Cover - shares |
3 Months Ended | |
|---|---|---|
Apr. 30, 2023 |
May 31, 2023 |
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| Cover [Abstract] | ||
| Document Type | 10-Q/A | |
| Document Quarterly Report | true | |
| Document Period End Date | Apr. 30, 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 Current Reporting Status | No | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Accelerated Filer | |
| Entity Small Business | false | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 15,216,988 | |
| Amendment Flag | true | |
| Entity Central Index Key | 0001701758 | |
| Current Fiscal Year End Date | --02-04 | |
| Document Fiscal Year Focus | 2024 | |
| Document Fiscal Period Focus | Q1 | |
| Amendment Description | EXPLANATORY NOTE OverviewThe Lovesac Company (“Lovesac”, the “Company”, “we”, “our” and similar terms) is filing this Amendment No. 1 on Form 10-Q/A (“Amendment No. 1”) to amend and restate certain items presented in the Company’s Quarterly Form 10-Q for the period ended April 30, 2023, which was initially filed with the Securities and Exchange Commission (“SEC”) on June 9, 2023 (the “Original Form 10-Q”). This Amendment No. 1 contains our unaudited restated quarterly condensed financial statements for the periods ended April 30, 2023 and May 1, 2022 and (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 financial statements (refer to Part I, Item 1, Note 2. Restatement and Other Corrections of Previously Issued Condensed Financial Statements in the notes to the condensed financial statements included in this Amendment No.1 for additional information). 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. In addition, we have filed an amendment to the Company’s Annual Report on Form 10-K for the year ended January 29, 2023 (the "Form 10-K/A") that restated our audited annual financial statements as of and for the year ended January 29, 2023 and our unaudited quarterly condensed financial statements for the quarterly and year-to-date periods ended October 30, 2022, July 31, 2022 and May 1, 2022. This Amendment No. 1 also includes amendments to and restates the following items of the Original Form 10- Q as of and for the quarter ended April 30, 2023:• Part I—Item 1. Financial Statements and Financial Statement Schedules• Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations• Part I—Item 4. Controls and Procedures • Part II—Item 1A. Risk Factors • Part II—Item 6. ExhibitsIn accordance with applicable SEC rules, this Amendment No. 1 includes new certifications from our Chief Executive Officer and Chief Financial Officer dated as of the date of this filing and the financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibit 101. Other than as described above, this Amendment No. 1 does not reflect adjustments for events occurring after the filing of the Original Form 10-Q except to the extent that they are otherwise required to be included and discussed herein. See below and Part I, Item 1, Note 2. Restatement and Other Corrections of Previously Issued Condensed Financial Statements in the notes to the condensed financial statements included in this Amendment No. 1 for a detailed discussion of the effect of the restatement on the condensed 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-Q 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-Q remains unchanged. This Amendment No. 1 continues to describe the conditions as of the date of the Original Form 10-Q and, except as contained herein, we have not updated or modified the disclosures contained in the Original Form 10-Q to reflect any events that have occurred after the Original Form 10-Q. Accordingly, forward-looking statements included in this Amendment No. 1 may represent management’s views as of the Original Form 10-Q 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-Q, 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 $0.1 million for the thirteen weeks ended May 1, 2022•Understatement of $0.3 million for the thirteen weeks ended April 30,2023 Certain Balance Sheet ItemsAt 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 April 30, 2023, the impact of the error overstated merchandise inventories, net by $2.2 million, understated prepaid expenses and other current assets by $0.6 million, overstated accrued expenses by less than $0.1 million, and overstated accumulated earnings by $1.6 million. There was no impact to net cash used in operating activities.Selected Key ItemsThe following table sets forth the effects of the restatement 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 quarterly period ended April 30, 2023 and May 1, 2022:For the Thirteen Weeks EndedApril 30, 2023May 1, 2022(in thousands)As Previously ReportedAs RestatedAs Previously ReportedAs RestatedNet sales$141,193 $141,193 $129,380 $129,380 Gross profit70,704 70,575 66,108 65,974 Operating (loss) income(5,869)(5,706)2,645 2,494 Net (loss) income(4,230)(4,115)1,895 1,786 The following table sets forth the effects of the restatement associated with correction of the Misstatements and other immaterial accounting errors, respectively, on certain key items within our previously reported Balance Sheets for the periods ended April 30, 2023 and January 29, 2023:As ofApril 30, 2023January 29, 2023(in thousands)As Previously ReportedAs RestatedAs Previously ReportedAs RestatedTotal current assets$187,697 $181,462 $194,041 $187,715 Total non-current assets240,339 239,747 224,013 220,911 Total assets428,036 421,209 418,054 408,626 Total current liabilities96,922 89,127 88,839 82,041 Total non-current liabilities141,868 142,826 135,955 133,491 Total liabilities238,790 231,953 224,794 215,532 Total equity189,246 189,256 193,260 193,094 The adjustments made as a result of the restatement are more fully discussed in Part I Item 1, Note 2. Restatement and Other Corrections of Previously Issued Condensed Financial Statements.Internal Control ConsiderationsManagement has reassessed its evaluation of the effectiveness of its internal control over financial reporting as of April 30, 2023, as further described in Part I, Item 4 of this Amendment and concluded that certain material weakness existed and that internal control over financial reporting and disclosure controls and procedures were not effective during April 30, 2023 and January 29, 2023. See Part II Item 9A – Controls and Procedures in the Company’s Form 10-K/A for the year ended January 29, 2023 for a description of these matters. |