center lease loss liability activity in fiscal 2018 and fiscal 2017 was as follows (in thousands):
|  | Year Ended |
|  | February 2, |  |  | February 3, |
|  | 2019 |  |  | 2018 |
Balance at beginning of fiscal year |  | $ | 2,585 |  |  | $ | — |
Lease loss liability additions |  |  | 1,927 |  |  |  | 2,447 |
Lease loss liability remeasurements |  |  | (1,232 | ) |  |  | — |
Payments made under lease agreements |  |  | (6,041 | ) |  |  | (583 | )
Payments received under sublease agreements |  |  | 4,904 |  |  |  | 716 |
Interest |  |  | 34 |  |  |  | 5 |
Balance at end of fiscal year |  | $ | 2,177 |  |  | $ | 2,585 |

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