Cover - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Jan. 29, 2023 |
Mar. 15, 2023 |
Jul. 29, 2022 |
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| Cover [Abstract] | |||
| Document Type | 10-K/A | ||
| Document Annual Report | true | ||
| Current Fiscal Year End Date | --01-29 | ||
| Document Period End Date | Jan. 29, 2023 | ||
| Document Transition Report | false | ||
| Entity File Number | 001-38555 | ||
| Entity Registrant Name | THE LOVESAC COMPANY | ||
| Entity Incorporation, State or Country Code | DE | ||
| Entity Tax Identification Number | 32-0514958 | ||
| Entity Address, Address Line One | Two Landmark Square, | ||
| Entity Address, Address Line Two | Suite 300 | ||
| Entity Address, City or Town | Stamford, | ||
| Entity Address, State or Province | CT | ||
| Entity Address, Postal Zip Code | 06901 | ||
| City Area Code | 888 | ||
| Local Phone Number | 636-1223 | ||
| Title of 12(b) Security | Common Stock, $0.00001 par value per share | ||
| Trading Symbol | LOVE | ||
| Security Exchange Name | NASDAQ | ||
| Entity Well-known Seasoned Issuer | No | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | No | ||
| Entity Interactive Data Current | Yes | ||
| Entity Small Business | false | ||
| Entity Emerging Growth Company | false | ||
| ICFR Auditor Attestation Flag | true | ||
| Entity Shell Company | false | ||
| Entity Public Float | $ 439,821,967 | ||
| Entity Common Stock, Shares Outstanding | 15,195,566 | ||
| Entity Central Index Key | 0001701758 | ||
| Document Fiscal Year Focus | 2023 | ||
| Document Fiscal Period Focus | FY | ||
| Amendment Flag | true | ||
| Entity Filer Category | Accelerated Filer | ||
| Amendment Description | EXPLANATORY NOTE OverviewThe Lovesac Company (“Lovesac”, the “Company”, “we”, “our” and similar terms) is filing this Amendment No. 1 on Form 10-K/A (“Amendment No. 1”) to amend and restate certain items presented in the Company’s Annual Report on Form 10-K for the year ended January 29, 2023, which was initially filed with the Securities and Exchange Commission (“SEC”) on March 29, 2023 (the “Original Form 10-K”). This Amendment No. 1 contains our audited restated annual financial statements as of and for the year ended January 29, 2023 and our unaudited restated quarterly condensed financial statements for the quarterly and year-to-date periods ended October 30, 2022, July 31, 2022 and May 1, 2022 (collectively, the “Affected Periods”), respectively, which have been restated to correct certain errors related to the accounting for last mile shipping expenses as further described below (the “Misstatements”), along with other immaterial accounting errors that when aggregated with the Misstatements are material in respect to the Affected Periods (refer to Note 2. Restatement and Other Corrections of Previously Issued Financial Statements and Note 13. Quarterly Financial Data (Unaudited) to our financial statements included in Part II, Item 8 of this Amendment No.1 for additional information). This Amendment No. 1 also contains our audited annual financial statements as of and for the year ended January 30, 2022 (the "Revision Period") which have been revised to correct certain accounting errors that when aggregated are not material to those financial statements and our audited annual financial statements as of and for the year ended January 31, 2021, which were not impacted by the Misstatements or other immaterial accounting errors. In addition, we intend to file an amendment (such report, together with this Amendment No. 1, the “Amended Reports”) to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2023, originally filed with the SEC on June 9, 2023 (“Original Form 10-Q” and together with the Original Form 10-K, the “Original Reports”), to account for the Misstatements during the periods presented therein and to restate our unaudited condensed financial statements for the quarterly period ended April 30, 2023. All material restatement information that relates to the Misstatements will be included in the Amended Reports, and we do not intend to separately amend other filings that the Company has previously filed with the SEC. As a result, such prior reports should no longer be relied upon.This Amendment No. 1 also includes amendments to and restates and revises the following items of the Original Form 10-K as of and for the year ended January 29, 2023:•Part I — Item 1A. Risk Factors•Part I — Item 3. Legal Proceedings•Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations•Part II — Item 8. Financial Statements and Supplementary Data•Part II — Item 9A. Controls and Procedures•Part IV — Item 15. Exhibits, Financial Statement SchedulesIn accordance with applicable SEC rules, this Amendment No. 1 includes new certifications specified in Rule 13a-14 under the Exchange Act from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing. This Amendment No. 1 also contains a modified report of Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm, on the financial statements for year ended January 29, 2023, a modified report of Deloitte’s opinion on the effectiveness of the Company’s internal control over financial reporting as of January 29, 2023, a modified report of Marcum LLP (“Marcum”), the Company’s prior independent registered public accounting firm, on the consolidated financial statements for years ended January 30, 2022 and January 21, 2021 and a new consent of each of Deloitte and Marcum. Other than as described above, this Amendment No. 1 does not reflect adjustments for events occurring after the filing of the Original Form 10-K except to the extent that they are otherwise required to be included and discussed herein. See below and Part II, Item 8, Note 2. Restatement and Other Corrections of Previously Issued Financial Statements in the notes to the financial statements included in this Amendment No. 1, for a detailed discussion of the effect of the restatement on the financial statements included in this Amendment No. 1. Pursuant to Rule 12b-15 under the Exchange Act, this Amendment No. 1 contains only the items and exhibits to the Original Form 10-K that are being amended and restated, and unaffected items and exhibits are not included herein. Except as noted herein, the information included in the Original Form 10-K remains unchanged. This Amendment No. 1 continues to describe the conditions as of the date of the Original Form 10-K and, except as contained herein, we have not updated or modified the disclosures contained in the Original Form 10-K to reflect any events that have occurred after the Original Form 10-K. Accordingly, forward-looking statements included in this Amendment No. 1 may represent management’s views as of the Original Form 10-K and should not be assumed to be accurate as of any date thereafter. This Amendment No. 1 should be read in conjunction with the Company's filings made with the SEC subsequent to the filing of the Original Form 10-K, including any amendment to those filings.Background on the RestatementAs previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on August 16, 2023, the Audit Committee (the “Audit Committee”) of the Board of Directors of The Lovesac Company commenced an internal investigation in June 2023 related to the recording of last mile shipping expenses, resulting from the discovery of an inappropriately recorded journal entry in the quarter ended April 30, 2023 to capitalize $2.2 million of shipping expenses that related to the fiscal year ended January 29, 2023. That investigation has been completed, and the results are discussed in this Explanatory Note. Through the investigation, the Company determined that the aforementioned journal entry was not in compliance with GAAP and upon further investigation identified certain errors, that were erroneously recorded with respect to the methodology used by the Company to calculate the accrual of its last mile freight expenses which impacted the Company’s financial statements for the Affected Periods and the quarter ended April 30, 2023. The Company determined that the impact for the fiscal year end of January 30, 2022, in aggregate was $0.2 million and immaterial to the overall financial statements. The Company determined that the accrual methodology was not correctly designed to develop a dedicated accrual for shipping expenses incurred in the period but not yet invoiced. The Company further determined that the assumptions used for the accrual estimates were in certain instances understated or incomplete. On August 15, 2023, the Company, in consultation with the Audit Committee of its Board of Directors and outside advisors, reached a determination that the Company’s financial statements for fiscal year 2023 included in the Original Form 10-K and the interim periods included therein, management’s report on internal control over financial reporting for the fiscal year ended January 29, 2023, the associated audit report and report on internal control over financial reporting of the Company’s independent registered public accounting firm, Deloitte & Touche LLP, and the Company’s condensed financial statements included in the Original Form 10-Q, should no longer be relied upon. The Company determined that it is appropriate to correct the Misstatements and other immaterial accounting errors in the Affected Periods by amending the Original Filings. The restated financial statements correct the following errors related to last mile expense:Cost of Merchandise Sold•Understatement of $1.5 million for the year ended January 29, 2023; •Understatement of $0.1 million for the thirteen weeks ended May 1, 2022;•Understatement of $0.9 million and $1.0 million for the thirteen and twenty-six weeks ended July 31, 2022, respectively;•Overstatement of $0.4 million and understatement of $0.6 million for the thirteen and thirty-nine weeks ended October 30, 2022, respectively.Certain Balance Sheet ItemsAt January 29, 2023, the impact of the error understated prepaid expenses and other current assets by $1.0 million, understated accrued expenses by $2.3 million, and overstated accumulated earnings by $1.3 million. There was no impact to net cash used in operating activities.At May 1, 2022, the impact of the error understated prepaid expenses and other current assets by $0.1 million, understated accrued expenses by less than $0.1 million, and overstated accumulated deficit by less than $0.1 million. There was no impact to net cash used in operating activities.At July 31, 2022, the impact of the error understated prepaid expenses and other current assets by $0.2 million, understated accrued expenses by $1.0 million, and understated accumulated deficit by $0.8 million. There was no impact to net cash used in operating activities.At October 30, 2022, the impact of the error understated prepaid expenses and other current assets by $0.7 million, understated accrued expenses by $1.1 million, and understated accumulated deficit by $0.4 million. There was no impact to net cash used in operating activities.Selected Key ItemsThe following table sets forth the effects of the restatement and revisions associated with correction of the Misstatements and other immaterial accounting errors, respectively, on certain key items within our previously reported Statements of Operations for the years ended January 29, 2023 and January 30, 2022:Year EndedJanuary 29, 2023January 30, 2022(in thousands)As Previously ReportedAs RestatedAs Previously ReportedAs RevisedNet sales$651,545 $651,179 $498,239 $498,239 Gross profit345,826 343,651 273,345 273,532 Operating income39,017 36,966 38,441 40,578 Net income28,242 26,488 45,900 47,488 The following table sets forth the effects of the restatement and revisions associated with correction of the Misstatements and other immaterial accounting errors, respectively, on certain key items within our previously reported Balance Sheets for the years ended January 29, 2023 and January 30, 2022:As ofJanuary 29, 2023January 30, 2022(in thousands)As Previously ReportedAs RestatedAs Previously ReportedAs RevisedTotal current assets$194,041 $187,715 $225,158 $221,731 Total non-current assets224,013 220,911 146,421 147,353 Total assets418,054 408,626 371,579 369,084 Total current liabilities88,839 82,041 118,779 114,696 Total non-current liabilities135,955 133,491 96,574 96,574 Total liabilities224,794 215,532 215,353 211,270 Total equity193,260 193,094 156,226 157,814 The adjustments made as a result of the restatement are more fully discussed in Part II, Item 8, Note 2. Restatement and Other Corrections of Previously Issued Financial Statements. See Part II, Item 8, Note 13. Quarterly Financial Data (Unaudited) for a discussion of the effects of the restatements on the quarterly periods ended October 30, 2022, July 31, 2022 and May 1, 2022.Internal Control ConsiderationsManagement has reassessed its evaluation of the effectiveness of its internal control over financial reporting as of January 29, 2023 as further described in Part II, Item 9A of this Amendment, and concluded that certain material weaknesses existed and that internal control over financial reporting and disclosure controls and procedures were not effective during the Affected Periods. |