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At Home Group Inc. Announces Third Quarter Fiscal 2019 Financial Results

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Q3 net sales increased 25.5%; comparable store sales increased 5.2%

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Delivers 19th consecutive quarter of comparable store sales growth

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Delivers 18th consecutive quarter of over 20% net sales growth

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Operating income increased 105%; adjusted operating income(1) increased 61%

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Q3 EPS increased to $0.17;  Q3 pro forma adjusted EPS(1) increased to $0.18

 

Plano, Texas, December 6, 2018 -- At Home Group Inc. (NYSE: HOME), the home décor superstore, today announced its financial results for the third quarter ended October 27, 2018.

Lee Bird, Chairman and Chief Executive Officer, stated: “We had an exceptional third quarter exceeding our top and bottom line expectations. Net sales growth of over 25% was fueled by continued strong performance from our new stores and a 5.2% increase in comparable store sales. Alongside our topline performance, we delivered 280 basis points of gross margin expansion and reinvested in store labor hours and advertising, resulting in a 105% increase in operating income and a 61% increase in adjusted operating income. We also made progress on our key priorities aimed at strengthening both the customer experience and our superior value proposition.”

Mr. Bird added, “Our fourth quarter comparable store sales outlook reflects a patch of softness early in the quarter before the business rebounded.  However, the continued strength of our new and non-comp stores enables us to reiterate both our net sales and adjusted profitability metrics for fiscal 2019 as we look forward to delivering yet another year of industry-leading growth.” 

For the Thirteen Weeks Ended October 27, 2018

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Net sales increased 25.5% to $267.2 million from $213.0 million in the quarter ended October 28, 2017, driven by the net addition of 29 stores since the third quarter of fiscal 2018 and a comparable store sales increase of 5.2%.

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We expanded our store footprint by opening eight net new stores, including one store relocation, in the third quarter of fiscal 2019. We ended the quarter with 173 stores in 36 states, which represents a 20.1% increase in store count since October 28, 2017.

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Gross profit increased 37.2% to $86.0 million from $62.7 million in the third quarter of fiscal 2018. Gross margin expanded by 280 basis points to 32.2% from 29.4% in the prior year period primarily due to product margin improvement, including direct sourcing benefits, partially offset by increased occupancy costs resulting from our fiscal 2019 and 2018 sale-leaseback transactions.

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Selling, general and administrative expenses (“SG&A”) increased 26.2% to $65.3 million from $51.8 million in the prior year period primarily due to the net addition of 29 stores, increased advertising and store labor hours to support our growth strategies and expenses associated with the transition of our former chief financial officer,  partially offset by the nonrecurrence of IPO-related stock-based compensation expense.

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Adjusted SG&A1 increased 32.2% to $63.9 million compared to $48.3 million in the third quarter of fiscal 2018. Adjusted SG&A1 as a percentage of net sales increased 120 basis points to 23.9% primarily due to increased store labor hours and advertising.

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Operating income increased 105.0% to $19.1 million compared to $9.3 million in the third quarter of fiscal 2018.

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Adjusted operating income1 increased 61.0% to $20.5 million from $12.8 million in the third quarter of fiscal 2018. Adjusted operating margin1 expanded by 170 basis points to 7.7% of net sales driven by gross margin improvement partially offset by increased store labor hours and advertising.

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Interest expense increased to $7.0 million from $5.6 million in the third quarter of fiscal 2018 due to an increase in interest rates since October 28, 2017 as well as increased borrowings under our revolving credit facility (“ABL Facility”) to support our growth strategies.

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Income tax expense was $1.0 million compared to $1.3 million in the third quarter of fiscal 2018. Recognition of excess tax benefits related to stock option exercises favorably impacted our effective tax rate in the third quarter of fiscal 2019.

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Net income increased to $11.1 million compared to $2.4 million in the third quarter of fiscal 2018.

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The following information was filed by At Home Group Inc. (HOME) on Thursday, December 6, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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