Value home décor retailer sees potential for major store expansion

When it comes to expanding its store portfolio, At Home has barely gotten started.



Reporting strong results for the fourth quarter and full year, the home décor retailer also said it plans to open 25 new stores this year, with the potential for almost 500 more locations over the long term.



“Our long-term growth runway is substantial with potential to increase store count to nearly five times our current footprint,” said Lee Bird, president and CEO, At Home, which ended the year with 126 stores. “We have a young brand that has significant room to grow and a value proposition that is increasingly relevant in today's retail environment. We are focused on disciplined execution and building on our progress in fiscal 2018."



Analyst Neil Saunders, managing director of GlobalData Retail, commented that the company’s growth prospects are sound.



“Although At Home has been expanding more aggressively, it remains a young chain and brand with a somewhat limited exposure,” he said. “There is plenty of headroom to expand via new stores as well as online.”



The analyst, however, noted there is one particular area where At Home could execute better: inspiration in its stores.



“Even new shops are very functional, and there is limited engagement with shoppers,” Saunders said. “Although this is partly a symptom of the big-box nature of the format, this is a lost opportunity in a category like home.”



At Home reported that its net sales for the fourth quarter, ended Jan. 28, rose 26.4% to $234.5 million. Same-store sales increased 7.1%.



Net income in the quarter was $15.3 million, compared to $58.8 million in the year ago period, primarily due to an income tax benefit recognized during the previous year’s period.



"We are pleased to report results for our 11th consecutive quarter of over 20% net sales growth and our 12th consecutive quarter of positive comparable store sales growth,” Bird said. “Our fourth quarter outperformance was driven by strong new store results accompanied by a 7.1% comparable store sales increase as we further elevated our holiday assortment and capitalized on an inventory opportunity identified earlier in the year, both of which were well-received by our customers.”



For the full fiscal year, net sales increased 23.1% to $765.6 million, driven by the net addition of 23 stores and a comparable store sales increase of 3.7%.



Net income was $27.1 million, which included a $2.7 million loss on the extinguishment of debt in the third quarter. This compares to net income of $3.6 million in the year-ago period, which included a $36.0 million pre-tax loss on the extinguishment of debt in the second quarter.