- September 1, 2021
- Comments: 0
- Posted by: admin
The negative impacts the COVID-19 pandemic has had, and will continue to have,
? on our business, financial condition, profitability, cash flows, and supply
chain, as well as consumer spending (including future uncertain impacts);
? epidemics, pandemics like COVID-19 or natural disasters that have and could
continue to negatively impact sales;
changes in the overall level of consumer spending and volatility in the
? economy, including as a result of the COVID-19 pandemic and/or government aid
programs;
? a decline in operating results that has and may continue to lead to asset
impairment and store closure charges;
? our ability to sustain our growth plans and successfully implement our
long-range strategic and financial plan;
? our ability to gauge beauty trends and react to changing consumer preferences
in a timely manner;
? the possibility that we may be unable to compete effectively in our highly
competitive markets;
? our ability to execute our Efficiencies for Growth cost optimization program;
the possibility that cybersecurity breaches and other disruptions could
? compromise our information or result in the unauthorized disclosure of
confidential information;
? the possibility of material disruptions to our information systems;
the possibility that the capacity of our distribution and order fulfillment
? infrastructure and the performance of our distribution centers and fast
fulfillment centers may not be adequate to support our expected future growth
plans;
? changes in the wholesale cost of our products;
? the possibility that new store openings and existing locations may be impacted
by developer or co-tenant issues;
? our ability to attract and retain key executive personnel;
? our ability to successfully execute our common stock repurchase program or
implement future common stock repurchase programs; and
other risk factors detailed in our public filings with the Securities and
? Exchange Commission (the SEC), including risk factors contained in Item 1A,
subsequently filed Quarterly Reports on Form 10-Q (including this report).
Overview
Impact of COVID-19
Industry trends
Basis of presentation
The Company has one reportable segment, which includes retail stores, salon services, and e-commerce.
? the general national, regional, and local economic conditions and corresponding
impact on customer spending levels;
? the introduction of new products or brands;
? the location of new stores in existing store markets;
? competition;
? our ability to respond on a timely basis to changes in consumer preferences;
? the effectiveness of our various merchandising and marketing activities; and
? the number of new stores opened and the impact on the average age of all of our
? the cost of merchandise sold, including substantially all vendor allowances,
which are treated as a reduction of merchandise costs;
? distribution costs including labor and related benefits, freight, rent,
depreciation and amortization, real estate taxes, utilities, and insurance;
? shipping and handling costs;
? retail stores occupancy costs including rent, depreciation and amortization,
real estate taxes, utilities, repairs and maintenance, insurance, and licenses;
? salon services payroll and benefits; and
? shrink and inventory valuation reserves.
Selling, general and administrative expenses include:
? payroll, bonus, and benefit costs for retail store and corporate employees;
? advertising and marketing costs;
? occupancy costs related to our corporate office facilities;
? stock-based compensation expense;
depreciation and amortization for all assets, except those related to our
? retail stores and distribution operations, which are included in cost of
sales; and
? legal, finance, information systems, and other corporate overhead costs.
Impairment, restructuring and other costs include long-lived asset impairment charges and restructuring costs associated with store closings.
Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which we operate stores.
Results of operations
The following tables present the components of our consolidated results of operations for the periods indicated:
Selling, general and administrative expenses 464,299 271,587
Selling, general and administrative expenses 23.6% 22.1%
Comparison of 13 weeks ended July 31, 2021 to 13 weeks ended August 1, 2020
Net sales
Gross profit
Selling, general and administrative expenses
Impairment, restructuring and other costs
There were no impairment, restructuring and other costs recognized in the 13 weeks ended July 31, 2021, compared to $40.8 million for the 13 weeks ended August 1, 2020.
Pre-opening expenses
Income tax expense
Net income
Table of Contents
Net sales
Gross profit
Selling, general and administrative expenses
Impairment, restructuring and other costs
There were no impairment, restructuring and other costs recognized in the 26 weeks ended July 31, 2021, compared to $60.3 million for the 26 weeks ended August 1, 2020.
Pre-opening expenses
Income tax expense (benefit)
Liquidity and capital resources
The following table presents a summary of our cash flows for the 26 weeks ended July 31, 2021 and August 1, 2020:
26,304
722,670
Investing activities
We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investment activities for capital
expenditures were $57.3 million during the 26 weeks ended July 31, 2021, compared to $77.1 million during the 26 weeks ended August 1, 2020. During the 26 weeks ended August 1, 2020, we received $110.0 million in short-term investments and we contributed $5.4 million to equity investments.
Financing activities
Share repurchase program
Total cost of shares repurchased $ 635.8 $ 73.0
As of July 31, 2021, we were in compliance with all terms and covenants of the Loan Agreement.
Off-balance sheet arrangements
As of July 31, 2021, we have not entered into any “off-balance sheet” arrangements, as that term is described by the SEC. We do, however, have off-balance sheet purchase obligations incurred in the ordinary course of business.
Contractual obligations
Critical accounting policies and estimates
Recently adopted accounting pronouncements
See Note 2 to our consolidated financial statements, “Summary of significant accounting policies – Recently adopted accounting pronouncements.”
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