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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on July 25, 2016

Registration No. 333-206772


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



AMENDMENT NO. 6
TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



AT HOME GROUP INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  5719
(Primary Standard Industrial
Classification Code Number)
  45-3229563
(I.R.S. Employer
Identification No.)

1600 East Plano Parkway
Plano, Texas 75074
(972) 265-6227
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Judd T. Nystrom
Chief Financial Officer
At Home Group Inc.
1600 East Plano Parkway
Plano, Texas 75074
(972) 265-6227
(Name, address, including zip code, and telephone number including area code, of agent for service)



Copies of all communications, including communications sent to agent for service, should be sent to:

Andrew B. Barkan, Esq.
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, New York 10004
(212) 859-8000

 

Mary Jane Broussard
General Counsel
At Home Group Inc.
1600 East Plano Parkway
Plano, Texas 75074
(972) 265-6227

 

Marc D. Jaffe, Esq.
Ian D. Schuman, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
(212) 906-1200

                    Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

                    If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

                    If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

                    If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

                    If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

                    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý   Smaller reporting company o

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price
Per Share(1)(2)

  Proposed Maximum
Aggregate Offering
Price(1)(2)

  Amount of
Registration Fee(3)

 

Common Stock, par value $0.01 per share

  9,967,050   $16.00   $159,472,800   $17,609

 

(1)
Includes shares and the offering price of shares that may be sold upon any exercise of the underwriters' option to purchase additional shares.

(2)
This amount represents the proposed maximum aggregate offering price of the securities registered hereunder. These figures are estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(3)
The registrant previously paid $11,620 in connection with a prior filing of this Registration Statement on September 4, 2015.



                    The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION. DATED JULY 25, 2016.

8,667,000 Shares

LOGO

At Home Group Inc.

Common Stock

                  This is an initial public offering of shares of common stock of At Home Group Inc. We are selling all of the shares to be sold in the offering.

                  Prior to this offering, there has been no public market for the common stock. The initial public offering price is expected to be between $14.00 and $16.00 per share. We have received approval to list our common stock on the New York Stock Exchange under the symbol "HOME".

                  The underwriters have an option for a period of 30 days to purchase up to a maximum of 1,300,050 additional shares of our common stock from us.

                  After the completion of this offering, we expect to be a "controlled company" within the meaning of the corporate governance standards of the New York Stock Exchange.

                  We are an "emerging growth company", as defined in Section 2(a) of the Securities Act of 1933, as amended, and will be subject to reduced reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

                  Investing in our common stock involves risk. See "Risk Factors" beginning on page 24 to read about factors you should consider before buying shares of our common stock.

 
  Price to Public   Underwriting
Discounts and
Commissions(1)
  Proceeds to
At Home Group
Inc.

Per Share

          $                   $                   $        

Total

          $                   $                   $        
(1)
See "Underwriting" for additional information regarding underwriting compensation.

                  Delivery of the shares of common stock will be made on or about                        , 2016.

                  Neither the Securities and Exchange Commission ("SEC") nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

BofA Merrill Lynch   Goldman, Sachs & Co.

Jefferies

 

Morgan Stanley

 

Evercore ISI   Guggenheim Securities   William Blair

The date of this prospectus is                        , 2016.

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TABLE OF CONTENTS

 
  Page

MARKET AND INDUSTRY DATA

  ii

BASIS OF PRESENTATION

  ii

NON-GAAP FINANCIAL MEASURES

  iii

CERTAIN TRADEMARKS

  iv

PROSPECTUS SUMMARY

  1

RISK FACTORS

  24

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

  48

USE OF PROCEEDS

  50

DIVIDEND POLICY

  51

CAPITALIZATION

  52

DILUTION

  54

SELECTED CONSOLIDATED FINANCIAL DATA

  56

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  60

BUSINESS

  92

MANAGEMENT

  109

EXECUTIVE COMPENSATION

  116

PRINCIPAL STOCKHOLDERS

  135

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

  138

DESCRIPTION OF CAPITAL STOCK

  141

DESCRIPTION OF CERTAIN INDEBTEDNESS

  146

SHARES ELIGIBLE FOR FUTURE SALE

  151

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR COMMON STOCK

  153

UNDERWRITING

  158

LEGAL MATTERS

  165

EXPERTS

  165

WHERE YOU CAN FIND MORE INFORMATION

  165

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

  F-1




ABOUT THIS PROSPECTUS

                You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us that we have referred to you. Neither we nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us that we have referred to you. If anyone provides you with additional, different or inconsistent information, you should not rely on it. Offers to sell, and solicitations of offers to buy, shares of our common stock are being made only in jurisdictions where offers and sales are permitted.

                No action is being taken in any jurisdiction outside the United States to permit a public offering of common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to

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inform themselves about and to observe any restriction as to this offering and the distribution of this prospectus applicable to those jurisdictions.




MARKET AND INDUSTRY DATA

                This prospectus includes estimates regarding market and industry data that we prepared based on our management's knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information, industry reports and publications, surveys, our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate. In addition, certain market and industry data has been derived from (1) research and modeling initially prepared for us in May 2013, and subsequently updated from time to time, by Buxton Company, a leading real estate analytics firm, which we refer to herein as "Buxton" and (2) market research prepared for us in April 2015 by Russell Research, Inc., a consumer research firm, which we refer to herein as "Russell Research".

                In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets for the products we distribute. Market share data is subject to change and may be limited by the availability of raw data, the voluntary nature of the data gathering process and other limitations inherent in any statistical survey of market shares. In addition, customer preferences are subject to change. Accordingly, you are cautioned not to place undue reliance on such market share data. References herein to the markets in which we conduct our business refer to the geographic metropolitan areas in which our stores are located.




BASIS OF PRESENTATION

                We report on the basis of a 52- or 53-week fiscal year, which ends on the last Saturday in January. References to a fiscal year mean the year in which that fiscal year ends. References herein to "fiscal year 2013" or "FY2013" relate to the 52 weeks ended January 26, 2013, references herein to "fiscal year 2014" or "FY2014" relate to the 52 weeks ended January 25, 2014, references herein to "fiscal year 2015" or "FY2015" relate to the 53 weeks ended January 31, 2015, references herein to "fiscal year 2016" or "FY2016" relate to the 52 weeks ended January 30, 2016, references herein to "fiscal year 2017" relate to the 52 weeks ending January 28, 2017 and references herein to "fiscal year 2018" relate to the 52 weeks ending January 27, 2018. References herein to "the first quarter of fiscal year 2016" and "the first quarter of fiscal year 2017" relate to the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively. References herein to "LTM" relate to the last twelve months ended April 30, 2016.

                As used in this prospectus, unless the context otherwise requires, references to:

    "the Company", "At Home", "we", "us" and "our" mean At Home Group Inc. and its consolidated subsidiaries;

    "ABL Facility" means our $215 million senior secured asset based revolving credit facility;

    "aided brand awareness" means the percentage of survey respondents who expressed knowledge of our brand when asked and "unaided brand awareness" means the percentage of survey respondents who expressed knowledge of our brand without prompting when asked about awareness of home décor stores;

    "big box", "large format" and "superstore" mean a store that is larger than 50,000 square feet in size;

    "core customer" means, with respect to data discussed herein from Russell Research, a customer that spent more than $200 at our stores during the twelve months preceding the market research survey conducted by Russell Research;

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    "efficiency" or "efficient" means our financial performance as measured by the Adjusted EBITDA profit margins that we generate in our business;

    "First Lien Facility" means our $300 million senior secured first lien term loan facility;

    "good / better / best" means our three-tiered strategy that our buyers use to create our product assortment;

    "June 2015 Refinancing" means our entry into the Term Loan Facilities and redemption in full of the Senior Secured Notes with the proceeds of the Term Loan Facilities, which were consummated on June 5, 2015;

    "net investment" means the sum of gross capital expenditure required for a new store or facility, net working capital investment and pre-opening expenses, less sale-leaseback proceeds, as applicable;

    "net promoter score" means a management tool that is used to gauge the loyalty of customer relationships;

    "new stores" means the number of stores opened during a particular period, including any relocations of existing stores during such period;

    "non-linear investment" means ongoing fixed costs in connection with our business that are not expected to grow with the size of our business;

    "pay back" and "payback period" mean, for a given store, the period of time it takes for the cumulative Store-level Adjusted EBITDA for that store from its opening to equal our net investment in that store on a pre-tax basis;

    "profitability" means our financial performance as measured by Adjusted EBITDA and Adjusted EBITDA margin;

    "Second Lien Facility" means our $130 million senior secured second lien term loan facility;

    "Senior Secured Notes" means our $360 million in aggregate principal amount of 10.75% senior secured notes due June 1, 2019, which were redeemed in full on June 5, 2015;

    "SKU" means stock keeping unit;

    "Sponsors" means investment funds affiliated with AEA Investors LP ("AEA") and Starr Investment Holdings, LLC ("Starr Investments"), which together own a controlling interest in us; and

    "Term Loan Facilities" means our First Lien Facility and our Second Lien Facility, together.




NON-GAAP FINANCIAL MEASURES

                Certain financial measures presented in this prospectus, such as comparable store sales, Adjusted EBITDA and Store-level Adjusted EBITDA are not recognized under accounting principles generally accepted in the United States, which we refer to as "GAAP". We define these terms as follows:

    "comparable store sales" means, for any reporting period, the change in period-over-period net sales for the comparable store base, beginning with stores on the first day of the sixteenth full fiscal month following the store's opening. When a store is being relocated or remodeled, we exclude sales from that store in the calculation of comparable store sales until the first day of the sixteenth full fiscal month after it reopens. For the fiscal years ended January 25, 2014, January 31, 2015 and January 30, 2016 and the thirteen weeks ended May 2, 2015 and April 30, 2016, there were 55, 60, 75, 63 and 79 stores, respectively, in our comparable store base.

    "Adjusted EBITDA" means net (loss) income before interest expense, net, loss from early extinguishment of debt, income tax (benefit) provision and depreciation and amortization, adjusted for the impact of certain other items permitted by our debt agreements, including

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      certain legal settlements and consulting and other professional fees, costs associated with new store openings, relocation and employee recruiting incentives, management fees and expenses, stock-based compensation expense, impairment of our trade name and non-cash rent.

    "Adjusted EBITDA margin" means Adjusted EBITDA divided by net sales.

    "Store-level Adjusted EBITDA" means Adjusted EBITDA, adjusted further to exclude the impact of certain corporate overhead expenses, which we do not consider in our evaluation of the ongoing performance of our stores from period to period.

    "Store-level Adjusted EBITDA margin" means Store-level Adjusted EBITDA divided by net sales.

                We present Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin, which are not recognized financial measures under GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as interest, depreciation, amortization, loss on extinguishment of debt and taxes, as well as costs related to new store openings, which are incurred on a limited basis with respect to any particular store when opened and are not indicative of ongoing core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Store-level Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA. In particular, Store-level Adjusted EBITDA does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA. Our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Store-level Adjusted EBITDA following this offering, and any such modification may be material. In addition, Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

                Management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA in connection with performance evaluations for our executives; to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and to compare our performance against that of other peer companies using similar measures. In addition, we utilize Adjusted EBITDA in certain calculations under our ABL Facility (defined therein as "Consolidated EBITDA") and our Term Loan Facilities (defined therein as "Consolidated Cash EBITDA"). Management believes Store-level Adjusted EBITDA is helpful in highlighting trends because it facilitates comparisons of store operating performance from period to period by excluding the impact of certain corporate overhead expenses, such as certain costs associated with management, finance, accounting, legal and other central corporate functions.




CERTAIN TRADEMARKS

                This prospectus includes trademarks and service marks owned by us, including "at home". This prospectus also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

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PROSPECTUS SUMMARY

                This summary highlights selected information contained elsewhere in this prospectus. Because this is only a summary, it does not contain all the information that may be important to you. You should read the entire prospectus carefully, especially "Risk Factors" beginning on page 24 of this prospectus and our consolidated financial statements and related notes included elsewhere in this prospectus, before deciding to invest in our common stock.

Our Company

                At Home is the leading home décor superstore based on the number of our locations and our large format stores that we believe dedicate more space per store to home décor than any other player in the industry. We are focused on providing the broadest assortment of products for any room, in any style, for any budget. We utilize our space advantage to out-assort our competition, offering over 50,000 SKUs throughout our stores. Our differentiated merchandising strategy allows us to identify on-trend products and then value engineer those products to provide desirable aesthetics at attractive price points for our customers. Over 70% of our products are unbranded, private label or specifically designed for us. We believe that our broad and comprehensive offering and compelling value proposition combine to create a leading destination for home décor with the opportunity to continue taking market share in a large, fragmented and growing market.

                We have loyal, enthusiastic and diverse customers who are deeply passionate about, and love to decorate, their homes. According to a report prepared for us by Russell Research, a consumer research firm, our average customer typically visits an At Home store four times per year, while our core customer shops our stores more than seven times per year. Our stores are a regular destination where our core customer typically spends more than one hour per visit, providing a means to express her vision in her home often and affordably. To our customer, her home is a representation and an extension of who she is. Decorating her home is a continuous, ever evolving process that can be as simple as replacing patio cushions with a new seasonal pattern or as involved as updating the look of a whole room or the entire house. Making her feel at home while shopping At Home is our primary focus, and we strive to do so by creating an environment that is easy for her to shop, enjoy the experience and express herself through our merchandise.

                Our current store base is comprised of 115 stores across 29 states and 65 markets, averaging approximately 120,000 square feet per store. We utilize a flexible and disciplined real estate strategy that allows us to successfully open and operate stores from 80,000 to 200,000 square feet across a wide range of formats and markets. All of our stores that were open as of the beginning of the year are profitable, and stores that have been open for more than a year average over $6 million in net sales and realize average Store-level Adjusted EBITDA margins of 28%. Due in part to our past investments, our distribution center should be able to support up to approximately 220 stores with limited incremental investment, while we believe our existing systems, processes and controls should be able to support growth beyond this. In addition, based on our internal analysis and research conducted for us by Buxton, a leading real estate analytics firm, we believe that we have the potential to expand to at least 600 stores in the United States over the long term, or more than five times our current store base, although we do not currently have an anticipated timeframe to reach this potential.

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                We have developed a highly efficient operating model that seeks to drive growth and profitability while minimizing operating risk. Our merchandising, sourcing and pricing strategies generate strong and consistent performance across our product offering and throughout the entire year. Through specialized in-store merchandising and visual navigation elements, we enable a self-service model that minimizes in-store staffing needs and allows us to deliver exceptional value to our customers.

                We believe that our differentiated home décor concept, flexible real estate strategy and highly efficient operating model create competitive advantages that have driven our financial success. In fiscal year 2016, we produced net sales of $622 million, Adjusted EBITDA of $115 million and net income of $3.6 million. For a reconciliation of Adjusted EBITDA to net income, please see "—Summary Consolidated Financial and Operating Data".

                Recent financial highlights include:

      Positive comparable stores sales in the last nine consecutive fiscal quarters, averaging 5.6% growth over the period;

      Eight consecutive fiscal quarters of over 20% year-over-year net sales growth;

      Opened 59 new stores in the last five fiscal years, including 20 in fiscal year 2016;

      Total net sales growth from $364 million in fiscal year 2013 to $653 million for the last twelve months ended April 30, 2016, representing a compound annual growth rate, or CAGR, of approximately 20%;

      Store-level Adjusted EBITDA margins of 27.0% for the last twelve months ended April 30, 2016, and growth of Store-level Adjusted EBITDA from $96 million in fiscal year 2013 to $176 million for the last twelve months ended April 30, 2016, representing a CAGR of 21%, slightly outpacing total net sales growth; and

      Adjusted EBITDA margins of 18.4% for the last twelve months ended April 30, 2016, and growth of Adjusted EBITDA from $82 million in fiscal year 2013 to $120 million for the last twelve months ended April 30, 2016, representing a CAGR of 13%, which includes significant non-linear investments in people, systems and processes to support our future growth.

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Our History and Evolution

                Our Company (formerly known as Garden Ridge) was founded in 1979 in Garden Ridge, Texas, a suburb of San Antonio. We quickly gained a loyal following in our Texas home market and expanded thereafter. Throughout our history, we have cultivated a passionate customer base that shops our stores for the unique, wide assortment of products offered at value price points. After our

 

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Company was acquired in 2011 by an investment group led by AEA, which included affiliates of Starr Investments, we began a series of strategic investments in the business. We believe that the core strengths of our business combined with the significant investments made in the first four years following our acquisition by our Sponsors position us to grow sales and expand our store base.

                Key changes that have been implemented since 2011 include:

      Hired seven out of the eight top executives at the Company including our current Chief Executive Officer and Chief Financial Officer, while doubling our home office headcount from 110 to over 220 across all functions;

      Launched the At Home brand in 2014 and converted our entire store base in the same calendar year while investing in advertising and marketing initiatives to support the brand launch;

      Expanded our assortment and broadened our appeal to include more on-trend merchandise and increased our mix of "better" and "best" products;

      Re-established a marketing function and reinstituted marketing spending to 2% of net sales in each of fiscal years 2015 and 2016, up from nearly zero;

      Invested in our stores to create a better customer experience by refreshing all stores, improving our in-store signage and enhancing our merchandising layout for easier navigation and improved shopability;

      Invested in systems, processes and controls including new point-of-sale, or POS, and inventory allocation systems, and the automation of our distribution center that should be able to support up to approximately 220 stores with limited incremental investment; and

      Developed our real estate capabilities by implementing a proprietary site selection model and employing multiple financing approaches, enabling a doubling of the store base while increasing the first year net sales and Adjusted EBITDA performance of stores opened during fiscal year 2016 by approximately 45% and 64%, respectively, as compared to stores opened during fiscal year 2014.

Our Competitive Strengths

            Highly Differentiated Home Décor Concept

                We believe our concept is highly differentiated from other home décor retailers given our broad product offering, warehouse format and customer friendly in-store experience. For most products, our superstores dedicate up to 15 times more square footage and SKUs than other home décor retailers. The size of our stores also provides us the ability to sell larger size products such as oversized area rugs, and fully-assembled products, such as decorative accent furniture and bar stools. Our stores are designed as shoppable warehouses that combine the scale of a big box format with shopper friendly features such as an interior racetrack, clear signage that enables easy navigation throughout the store and product vignettes that offer design inspiration and coordinated product ideas. We believe our customer values shopping At Home as an in-person experience through which she can see and feel the quality of our products and physically assemble her desired aesthetic. We believe we have no direct competitor, effectively competing with mass merchants and large format multi-chain retailers that dedicate only a small portion of their selling space to home décor and do not deliver a shopping experience specifically focused on the home décor customer. Additionally, we also compete with smaller format, independent or national specialty retailers that cannot match our total square footage, selection of products and diverse array of home décor styles. We believe our differentiated concept is positioning us as a leading destination for the home décor consumer and will allow us to continue taking share in a large, highly fragmented and growing market.

 

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            Compelling Customer Value Proposition

                We believe we provide a compelling value proposition to our customers through our broad merchandise assortment, unique product offering and attractive value price points. By offering something for any room, in any style, for any budget, we appeal to a diverse customer base across a variety of markets.

      Any Room.    We offer over 50,000 SKUs across virtually all home décor products, enabling our customer to decorate any space inside or outside her home. From her bedroom to her living and dining rooms to her outside patio and garden areas, we carry thousands of products that allow her to express her unique sense of style in any area of the home she desires. All of our products are in-stock and ready to take home, enabling a one-stop shopping experience.

      Any Style.    We deliver a unique and innovative product offering that spans all styles of home décor ranging from traditional to country and from vintage to modern. We introduce approximately 20,000 new SKUs per year, or an average of 400 new SKUs per week, which keeps our offering fresh and exciting.

      Any Budget.    We value engineer products in collaboration with our suppliers to recreate the "look" that we believe our customer wants while eliminating the costly construction elements that she does not value. This design approach allows us to deliver an attractive value to our customers, as our products are typically less expensive than other branded products that have a similar look. We employ a simple everyday low pricing strategy that consistently delivers savings to our customers without the need for extensive promotions, as evidenced by 80% of our net sales occurring at full price.

            Efficient Operating Model Driving Industry-Leading Profitability

                We believe we have the most efficient operating model in the home décor industry, which drives our industry-leading profitability. We generate strong product margins through our extensive product offering with an everyday low pricing strategy. We have designed a store model that enables a largely self-service shopping experience and streamlines our store operations, thereby minimizing in-store staffing levels. Our disciplined yet flexible real estate strategy allows us to negotiate favorable lease terms, which average $5 per square foot in annual rental costs. Despite the significant investments we have made in our business, we continue to operate with a highly efficient home office team. All major decisions regarding merchandising, pricing, product assortment and allocation are standardized and made centrally, which supports a lean cost structure. As a result of these factors, we are able to deliver industry-leading profitability and succeed in locations where we believe other retailers cannot.

            Flexible and Disciplined Real Estate Strategy Supporting Attractive Store Economics

                We have developed a store model that has been successful across a number of geographic markets, population densities and real estate locations, including anchor, stand-alone or mall-enclosed locations that range between 80,000 and 200,000 square feet, averaging approximately 120,000 square feet per store. Our success operating stores across multiple market types and store formats allows us to be opportunistic and select locations with the most favorable investment characteristics. We are flexible in our approach and realize compelling store economics whether we lease a second generation property, purchase a second generation location or build a new store from the ground up. We believe we are one of the few growing retail concepts that actively targets larger box sizes, enabling us to obtain highly attractive real estate terms. We have also become a direct beneficiary of large, national big box retailers pruning their store portfolios and have become a preferred partner for a number of these retailers looking to quickly shed stores. All of our stores that were open as of the beginning of the year are profitable and those that have been open for more than a year average over $6 million in net sales and realize average Store-level Adjusted EBITDA margins of 28%. Over the past four fiscal

 

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years, we have successfully opened 53 new stores of which 32 were in new markets. On average we expect our new stores to generate at least $1 million of Store-level Adjusted EBITDA in the first year of operations and pay back the net investment within two years. We believe our ability to achieve such attractive returns across a broad set of markets is a testament to the universal appeal of our concept and strongly positions us to continue to profitably open new stores.

            Systematic Approach to Minimizing Operating Risk

                We have designed and implemented a systematic approach to our business that is focused on driving growth and profitability while minimizing operating risk. Through this approach, we are able to deliver consistent sales and profitability growth and reduce the volatility that other big box retailers may face. Key areas of our business that are built on this approach include:

      Merchandising:    We have a broad assortment that delivers consistent financial results across our product offering and reduces our reliance on any individual product, style or trend. Additionally, our store size allows merchandise to stay on the floor longer than a typical retailer, thereby reducing the need for unplanned markdowns.

      Inventory Management:    We maintain strict inventory controls at the overall company level as well as at individual stores in order to minimize markdowns. Additionally, we have a regular markdown cadence through which we clear slower moving inventory. Finally, we do not carry over or store any of our holiday products, ensuring that our inventory remains as relevant and fresh to our customers as possible.

      Product Development and Sourcing:    Our largely private label and unbranded offering allows us to better control input costs and maintain a profitable product margin, even in the event of a markdown. We implement rigorous controls to maintain our product costs, often changing materials and features based on fluctuations in input costs. We work with over 500 vendors and are not reliant on any single vendor, with our largest vendor representing less than 5% of our purchases.

      Store Operations:    We optimize our staffing levels based on hourly sales and traffic volumes and are able to utilize downtime to stock shelves and displays with new inventory. Additionally, we work with our vendors and internal operations teams to deploy customized merchandising solutions such as specialized racks and displays to reduce labor needs, while creating a more pleasant shopping experience for our customers.

      Real Estate:    We employ a highly analytical approach to real estate site selection with a stringent process to approve new stores and, as a result, have not closed a single store due to poor financial performance in the past decade. Our ability to negotiate favorable lease terms typically results in low square footage rents, unilateral two to three year "opt-out" clauses or short initial terms with multiple renewal options, and other features that provide us with optimal flexibility to manage our store portfolio.

            Scalable Operations To Support Future Growth

                We have made significant capital and non-linear operating expense investments in our business that we believe have laid the foundation for continued profitable growth. During fiscal years 2014 and 2015, we invested $47.8 million in capital to update our stores, expand our distribution center capacity and rebrand our Company. We also invested $22.3 million in non-linear operating expenses, which include people, processes and systems, as well as $14.5 million in one-time expenses to build key capabilities to support our future growth. We believe that we are just beginning to see the benefits of these investments in our business. Our strengthened management team, new brand identity, upgraded and automated distribution center and enhanced information systems, including our inventory allocation, warehouse management and POS systems, should enable us to profitably replicate our store

 

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format and differentiated shopping experience. We believe our standardized systems and processes, which rely on refined tools for store operations, inventory management, procurement, employee hiring, training and scheduling, are scalable to meet our expansion goals. We expect these infrastructure investments to support our successful operating model over a significantly expanded store base.

            Exceptional Management Team and Strong Corporate Culture

                We have assembled a highly experienced management team that has an average of 19 years of retail experience, has a demonstrated track record of delivering superior results and is well-positioned to scale our business. Since 2011, we have made meaningful investments in our team, hiring top executives with experience leading their respective functions at large industry-leading public retail companies including Nike, Gap, Best Buy, Advance Auto Parts, Nordstrom, TJX, Brinker International and Yum! Brands, among others. Additionally, we have built out and enhanced functional teams across finance, real estate, marketing, merchandising, information technology and store operations. We believe that our experienced management team has been able to institute rigorous, systematic processes across each of our functional areas that have resulted in strong financial performance while opening new stores. Under the leadership of our Chief Executive Officer, Lee Bird, we have developed a strong corporate culture that is focused on motivating and empowering our employees and creating a great place to work. Toward that goal, we were recently named one of the "Best Places to Work" in North Texas by the Dallas Business Journal. Our entire organization is aligned with our mission to enable our customer to affordably make her house a home and realize our vision of becoming the leading home décor retailer.

Our Growth Strategies

                We expect to continue our strong sales growth and leading profitability by pursuing the following strategies:

            Expand Our Store Base

                We believe there is a tremendous whitespace opportunity to expand in both existing and new markets in the United States. Over the long term, we believe we have the potential to expand to at least 600 stores in the United States, or more than five times our current footprint of 115 stores, based on our internal analysis and research conducted for us by Buxton. During fiscal year 2016, we opened 20 new stores. During fiscal year 2017, we plan to open 22 new stores, net of one relocated store, of which 15 are already open and the remainder are under construction or have signed letters of intent. We plan to open at least 22 new stores in each subsequent year for the foreseeable future. The rate of future growth in any particular period is inherently uncertain and is subject to numerous factors that are outside of our control. As a result, we do not currently have an anticipated timeframe to reach our long-term potential. In addition, due in part to our investments, our systems, processes and controls should be able to support up to approximately 220 stores with limited incremental investment.

                We have used our site selection model to score over 20,000 big box retail locations throughout the United States, which positions us to be able to act quickly as locations become available, and we have developed detailed market maps for each U.S. market that guide our deliberate expansion strategy. Over the last four fiscal years, we have opened stores in a mix of new and existing markets. New stores in existing markets have increased our total market share due to higher brand awareness. We believe there is still a considerable opportunity to continue adding locations in even our most established markets. In addition, we anticipate a limited number of relocations periodically as we evaluate our position in the market upon the impending expiration of lease terms. We have demonstrated our ability to open stores successfully in a diverse range of new markets across the country, having entered 39 new markets since 2011. Our portable concept has delivered consistent store economics across all markets, from smaller, less dense locations to larger, more heavily populated metropolitan areas. We have delivered over 20% year-over-year net sales growth in each of the past eight consecutive quarters.

 

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                Our new store model combines high average unit volumes and high Store-level Adjusted EBITDA margins with low net capital investment and occupancy costs, resulting in cash flow generation early in the life of a store. Our stores typically mature within six months of opening. We target first year annualized sales of $5 million, with Store-level Adjusted EBITDA margins of approximately 20%. Our new stores require on average $2 to $3 million of net investment, varying based on our lease, purchase or build decisions, but all with a target payback period of less than two years.

            Drive Comparable Store Sales

                We have achieved positive comparable store sales in the last nine consecutive fiscal quarters, averaging 5.6% growth over the period. We will seek to continue to drive demand and customer spend by providing a targeted, exciting product selection and a differentiated shopping experience, including the following specific strategic initiatives:

      Continuously introduce new and on-trend products to appeal to a wide range of customers and improve the mix of our assortment ("good / better / best" product offering);

      Enhance inventory planning and allocation capabilities to get the right products in the right store at the right time;

      Continue to strengthen our visual merchandising such as vignettes, end caps and feature tables to inspire our customers and generate in-store demand; and

      Grow the At Home brand through marketing and advertising as well as community engagements that target the home décor enthusiast to drive increased traffic to our stores.

            Build the At Home Brand and Create Awareness

                During fiscal year 2015, we launched the At Home brand, which we believe better communicates our positioning as the leading home décor superstore. Additionally, we re-established a marketing function and reinstated marketing spend to highlight our new brand, broad product offering and compelling value proposition. Given the newness and relatively limited awareness of the At Home brand, we believe there is a significant opportunity to grow our brand and build awareness for existing and new markets.

                While we have a net promoter score that is among the highest of our home décor peers, according to Russell Research, At Home has an aided brand awareness in our existing and newly entered markets that is approximately half of many of our specialty and mass merchant competitors. Our low awareness level, coupled with the high loyalty and customer satisfaction we have among existing customers, underscores what we believe is a significant growth opportunity to convert potential new customers into loyal brand enthusiasts.

                To address this opportunity, we intend to allocate our marketing spend across a range of strategic initiatives in order to highlight our differentiated value proposition. We will involve both traditional media platforms and unique, targeted strategies aimed at reaching the home décor enthusiast. Our marketing and brand building efforts will be enhanced by engaging in an ongoing dialogue with our customers through growing social and mobile channels. We believe we have an opportunity to leverage our growing social media and online presence to drive brand excitement and increase store visits within existing and new markets.

                Through our extensive customer research, we have learned that many home décor enthusiasts browse online for ideas, inspiration and general product information before visiting specific stores. We recently upgraded our website to enable our customers to view our product assortment online with robust search functionality and a mobile-friendly website. This enhancement focuses on an inspirational shopping experience that showcases decorating ideas to drive traffic into our stores. We are exploring

 

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opportunities to provide various levels of e-commerce capabilities but intend to focus on initiatives that maintain our industry-leading profitability.

                We believe increased brand awareness will not only drive traffic to existing stores, but also strengthen our business as we expand into new markets.

Our Industry

                We compete in the large, growing and highly fragmented home furnishings and décor market. The industry had total sales of approximately $180 billion in 2014 according to Home Furnishings News, and has enjoyed stable growth at an annual rate of approximately 3% per year over the last five years according to Euromonitor. We attribute this growth to the industry's broad consumer appeal, coupled with strong positive tailwinds from a growing housing market, rising property values and home sales and growing disposable incomes. This growth trend is expected to continue, with a forecasted growth rate of approximately 3% over the next four years according to Euromonitor.

                Unlike other big box retail categories (e.g., office supplies, home improvement and electronics) where the top retailers hold a significant share of the overall market, the top three retailers in the home décor and furnishings category make up less than 25% of the market share. We believe we are uniquely positioned in the market, focused on providing the broadest assortment of home décor products at value price points. In addition, the size of our stores enables us to carry a broad offering of fully assembled, larger merchandise, unlike many of our competitors, who are space constrained from providing a similar offering. We believe our focus on a broad assortment at value price points also uniquely positions us for those times when the industry is growing below trend, as it allows us to gain share in a fragmented market while also supporting our customer's passion about, and love for, decorating her home.

                The home furnishings and décor market includes a diverse set of categories and retail formats. However, we believe that we do not have a direct competitor, as no retailer matches our size, scale or scope of the product assortment that we offer at everyday low prices. While we have no direct competitor, certain products that we offer do compete with offerings by companies in the following segments:

    Specialty Home Décor / Organization and Furniture retailers (e.g., Bed Bath & Beyond, The Container Store, Ethan Allen, Havertys, Home Goods, Pier 1 Imports and Williams-Sonoma) have stores that are typically smaller (approximately 10,000 to 30,000 square feet) and we believe their home décor product offering is much narrower than ours and often is priced at a substantial premium.

    Mass / Club retailers (e.g., Costco, Target and Wal-Mart Stores) only dedicate a small portion of their selling spaces to home décor products and focus on the most popular SKUs.

    Arts / Craft / Hobby retailers (e.g., Hobby Lobby, Jo-Ann Stores and Michaels Stores) target customers who prefer to create the product themselves, whereas our customer prefers finished products.

    Discount retailers (e.g., Big Lots, Burlington and Tuesday Morning) have a home décor product offering that is typically limited, offered at deep discounts and often dependent on their ability to purchase close-out or liquidated merchandise from manufacturers.

    Home Improvement retailers (e.g., Home Depot and Lowe's) have a product offering that is primarily focused on home improvement and repair items, although we do compete with them in seasonal and outdoor products.

    Online home décor retailers (e.g., Wayfair) offer a broad selection of products in home furnishings and décor that is typically weighted toward more expensive items (typically $200 to $300 per transaction) that can justify the high shipping, returns and damage costs and overall

 

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      economics of their model. Conversely, we focus primarily on the attractive decorative accents and accessories portion of the market, generating an average basket of approximately $65, where we can employ our efficient operating model to generate attractive economics. For similar products, we believe we are able to offer comparable breadth of assortment to online retailers. In addition, according to Russell Research, while consumers may browse options online, they strongly value the opportunity to experience the look-and-feel of products in stores before they purchase them.

Recent Developments

            Preliminary Estimated Financial Results for the Thirteen Weeks Ending July 30, 2016

                As of July 25, 2016, we estimate that for the thirteen weeks ending July 30, 2016, our net sales will be in the range of $183 million to $187 million, representing an increase of 17% to 20% over $156.0 million of net sales for the thirteen weeks ended August 1, 2015. We estimate that comparable store sales for the thirteen weeks ending July 30, 2016 will range from flat to an increase of up to 0.5%. Our comparable store sales were adversely impacted by weather conditions in certain of our markets where we have higher store density during the thirteen weeks ending July 30, 2016.

                For the thirteen weeks ending July 30, 2016, we expect to report the incurrence of incremental investment in several expense items that are not comparable to the thirteen weeks ended August 1, 2015, in the range of $5 million to $6 million. These items include additional pre-opening expenses associated with an increased number of new store openings; an increase in brand advertising to support overall consumer awareness of the At Home brand; increased consulting expenses; and increased public company readiness costs. In addition, our results for the thirteen weeks ended August 1, 2015 included a $1.8 million one-time gain on the sale of a property. As a result of these factors, we anticipate that our operating income for the thirteen weeks ending July 30, 2016 will be less than our operating income for the thirteen weeks ended August 1, 2015; however, we will not be able to estimate our operating income for the thirteen weeks ending July 30, 2016 until we have substantially completed our closing procedures for the quarter.

                The thirteen weeks ending July 30, 2016 has not yet concluded and, accordingly, our results of operations for such period are not yet available. Our expected results above reflect our current estimates for such period based on information available as of the date of this prospectus. We believe that the estimated net sales and comparable store sales data are important to an investor's understanding of our performance, notwithstanding that we are not yet able to provide estimated operating income or net income data. Our estimates of results are based solely on information available to us as of the date of this prospectus and are inherently uncertain and subject to change due to a variety of business, economic and competitive risks and uncertainties, many of which are not within our control, and we undertake no obligation to update this information. Our estimates contained in this prospectus are forward looking statements. Actual results remain subject to the completion of the fiscal quarter on July 30, 2016, the completion of management's and the audit committee's final reviews and our other quarterly financial closing procedures and the completion of the preparation of our interim consolidated financial statements. Our actual consolidated financial statements and related notes as of and for the thirteen weeks ending July 30, 2016 are not expected to be filed with the SEC until after this offering is completed. During the course of the preparation of these actual consolidated financial statements and related notes, additional items that may require material adjustments to the preliminary estimated financial results presented above could be identified. See "Risk Factors—Risks Relating to Our Business" and "Cautionary Note Regarding Forward-Looking Statements".

                The preliminary financial data included in this prospectus have been prepared by and are the responsibility of our management. Our independent accountant, Ernst & Young LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary financial data. Accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect thereto.

 

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            Pending Sale Leaseback Transaction

                We are currently in negotiations to enter into a sale-leaseback transaction covering several of our properties. If this transaction is completed, we estimate that net proceeds to us will be approximately $28 million, net of closing costs and $3.7 million in mortgage debt extinguishment. We currently expect to complete this transaction within the next 30 days; however, we have not entered into any binding agreement with respect to this transaction and there can be no assurance that we will complete this transaction with respect to any or all of the subject properties on the terms currently contemplated or at all.

            ABL Facility Amendment

                In June 2016, we amended our ABL Facility to exercise the $75.0 million accordion feature of the ABL Facility, which increased the aggregate revolving commitments from $140.0 million to $215.0 million and increased the sublimit for the issuance of letters of credit from $10.0 million to $25.0 million. The other terms of the ABL Facility remain unchanged.

Our Sponsors

                We were acquired by our Sponsors in 2011 pursuant to a stock purchase agreement with our former equity holders. Upon completion of this offering, our Sponsors will collectively own approximately 85% of our shares of common stock. See "—Organizational Structure" and "Principal Stockholders".

            AEA

                AEA is one of the most experienced global private investment firms. Founded in 1968, AEA currently manages over $10 billion of capital for an investor group that includes former and current chief executive officers of major multinational corporations, family groups, and institutional investors from around the world. With a staff of approximately 70 investment professionals and offices in New York, Stamford, London, Munich and Shanghai, AEA focuses on investing in companies in the consumer products/retail, industrial products, specialty chemicals and related services sectors.

                In addition to At Home, representative current and former consumer/retail portfolio companies include 1-800 Contacts, 24 Hour Fitness, ThreeSixty Group, Brand Networks, Shoes for Crews, Acosta Sales & Marketing, Burt's Bees, Tampico Beverages and Graco Children's Products.

            Starr Investments

                Starr Investments is a multi-billion dollar New York-based investment adviser that leverages the Starr Companies' unique duration-agnostic capital together with that of select institutions and family offices. Starr Investments invests in privately-held technology-enabled services businesses with strong market positions in industries such as healthcare, financial services and consumer. Starr Investments partners with world class management teams, supporting them with flexible capital and strategic resources that enable their companies to achieve their full potential.

Summary Risk Factors

                We are subject to a number of risks, including risks that may prevent us from achieving our business objectives or that may adversely affect our business, financial condition, results of operations, cash flows and prospects. You should carefully consider the risks discussed in the section entitled "Risk Factors", including the following risks, before investing in our common stock:

    general economic factors may materially adversely affect our business, revenue and profitability;

    consumer spending on home décor products could decrease or be displaced by spending on other activities as driven by a number of factors;

    failure to successfully implement our growth strategy on a timely basis or at all, which could harm our growth and results of operations;

 

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    failure to manage our inventory effectively and inability to satisfy changing consumer demands and preferences, which could materially adversely impact our operations; and

    the loss of, or disruption in, or our inability to efficiently operate our distribution network could have a materially adverse impact on our business.

Implications of Being an Emerging Growth Company

                As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:

    we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act");

    we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the "PCAOB") regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

    we are not required to submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay", "say-on-frequency" and "say-on-golden parachutes"; and

    we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

                We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our common stock held by non-affiliates or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. As a result of any such election, the information that we provide stockholders may be different than you might get from other public companies.

                The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to irrevocably "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted.

Our Corporate Information

                At Home Group Inc. was incorporated as a Delaware corporation on June 30, 2011 under the name GRD Holding I Corporation. Our principal executive office is located at 1600 East Plano Parkway, Plano, Texas 75074 and our telephone number at that address is (972) 265-6227. We maintain a website on the Internet at www.athome.com. The information contained on, or that can be accessed through, our website is not a part of, and should not be considered as being incorporated by reference into, this prospectus. For a chart illustrating our organizational structure, see "—Organizational Structure".

 

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Organizational Structure

                The chart below summarizes our ownership and corporate structure after giving effect to this offering, assuming no exercise of the underwriters' option to purchase additional shares.

GRAPHIC

 

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The Offering

Common stock offered by us

  8,667,000 shares.

Common stock to be outstanding
after this offering

  59,503,727 shares.

Option to purchase additional shares

  The underwriters have an option to purchase up to an aggregate of 1,300,050 additional shares of common stock from us, to cover any over-allotments. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Use of proceeds

  We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses, will be approximately $115.8 million, assuming the shares are offered at $15.00 per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use the net proceeds from this offering to repay indebtedness under the Second Lien Facility. To the extent that the underwriters do not exercise their option to purchase additional shares, we intend to use borrowings under the ABL Facility to repay the remaining principal amount of the Second Lien Facility. We expect to use cash to pay any accrued and unpaid interest and premium on the outstanding principal amount of the Second Lien Facility. To the extent any proceeds from this offering remain after the repayment in full of our Second Lien Facility, including any accrued and unpaid interest and premium thereon, we intend to use such remaining proceeds for general corporate purposes. See "Use of Proceeds".

Dividend policy

  We do not expect to pay any dividends on our common stock for the foreseeable future. See "Dividend Policy".

New York Stock Exchange symbol

  "HOME".

LOYAL3 platform

  At our request, the underwriters have reserved for sale, at the initial public offering price, up to 5% of the shares of common stock offered hereby to our directors, officers, employees, customers, certain business and other associates of ours and individual investors through the LOYAL3 platform. See "Underwriting".

Controlled company

  Following this offering, we will be a "controlled company" within the meaning of the corporate governance rules of the New York Stock Exchange.

Risk factors

  Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 24 of this prospectus for a discussion of factors you should carefully consider before investing in our common stock.

 

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                The number of shares of common stock to be outstanding after this offering excludes:

      5,620,199 shares of common stock issuable upon the exercise of options outstanding under our 2012 Option Plan as of April 30, 2016 at a weighted average exercise price of approximately $10.18 per share;

      2,478,702 shares of common stock issuable upon the exercise of options to be granted in connection with this offering under our 2016 Equity Plan, our new omnibus incentive plan, and 28,311 shares of common stock issuable upon the exercise of options to be granted in connection with this offering under our 2012 Option Plan, each at an exercise price equal to the initial public offering price; and

      3,718,053 shares of common stock reserved for future issuance under our 2016 Equity Plan.

                Pro forma diluted weighted average shares outstanding for the thirteen weeks ended April 30, 2016 as calculated under the treasury stock method include the dilutive effect of 1,770,767 options outstanding under our 2012 Option Plan. Options to be granted in connection with this offering under our 2012 Option Plan and our 2016 Equity Plan would be anti-dilutive on the date of grant. See note 7 to the pro forma statement of operations data included under "—Summary Consolidated Financial and Operating Data".

                Unless otherwise indicated, all information contained in this prospectus:

      assumes an initial public offering price of $15.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus;

      assumes the underwriters' option to purchase additional shares will not be exercised;

      gives effect to the 128.157393-for-one stock split effected on July 22, 2016; and

      gives effect to our amended and restated certificate of incorporation and our amended and restated bylaws.

 

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Summary Consolidated Financial and Operating Data

                Our summary consolidated statements of operations, cash flow and balance sheet data presented below as of January 31, 2015 and January 30, 2016 and for each of the three fiscal years in the period ended January 30, 2016 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our summary consolidated balance sheet data as of January 25, 2014 has been derived from our audited consolidated financial statements not included in this prospectus. Our summary condensed consolidated statements of operations, cash flow and balance sheet data presented below as of and for the thirteen weeks ended May 2, 2015 and April 30, 2016 has been derived from the unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements were prepared on a basis consistent with that used in preparing our audited consolidated financial statements and include all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of our financial position and results of operations for the unaudited periods.

                Our summary consolidated financial information presented below for the last twelve months ended April 30, 2016 has been derived by adding our financial information for the fiscal year ended January 30, 2016 to the financial information for the thirteen weeks ended April 30, 2016, and then subtracting the financial information for the thirteen weeks ended May 2, 2015. We believe that the presentation of financial information for the last twelve months ended April 30, 2016 is useful to investors because it presents information about how our business has performed in the twelve month period immediately preceding the date of our most recent interim financial statements, which allows investors to review our performance trends over a period consisting of our four most recent consecutive fiscal quarters, reflecting, to the extent possible, the impact of our recent expansion, while compensating for any seasonal factors that might impact results in any particular quarter.

                The historical results presented below are not necessarily indicative of the results to be expected for any future period. The summary consolidated financial and operating data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  Fiscal Year Ended   Thirteen Weeks Ended   Twelve Months
Ended
 
 
  January 25,
2014
  January 31,
2015
  January 30,
2016
  May 2,
2015
  April 30,
2016
  April 30,
2016
 
 
  (in thousands)
 

Statement of Operations Data:

                                     

Net sales

  $ 403,966   $ 497,733   $ 622,161   $ 141,217   $ 172,079   $ 653,023  

Cost of sales

    272,021     335,617     421,750     93,912     113,773     441,611  

Gross profit

    131,945     162,116     200,411     47,305     58,306     211,412  

Operating expenses

                                     

Selling, general and administrative expenses

    74,255     110,503     135,716     29,941     37,444     143,219  

Impairment of trade name

    37,500                      

Depreciation and amortization

    1,262     5,310     2,476     466     892     2,902  

Total operating expenses

    113,017     115,813     138,192     30,407     38,336     146,121  

Operating income

    18,928     46,303     62,219     16,898     19,970     65,291  

Interest expense, net

    41,152     42,382     36,759     10,806     8,193     34,146  

Loss on extinguishment of debt

            36,046             36,046  

(Loss) income before income taxes

    (22,224 )   3,921     (10,586 )   6,092     11,777     (4,901 )

Income tax provision (benefit)

    59     4,357     (14,160 )   4,324     4,451     (14,033 )

Net (loss) income

  $ (22,283 ) $ (436 ) $ 3,574   $ 1,768   $ 7,326   $ 9,132  

 

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  Fiscal Year Ended   Thirteen Weeks Ended   Twelve Months Ended  
 
  January 25, 2014   January 31, 2015   January 30, 2016   May 2,
2015
  April 30,
2016
  April 30,
2016
 
 
  (dollars in thousands, except per share data)
 

Per Share Data:

                                     

Net (loss) income per common share:

                                     

Basic

  $ (0.44 ) $ (0.01 ) $ 0.07   $ 0.03   $ 0.14   $ 0.18  

Diluted

  $ (0.44 ) $ (0.01 ) $ 0.07   $ 0.03   $ 0.14   $ 0.17  

Weighted average shares outstanding:

                                     

Basic

    50,836,727     50,836,727     50,836,727     50,836,727     50,836,727     50,836,727  

Diluted

    50,836,727     50,836,727     51,732,752     52,705,000     52,607,494     52,607,494  

Cash Flow Data:

   
 
   
 
   
 
   
 
   
 
   
 
 

Net cash provided by (used in) operating activities

  $ 35,695   $ 15,321   $ 14,913   $ (971 ) $ 25,840   $ 41,724  

Net cash used in investing activities          

    (30,310 )   (100,098 )   (39,727 )   (264 )   (30,418 )   (69,881 )

Net cash (used in) provided by financing activities

    (4,032 )   84,512     25,536     3,936     8,059     29,659  

Net increase (decrease) in cash and cash equivalents

    1,353     (265 )   722     2,701     3,481     1,502  

Balance Sheet Data (as of end of period):

   
 
   
 
   
 
   
 
   
 
   
 
 

Cash and cash equivalents

  $ 4,971   $ 4,706   $ 5,428   $ 7,407   $ 8,909   $ 8,909  

Inventories, net

    109,125     142,256     176,388     146,073     175,472     175,472  

Property and equipment, net

    111,786     220,084     272,776     231,775     296,649     296,649  

Net working capital(1)(2)

    43,844     59,280     95,839     69,351     87,638     87,638  

Total assets(2)

    824,742     968,315     1,054,810     972,649     1,081,399     1,081,399  

Total debt(2)(3)

    372,351     445,661     515,136     449,972     523,667     523,667  

Total shareholders' equity

    357,101     360,916     369,153     363,794     377,640     377,640  

Other Financial and Operating Data:

   
 
   
 
   
 
   
 
   
 
   
 
 

Total stores at end of period

    68     81     100     86     106     106  

New stores opened(4)

    10     16     20     5     6     21  

Comparable store sales

    (0.4 )%   8.3 %   3.9 %   3.8 %   1.9 %   3.4 %

Store-level Adjusted EBITDA(5)

  $ 112,945   $ 133,122   $ 168,573   $ 41,466   $ 49,256   $ 176,363  

Store-level Adjusted EBITDA margin(5)

    28.0 %   26.7 %   27.1 %   29.4 %   28.6 %   27.0 %

Adjusted EBITDA(5)

  $ 86,968   $ 95,552   $ 115,270   $ 29,399   $ 33,962   $ 119,833  

Adjusted EBITDA margin(5)

    21.5 %   19.2 %   18.5 %   20.8 %   19.7 %   18.4 %

 

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  Fiscal Year Ended
January 30, 2016
  Thirteen Weeks
Ended
April 30, 2016
 
 
  (in thousands, except share and per share data)
 

Pro Forma Statement of Operations Data:

             

Pro forma net income(6)

  $ 15,976   $ 9,937  

Pro forma weighted average shares outstanding(7)

             

Basic

    59,503,727     59,503,727  

Diluted

    60,399,752     61,274,494  

Pro forma net income per share(6)(7)

             

Basic

  $ 0.27   $ 0.17  

Diluted

  $ 0.26   $ 0.16  

(1)
Net working capital is defined as current assets (excluding cash and cash equivalents) less current liabilities (excluding the current portion of long-term debt and revolving line of credit).

(2)
On January 30, 2016, we elected to early adopt Accounting Standards Update ("ASU") No. 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which changes the presentation of unamortized debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the carrying value of the debt, similar to the presentation of debt discounts. We applied the new guidance retrospectively to all prior periods presented to conform to our fiscal year 2016 and first quarter of fiscal year 2017 presentation. As a result, $8.4 million, $7.5 million and $7.5 million of unamortized deferred debt issuance costs related to our long-term debt as of January 25, 2014, January 31, 2015 and May 2, 2015, respectively, were reclassified from debt issuance costs to the associated long-term debt in our consolidated balance sheet data. For more information, see Note 1 to our consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus. The impact of the adoption of ASU 2015-03 has been excluded from this presentation of total debt; accordingly, amounts shown for total debt exclude unamortized debt issuance costs of $8.4 million, $7.5 million, $12.7 million, $7.5 million and $12.3 million as of January 25, 2014, January 31, 2015, January 30, 2016, May 2, 2015 and April 30, 2016, respectively, which were included as a direct reduction of long-term debt in the consolidated balance sheets included elsewhere in this prospectus.


In addition, on January 30, 2016, we elected to early adopt ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"). ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. We applied the new guidance retrospectively to all prior periods presented to conform to our fiscal year 2016 and first quarter of fiscal year 2017 presentation. Accordingly, current deferred tax assets and noncurrent deferred tax liabilities in the net amount of $0.4 million, $2.4 million and $2.6 million as of January 25, 2014, January 31, 2015 and May 2, 2015, respectively, have been classified as noncurrent deferred tax assets in our consolidated balance sheet data. For more information, see Note 1 to our consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus.

(3)
Total debt consists of the current and long-term portions of the Senior Secured Notes, the First Lien Facility, the Second Lien Facility and mortgage loans, as well as outstanding borrowings under the ABL Facility, as applicable, in each case before giving effect to any deduction of unamortized debt issuance costs, as described in note 2 above. The current portion of long-term debt, per our consolidated balance sheets as of January 30, 2016 and April 30, 2016 included elsewhere in this prospectus, includes $0.5 million and $0.6 million, respectively, for the current portion of financing obligations that has been excluded from this presentation of total debt. Amounts shown for total

 

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    debt also exclude an accrued exit fee relating to the Second Lien Facility in the amount of $0.8 million and $1.1 million as of January 30, 2016 and April 30, 2016, respectively.

(4)
Represents new stores opened during each period presented, including relocations of existing stores as follows: zero during the fiscal year ended January 25, 2014; two during the fiscal year ended January 31, 2015; zero during the fiscal year ended January 30, 2016; zero during each of the thirteen weeks ended May 2, 2015 and April 30, 2016; and zero for the last twelve months ended April 30, 2016.

(5)
We present Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin, which are not recognized financial measures under GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as interest, depreciation, amortization, loss on extinguishment of debt and taxes, as well as costs related to new store openings, which are incurred on a limited basis with respect to any particular store when opened and are not indicative of ongoing core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Store-level Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA. In particular, Store-level Adjusted EBITDA does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA. Our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Store-level Adjusted EBITDA following this offering, and any such modification may be material. In addition, Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin may not be comparable to similarly titled measures used by other companies in our industry or across different industries.


Management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA in connection with performance evaluations for our executives; to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and to compare our performance against that of other peer companies using similar measures. In addition, we utilize Adjusted EBITDA in certain calculations under our ABL Facility (defined therein as "Consolidated EBITDA") and our Term Loan Facilities (defined therein as "Consolidated Cash EBITDA"). Management believes Store-level Adjusted EBITDA is helpful in highlighting trends because it facilitates comparisons of store operating performance from period to period by excluding the impact of certain corporate overhead expenses, such as certain costs associated with management, finance, accounting, legal and other central corporate functions.


We also include information concerning Adjusted EBITDA margin, which is calculated as Adjusted EBITDA divided by net sales. We present Adjusted EBITDA margin because it is used by management as a performance measure to judge the level of Adjusted EBITDA that is generated from net sales. In addition, we include information concerning Store-level Adjusted EBITDA margin, which is calculated as Store-level Adjusted EBITDA divided by net sales. We present Store-level Adjusted EBITDA margin because it is used by management as a performance measure to judge the level of Store-level Adjusted EBITDA that is generated from net sales.

 

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Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin have their limitations as analytical tools and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:

    Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin do not reflect every expenditure, future requirements for capital expenditures or contractual commitments;

    Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect changes in our working capital needs;

    Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect the significant interest expense, or the amounts necessary to service interest or principal payments, on our outstanding debt;

    Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect income tax expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate;

    Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect expenditures associated with new store openings;

    Store-level Adjusted EBITDA does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores;

    although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA and Store-level Adjusted EBITDA, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect any costs of such replacements;

    non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; and

    Adjusted EBITDA and Store-level Adjusted EBITDA do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations.


We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin only as supplemental information.

 

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The following is a reconciliation of our net (loss) income to EBITDA (excluding loss on extinguishment of debt), Adjusted EBITDA and Store-level Adjusted EBITDA:

 
  Fiscal Year Ended   Thirteen Weeks Ended   Twelve Months
Ended
 
 
  January 26,
2013
  January 25,
2014
  January 31,
2015
  January 30,
2016
  May 2,
2015
  April 30,
2016
  April 30,
2016
 
 
  (in thousands)
 

Net (loss) income

  $ (9,749 ) $ (22,283 ) $ (436 ) $ 3,574   $ 1,768   $ 7,326   $ 9,132  

Interest expense, net

    39,837     41,152     42,382     36,759     10,806     8,193     34,146  

Loss on extinguishment of debt

    20,744             36,046             36,046  

Income tax (benefit) provision

    (1,558 )   59     4,357     (14,160 )   4,324     4,451     (14,033 )

Depreciation and amortization(a)

    12,912     13,132     23,317     28,694     6,175     8,006     30,525  

EBITDA

  $ 62,186   $ 32,060   $ 69,620   $ 90,913   $ 23,073   $ 27,976   $ 95,816  

Legal settlements and consulting and other professional services(b)

    3,609     2,874     4,633     3,506     978     567     3,095  

Costs associated with new store openings(c)

    1,070     2,023     6,848     9,801     2,028     2,522     10,295  

Relocation and employee recruiting costs(d)

    321     4,442     2,928     724     167     87     644  

Management fees and expenses(e)

    3,805     3,690     3,596     3,612     887     901     3,626  

Stock-based compensation expense(f)

    292     4,373     4,251     4,663     1,109     1,162     4,716  

Impairment of trade name(g)

        37,500                      

Non-cash rent(h)

    1,730     1,367     1,795     2,398     214     747     2,931  

Other(i)

    8,567     (1,361 )   1,881     (347 )   943         (1,290 )

Adjusted EBITDA

  $ 81,580   $ 86,968   $ 95,552   $ 115,270   $ 29,399   $ 33,962   $ 119,833  

Corporate overhead expenses(j)

    14,146     25,977     37,570     53,303     12,067     15,294     56,530  

Store-level Adjusted EBITDA

  $ 95,726   $ 112,945   $ 133,122   $ 168,573   $ 41,466   $ 49,256   $ 176,363  

(a)
Includes the portion of depreciation and amortization expenses that are classified as cost of sales in the statements of operations included elsewhere in this prospectus.

(b)
Primarily consists of (i) consulting and other professional fees with respect to completed projects to enhance our accounting and finance capabilities, as well as other public company readiness initiatives, of $3.1 million, $2.2 million, $2.8 million and $3.5 million for fiscal years 2013, 2014, 2015 and 2016, respectively; $1.0 million and $0.6 million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively; and $3.1 million for the twelve months ended April 30, 2016 and (ii) litigation settlement charges and related legal fees for certain pre-Acquisition claims and legal costs for other matters that have concluded in the

 

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    amounts of $0.5 million, $0.7 million and $1.8 million for fiscal years 2013, 2014 and 2015, respectively, and adjustments related to such items for the other periods presented were not material.

(c)
Non-capital expenditures associated with opening new stores, including marketing and advertising, labor and cash occupancy expenses. We anticipate that we will continue to incur cash costs as we open new stores in the future. We opened seven, ten, 16 and 20 new stores in fiscal years 2013, 2014, 2015 and 2016, respectively; five and six new stores during the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively; and 21 new stores during the twelve months ended April 30, 2016.

(d)
Primarily reflects (i) relocation expenses associated with moving our corporate headquarters from Houston, Texas, to Plano, Texas, late in fiscal year 2014 and related relocation bonuses and (ii) employee recruiting and relocation costs incurred in connection with the build-out of our management team. Corporate relocation expenses were $3.2 million for fiscal year 2014 and $2.1 million for fiscal year 2015. There were no adjustments related to corporate relocation costs for the other periods presented. Employee recruiting and relocation costs were $0.3 million, $1.2 million, $0.8 million and $0.7 million for fiscal years 2013, 2014, 2015 and 2016, respectively; $0.2 million and $0.1 million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively; and $0.6 million for the twelve months ended April 30, 2016.

(e)
Reflects management fees paid to our Sponsors in accordance with our management agreement. In connection with this offering, the management agreement will be terminated and our Sponsors will no longer receive management fees from us.

(f)
Consists of non-cash stock-based compensation expense related to stock option awards.

(g)
Reflects the impairment of the Garden Ridge trade name as a result of our rebranding initiative.

(h)
Consists of the non-cash portion of rent, which reflects (i) the extent to which our GAAP straight-line rent expense recognized exceeds or is less than our cash rent payments, partially offset by (ii) the amortization of deferred gains on sale-leaseback transactions that are recognized to rent expense on a straight-line basis through the applicable lease term. The offsetting amounts relating to the amortization of deferred gains on sale-leaseback transactions were $(0.3) million, $(1.8) million and $(3.2) million for fiscal years 2014, 2015 and 2016, respectively; $(0.7) million and $(1.0) million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively; and $(3.4) million for the twelve months ended April 30, 2016. There were no adjustments related to the amortization of deferred gains on sale-leaseback transactions for the other periods presented. The GAAP straight-line rent expense adjustment can vary depending on the average age of our lease portfolio, which has been impacted by our significant growth over the last four fiscal years. For newer leases, our rent expense recognized typically exceeds our cash rent payments while for more mature leases, rent expense recognized is typically less than our cash rent payments.

(i)
Other adjustments include amounts our management believes are not representative of our ongoing operations, including:

for fiscal year 2013, a $5.6 million exit payment to former management;

for fiscal year 2014, an insurance reimbursement of $(1.6) million and a prior year audit refund of $(0.5) million;

 

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    for fiscal year 2015, asset retirements related to our rebranding of $0.6 million and $0.4 million for a store relocation; and

    for fiscal year 2016, gain on the sale of our property in Houston, Texas of $(1.8) million and $(0.3) million related to various refunds for prior period taxes and audits, slightly offset by $0.5 million in expenses incurred for a store closure.

(j)
Reflects corporate overhead expenses, which are not directly related to the profitability of our stores, to facilitate comparisons of store operating performance as we do not consider these corporate overhead expenses when evaluating the ongoing performance of our stores from period to period. Corporate overhead expenses, which are a component of selling, general and administrative expenses, are comprised of various home office general and administrative expenses such as payroll expenses, occupancy costs, marketing and advertising, and consulting and professional fees. Store-level Adjusted EBITDA should not be used as a substitute for consolidated measures of profitability or performance because it does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA. We anticipate that we will continue to incur corporate overhead expenses in future periods.
(6)
For the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, amounts are shown pro forma to give effect to the following transactions as if they had occurred as of the beginning of the periods presented: (i) this offering, (ii) the repayment of indebtedness from the proceeds of this offering as described in "Use of Proceeds" and (iii) each of the related adjustments mentioned below. Amounts for the fiscal year ended January 30, 2016 are also shown pro forma to give effect to the June 2015 Refinancing as if it had occurred as of the beginning of the period presented.


Adjustments to net income for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016 reflect (i) a $17.0 million and $3.3 million decrease in interest expense, respectively (see the reconciliation of historical interest expense to pro forma interest expense below), (ii) an $8.2 million and $1.6 million increase in income tax expense, respectively, due to higher income before taxes relating to our pro forma net income and (iii) the removal of $3.6 million and $0.9 million of the Sponsors' management fees, respectively.

    The following is a reconciliation of historical net income to pro forma net income for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016:

 
  Fiscal Year Ended
January 30, 2016
  Thirteen Weeks
Ended
April 30, 2016
 
 
  (in thousands)
 

Net income

  $ 3,574   $ 7,326  

Decrease in interest expense, net(a)

    16,989     3,297  

Increase in income tax expense(b)

    (8,199 )   (1,587 )

Removal of management fee(c)

    3,612     901  

Pro forma net income(d)

  $ 15,976   $ 9,937  

(a)
See the reconciliation of historical interest expense to pro forma interest expense below.

(b)
Reflects an increase in income tax expense for the related tax effects of the pro forma adjustments. For the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, the tax impact is based upon an increase of pro forma income before taxes of $20.6 million and $4.2 million, respectively, and an effective tax rate of 39.8% and 37.8%, respectively.

 

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(c)
Reflects the removal of management fees payable to the Sponsors. In connection with this offering, the management agreement will be terminated. See "Certain Relationships and Related Party Transactions".

(d)
For the fiscal year ended January 30, 2016, we recognized a loss on extinguishment of debt in the amount of approximately $36.0 million in connection with the redemption of the Senior Secured Notes in June 2015. Pro forma net income excludes any adjustments related to loss on extinguishment of debt that may result from this offering.

    The following is a reconciliation of historical interest expense to pro forma interest expense for the fiscal year ended January 30, 2016 and thirteen weeks ended April 30, 2016.

 
  Fiscal Year Ended
January 30,
2016
  Thirteen Weeks
Ended
April 30, 2016
 
 
  (in thousands)
 

Interest expense, net

  $ 36,759   $ 8,193  

Decrease resulting from the June 2015 Refinancing(a)

    (3,868 )    

Decrease resulting from use of proceeds of this offering(b)

    (13,404 )   (3,368 )

Increase resulting from the use of ABL borrowings(c)

    283     71  

Pro forma interest expense, net

  $ 19,770   $ 4,896  

(a)
For the fiscal year ended January 30, 2016, reflects redemption in full of the Senior Secured Notes with the proceeds of the Term Loan Facilities.

(b)
Assumes repayment of indebtedness under the Second Lien Facility, which bears interest at a rate of 9.0% per annum, using the proceeds of this offering, as if it had occurred as of the beginning of the periods presented.

(c)
Assumes that the underwriters do not exercise their option to purchase additional shares and, as a result, net proceeds to us from this offering are insufficient to repay the borrowings outstanding under the Second Lien Facility in full, in which case we intend to use borrowings under the ABL Facility to repay the remaining $14.2 million in outstanding principal. We expect to use cash to pay any accrued and unpaid interest and premium on the outstanding principal amount of the Second Lien Facility. The effective interest rate on the ABL Facility was approximately 2.00% for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016.
(7)
Gives effect to (i) the 128.157393-for-one stock split effected on July 22, 2016 and (ii) the 8,667,000 shares of our common stock to be issued by us in this offering. Pro forma basic net income per share consists of pro forma net income divided by the pro forma basic weighted average common shares outstanding. Pro forma diluted net income per share consists of pro forma net income divided by the pro forma diluted weighted average shares outstanding. Pro forma diluted weighted average shares outstanding include the dilutive effect of 896,025 and 1,770,767 options outstanding under our 2012 Option Plan for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, respectively. Options to be granted in connection with this offering under our 2012 Option Plan and our 2016 Equity Plan would be anti-dilutive on the date of grant.

 

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RISK FACTORS

                You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks or uncertainties. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business

                 General economic factors may materially adversely affect our business, revenue and profitability.

                General conditions in the United States and global economy that are beyond our control may materially adversely affect our business and financial performance. As a retailer that is dependent upon consumer discretionary spending for home décor products, our customers may allocate less money for discretionary purchases as a result of increased levels of unemployment, reduced consumer disposable income, higher interest rates, higher fuel and other energy costs, higher tax rates and other changes in tax laws, foreclosures, bankruptcies, falling home prices, reduced availability of consumer credit, higher consumer debt levels, a decline in consumer confidence, inflation, deflation, recession, an overall economic slowdown and other factors that influence consumer spending. Any reduced demand for the merchandise that we sell could result in a significant decline in customer traffic and sales and decreased inventory turnover. Therefore, if economic conditions worsen, there may be a material adverse impact on our business, revenue and profitability.

                In addition, our costs and expenses could be materially adversely impacted by general economic factors such as higher interest rates, higher fuel and other energy costs, higher transportation costs, higher commodity costs, higher costs of labor, insurance and healthcare, increased rental expense, inflation in other costs, higher tax rates and other changes in the tax law and changes in other laws and regulations. The economic factors that affect our operations also affect the operations and economic viability of our suppliers from whom we purchase goods, a factor that can result in an increase in the cost to us of merchandise we sell to our customers.

                 Volatility or disruption in the financial markets could materially adversely affect our business and the trading price of our common stock.

                We rely on stable and efficient financial markets. Any disruption in the credit and capital markets could adversely impact our ability to obtain financing on acceptable terms. Volatility in the financial markets could also result in difficulties for financial institutions and other parties that we do business with, which could potentially affect our ability to access financing under our existing arrangements. We are exposed to the impact of any global or domestic economic disruption, including any potential impact of the recent vote by the United Kingdom to exit the European Union, commonly referred to as "Brexit". Although we generally generate funds from our operations and our existing credit facilities to pay our operating expenses and fund our capital expenditures, our ability to continue to meet these cash requirements over the long term may require access to additional sources of funds, including equity and debt capital markets, and market volatility and general economic conditions may adversely affect our ability to access capital markets. In addition, the inability of our vendors to access capital and liquidity with which to maintain their inventory, production levels and product quality and to operate their businesses, or the insolvency of our vendors, could lead to their failure to deliver merchandise. If we are unable to purchase products when needed, our sales could be materially adversely impacted. Accordingly, volatility or disruption in the financial markets could impair our ability to execute our growth strategy and could have a material adverse effect on the trading price of our common stock.

                 Consumer spending on home décor products could decrease or be displaced by spending on other activities as driven by a number of factors.

                Consumer spending on home décor products could decrease or be displaced by spending on other activities as driven by a number of factors including:

      shifts in behavior away from home decorating in favor of other products or activities, such as fashion, media or electronics;

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      general economic conditions and other factors that affect consumer discretionary spending;

      natural disasters, including hurricanes, tornadoes, floods, droughts, heavy snow, ice or rain storms, which disrupt the ability of consumers to continue spending on home décor products;

      man-made disasters, such as terrorism or war, as well as other national and international security concerns; and

      other matters that influence consumer confidence and spending.

                Total consumer spending may not continue to increase at historical rates due to slowed population growth and shifts in population demographics, and it may not increase in certain product markets given changes in consumer interests. Further, as we expand into new markets, we may not accurately predict consumer preferences in that market, which could result in lower than expected sales. If consumer spending on home décor products decline, our results of operations could be materially adversely affected.

                 We may not be able to successfully implement our growth strategy on a timely basis or at all, which could harm our growth and results of operations.

                Our growth is dependent on our ability to open profitable new stores. Our ability to increase the number of our stores will depend in part on the availability of existing big box retail stores or store sites that meet our specifications. We may face competition from other retailers for suitable locations and we may also face difficulties in negotiating leases on acceptable terms. In addition, a lack of available financing on terms acceptable to real estate developers or a tightening credit market may adversely affect the retail sites available to us. Rising real estate costs and acquisition, construction and development costs and available lease financing could also inhibit our ability to open or acquire new stores.

                Opening or acquiring stores involves certain risks, including constructing, furnishing, supplying and staffing a store in a timely and cost-effective manner and accurately assessing the demographic or retail environment for a particular location, as well as addressing any environmental issues related to such locations. We cannot predict whether new stores will be successful. Our future sales at new stores may not meet our expectations, which could adversely impact our return on investment. For example, the costs of opening and operating new stores may offset the increased sales generated by the additional stores. Therefore, there can be no assurance that our new stores will generate sales levels necessary to achieve store-level profitability or profitability comparable to that of existing stores. New stores also may face greater competition and have lower anticipated sales volumes relative to previously opened stores during their comparable years of operation. In addition, a significant portion of our management's time and energy may be consumed with issues related to store expansion and we may be unable to hire a sufficient number of qualified store personnel or successfully integrate the new stores into our business. Furthermore, our vendors may be unable to meet the increased demand of additional stores in a timely manner. We cannot guarantee that we will be able to obtain and distribute adequate merchandise to new stores or maintain adequate warehousing and distribution capability at acceptable costs.

                In addition, our expansion in new and existing markets may present competitive, distribution, merchandising and regulatory challenges that differ from our current challenges, including competition among our stores, diminished novelty of our store design and concept, added strain on our distribution center, additional information to be processed by our information technology systems and diversion of management attention from operations. New stores in new markets, where we are less familiar with the population and are less well-known, may face different or additional risks and increased costs compared to stores operating in existing markets or new stores in existing markets. For example, we may need to increase marketing and advertising expenditures in new or smaller markets in which we have less store density. Additionally, we may not accurately predict consumer preferences in new markets, which could result in lower than expected sales. Expansion into new markets could also bring us into direct

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competition with retailers with whom we have no past experience as direct competitors. To the extent that we are not able to meet these new challenges, our sales could decrease and our operating costs could increase. Furthermore, our margins may be impacted in periods in which incremental expenses are incurred as a result of new store openings. Additionally, although our distribution center currently should be able to support a store base of up to approximately 220 stores with limited incremental investment, which is over two times our current store base, any unanticipated failure of or inability to support our growing store base could have a material adverse effect on our business. Therefore, there can be no assurance that we will be successful in opening, acquiring or operating any new stores on a profitable basis.

                Accordingly, we cannot assure you that we will achieve our planned growth or, even if we are able to grow our store base as planned, that any new stores will perform as planned. If we fail to successfully implement our growth strategy, we will not be able to sustain the growth in sales and profits that we expect, which would likely have an adverse impact on the price of our common stock.

                 Failure to manage our inventory effectively and inability to satisfy changing consumer demands and preferences could materially adversely impact our operations.

                Due to the nature of our business, we make decisions regarding merchandise several months in advance of each of the seasons in which such merchandise will be sold, particularly with respect to our merchandise that is manufactured, purchased and imported from countries around the world. We must maintain sufficient inventory levels to operate our business successfully. However, if we misjudge consumer preferences or demands, we could have excess inventory that may need to be held for a long period of time, written down or discarded in order to clear excess inventory, especially seasonal and holiday merchandise. Conversely, if we underestimate consumer demand, we may not be able to provide certain products in a timely manner to our customers in order to meet their demand, which can result in lost sales. Either event could have a material adverse impact on our business, financial condition and results of operations. In addition, we recently upgraded to a new inventory planning and allocation system. If the new inventory planning and allocation system is unsuccessful, our ability to properly allocate inventory to stores could be adversely affected.

                There can be no assurance that we will be able to continue to offer assortments of products that appeal to our customers or that we will satisfy changing consumer demands and preferences in the future. Accordingly, our business, financial condition and results of operations could be materially adversely affected if:

      we miscalculate either the market for the merchandise in our stores or our customers' purchasing habits;

      consumer demand unexpectedly shifts away from the merchandise we offer or if there are unanticipated shifts in consumer preferences in some seasons; or

      we are unable to anticipate, identify and respond to changing consumer demands or emerging trends, including shifts in the popularity of certain products or increased consumer demand for more enhanced customer service and assistance, home delivery or online sales and services.

                In addition, inventory shrinkage (inventory theft, loss or damage) rates could negatively impact our financial results. Furthermore, failure to control merchandise returns could also adversely affect our business. We have established a provision for estimated merchandise returns based upon historical experience and other known factors. However, if actual returns are greater than those projected by management, additional reductions of revenue could be recorded in the future. In addition, to the extent that returned merchandise is damaged or otherwise not appealing to our customers, we may not receive full retail value from the resale or liquidation of the returned merchandise.

                Our business model currently relies on purchasing all inventory centrally through our home office in Plano, Texas. At this office, all product samples are developed and/or received and reviewed; in addition, all purchase orders are placed, fulfilled and allocated from the same location. Major

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catastrophic events such as natural disasters, localized labor issues or wages increases, fire or flooding, malfunction or disruption of the information systems, a disruption in communication services, power outages or shipping interruptions could delay or otherwise adversely affect inventory purchasing or allocation, as well as the ultimate distribution of inventory to our stores and customers. Such disruptions could have a negative impact on our sales and results of operations. Our business model of central purchasing could also fail to account for differences in consumer preferences by market. In such cases, and where our focus of providing the broadest assortment of products for any room similarly did not account for differences in consumer preferences by market, our sales and results of operations could be adversely affected.

                 The loss of, or disruption in, or our inability to efficiently operate our distribution network could have a materially adverse impact on our business.

                We operate a single cross-dock distribution center in Plano, Texas, which services all of our stores, as well as warehouse premises in Garland, Texas. The majority of our inventory is shipped directly from suppliers to our distribution center where the inventory is processed and then shipped to our stores. Only mattresses and some food items are shipped directly to stores. We rely in large part on the orderly operation of this receiving and distribution process, which depends on our automated distribution system, adherence to shipping schedules and effective management of our distribution network. If complications arise with our distribution facility or if the facility or warehouse premises (or a significant portion of inventory located there) is severely damaged or destroyed, our ability to receive and deliver inventory on a timely basis will be significantly impaired. There can be no assurance that disruptions in operations due to natural or man-made disasters, fire, flooding, terrorism or other catastrophic events, system failure, labor disagreements or shipping problems will not result in delays in the delivery of merchandise to our stores. Such delays could materially adversely impact our business. In addition, we could incur significantly higher costs and longer lead times associated with distributing merchandise to our stores during the time it takes for us to reopen or replace our distribution center. Moreover, our business interruption insurance may not be adequate to cover or compensate us for any losses that may occur. In addition, our distribution center should, with limited incremental investment, have the capacity to support up to approximately 220 stores. To the extent that we grow to larger than 220 stores, we will need to expand our current distribution center and/or add new distribution capabilities.

                We rely upon various means of transportation primarily through third parties, including shipments by air, sea, rail and truck, to deliver products to our distribution center from vendors and from our distribution center to our stores, as well as for direct shipments from vendors to stores. Labor shortages or capacity constraints in the transportation industry, disruptions to the national and international transportation infrastructure, fuel shortages or transportation cost increases (such as increases in fuel costs or port fees) could materially adversely affect our business and operating results, particularly as we receive and deliver our seasonal and holiday merchandise.

                 Adverse events could have a greater impact on us than if our operations were in more dispersed geographical regions.

                We currently operate 115 stores in 29 states, primarily in the South Central, Southeastern and Midwestern regions of the United States, including 26 stores in Texas. In addition, we operate a single distribution center and warehouse premises in Texas, which service all of our stores. Accordingly, the effect on us of adverse events in these regions, especially in Texas, such as weather (including hurricanes, tornadoes, floods, droughts, heavy snow, ice or rain storms), natural or man-made disasters, catastrophic events, terrorism, blackouts, widespread illness or unfavorable regional economic conditions, may be greater than if our operations or inventory were more geographically dispersed throughout the country or abroad. Such events could result in physical damage to or destruction or disruption of one or more of our properties, physical damage to or destruction of our inventory, the closure of one or more stores, the lack of an adequate workforce in parts or all of our operations, supply chain disruptions, data and communications disruptions and the inability of our customers to shop in our stores.

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                In addition, increases in our selling, general and administrative expenses due to overhead costs could affect our profitability more negatively than if we had a larger store base. One or more unsuccessful new stores, or a decline in sales or profitability at an existing store, will have a more significant effect on our results of operations than if we had a larger store base.

                 We are subject to a number of risks because we import a significant portion of our merchandise.

                Approximately 60% of our merchandise was directly imported from foreign countries such as China, Hong Kong, Belgium and Taiwan during fiscal year 2016. In addition, many of our domestic vendors purchase a portion of their products from foreign sources. For example, we purchase merchandise from domestic vendors that is imported from China or that is manufactured in China and assembled in the United States. Currently, we do not employ any resources on the ground in Asia to manage our procurement process and various vendor relationships. Instead, we often rely on trading companies to handle sourcing and logistics with Asian factories.

                Foreign sourcing subjects us to a number of risks generally associated with doing business abroad such as the following:

      long lead times;

      work stoppages and strikes;

      delays in shipment, shipping port and ocean carrier constraints;

      freight cost increases;

      product quality issues;

      raw material shortages and factory consolidations;

      employee rights issues and other social concerns;

      epidemics and natural disasters;

      political instability, international conflicts, war, threats of war, terrorist acts or threats, especially threats to foreign and U.S. ports and piracy;

      economic conditions, including inflation;

      the imposition of tariffs, duties, quotas, taxes, import and export controls and other trade restrictions;

      governmental policies and regulations; and

      the status of trade relations with foreign countries, including the loss of "most favored nation" status with the United States for a particular foreign country.

                If any of these or other factors were to cause disruptions or delays in supply from the countries in which our vendors or the suppliers of our vendors are located, our inventory levels may be reduced or the cost of our products may increase unless and until alternative supply arrangements could be made. Merchandise purchased from alternative sources may be of lesser quality or more expensive than the merchandise we currently purchase abroad. Any shortages of merchandise (especially seasonal and holiday merchandise), even if temporary, could result in missed opportunities, reducing our sales and profitability.

                In addition, reductions in the value of the U.S. dollar or fluctuations in the value of foreign currencies could ultimately increase the prices that we pay for our products. We have not hedged our currency risk in the past and do not currently anticipate doing so in the future. All of our products manufactured overseas and imported into the United States are subject to duties collected by the U.S. Customs Service. We may be subjected to additional tariffs, duties, quotas, taxes, significant monetary penalties and other trade sanctions, the seizure and forfeiture of the products we are attempting to import or the loss of import privileges, if we or our suppliers are found to be in violation of U.S. laws and regulations applicable to the importation of our products. To the extent that any foreign manufacturers from whom we purchase products directly or indirectly employ labor, environmental or other business practices that vary from those commonly accepted in the United States, we could be hurt by any resulting negative publicity or, in some cases, potential claims of liability.

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                Additionally, the cost of labor and wage taxes have increased in China, which means we are at risk of higher costs associated with goods manufactured in China. Significant increases in these and other costs may increase the cost of goods manufactured in China, which could have a material adverse effect on our margins and profitability.

                 Because of our international operations, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery and anti-kickback laws.

                We source over half of our products abroad. The U.S. Foreign Corrupt Practices Act and other similar laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. While our policies mandate compliance with these anti-bribery laws, we cannot assure you that we will be successful in preventing our employees or other agents from taking actions in violation of these laws or regulations. Such violations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cash flows.

                 Our rebranding may not be successful.

                During fiscal year 2015, we launched a significant rebranding initiative through which we spent over $20 million in capital and expenses to change our brand and corporate name and convert and refresh all of our stores. There is no assurance that our rebranding initiative will be successful or result in a positive return on investment. In addition, we have a limited operating history under the At Home brand.

                We believe that maintaining and enhancing our brand is integral to our business and to the implementation of our strategies for expanding our business. According to Russell Research, At Home has 21% unaided brand awareness in existing markets, 15% unaided brand awareness in newly entered markets and less than 0.5% unaided brand awareness in potential new markets. Therefore, we could be required to devote significant additional resources to advertising and marketing, which could have an adverse impact on our operations.

                 We are subject to risks associated with leasing substantial amounts of space.

                We lease certain of our retail properties, our distribution center and our corporate office. The profitability of our business is dependent on operating our current store base with favorable margins, opening and operating new stores at a reasonable profit, renewing leases for stores in desirable locations and, if necessary, identifying and closing underperforming stores. We lease a significant number of our store locations, ranging from short-term to long-term leases. Typically, a large portion of a store's operating expense is the cost associated with leasing the location.

                The operating leases for our retail properties, distribution center and corporate office expire at various dates through 2035. A number of the leases have renewal options for various periods of time at our discretion. We are typically responsible for taxes, utilities, insurance, repairs and maintenance for these retail properties. Rent expense for the fiscal years ended January 25, 2014, January 31, 2015 and January 30, 2016 totaled approximately $37.9 million, $42.9 million and $52.3 million, respectively. Our future minimum rental commitments for all operating leases in existence as of January 30, 2016 for fiscal year 2017 is approximately $58.4 million and total approximately $595.6 million for fiscal years 2018 through 2035. We expect that many of the new stores we open will also be leased to us under operating leases, which will further increase our operating lease expenditures and require significant capital expenditures. We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from borrowings under our ABL Facility or other sources, we may not be able to service our lease expenses or fund our other liquidity and capital needs, which would materially affect our business.

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                Over time current store locations may not continue to be desirable because of changes in demographics within the surrounding area or a decline in shopping traffic, including traffic generated by other nearby stores. Although we have the right to terminate some of our leases under specified conditions by making certain payments (typically within two to three years after opening a store), we may not be able to terminate a particular lease if or when we would like to do so. If we decide to close stores, we are generally required to either continue to pay rent and operating expenses for the balance of the lease term or, for certain locations, pay exercise rights to terminate, which in either case could be expensive. Even if we are able to assign or sublease vacated locations where our lease cannot be terminated, we may remain liable on the lease obligations if the assignee or sublessee does not perform.

                In addition, when leases for the stores in our ongoing operations expire, we may be unable to negotiate renewals, either on commercially acceptable terms, or at all, which could cause us to close stores in locations that may be desirable. We may be unable to relocate these stores cost-effectively or at all and there can be no assurance that any relocated stores will be successful.

                 We are subject to risks associated with our sale-leaseback strategy.

                From time to time, we engage in sale-leaseback transactions. The net proceeds from such transactions have been used to reduce outstanding debt and fund future capital expenditures for new store development. However, the sale-leaseback market may cease to be a reliable source of additional cash flows for us in the future if capitalization rates become less attractive, other unfavorable market conditions develop or the perceived value of our owned property declines. For example, should the sale-leaseback market require significantly higher yields (which may occur as interest rates rise), we may not enter into sale-leaseback transactions, which could adversely affect our ability to reduce outstanding debt and fund capital expenditures for future store development.

                 We operate in a highly competitive retail environment.

                The retail business is highly competitive. The marketplace for home décor products is highly fragmented as many different retailers compete for market share by using a variety of store formats and merchandising strategies, dedicating a portion of their selling space to a limited selection of home décor, seasonal and holiday merchandise. Although we are the only big box concept solely dedicated to the home décor space, for all of our major products we compete with a diverse group of retailers, including mass merchants (such as Target and Wal-Mart), home improvement stores (such as Home Depot and Lowe's), craft retailers (such as Hobby Lobby, Jo-Ann Stores and Michaels Stores), home specialty/décor retailers (such as Bed Bath & Beyond, The Container Store, Home Goods and Pier 1 Imports), as well as various other small, independent retailers. In addition, to a lesser extent, we compete with Internet-based retailers (such as Wayfair), which competition could intensify in the future.

                We compete with these and other retailers for customers, retail locations, management and other personnel. Some of our competitors are larger and have greater resources, more customers and greater store brand recognition. They may secure better terms from vendors, adopt more aggressive pricing and devote more resources to technology, distribution and marketing. Competitive pressures or other factors could cause us to lose customers, sales and market share, which may require us to lower prices, increase marketing and advertising expenditures or increase the use of discounting or promotional campaigns, each of which could materially adversely affect our margins and could result in a decrease in our operating results and profitability. We cannot guarantee that we will continue to be able to compete successfully against existing or future competitors. Further, although we do not currently engage in e-commerce, there is no assurance that we will not in the future, and the use of e-commerce by our competitors could have a material adverse effect on our business. Expansion into markets served by our competitors, entry of new competitors, expansion of existing competitors into our markets or the adoption by competitors of innovative store formats and retail sale methods,

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including e-commerce, could cause us to lose market share and could be detrimental to our business, financial condition and results of operations.

                 We face risks related to our substantial indebtedness.

                As of April 30, 2016, after giving effect to the application of proceeds from this offering as set forth under "Use of Proceeds", including repayment of indebtedness under the Second Lien Facility, we would have had total outstanding debt of $406.7 million. Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk associated with our variable rate debt and prevent us from meeting our obligations under our ABL Facility and Term Loan Facilities. Our substantial indebtedness could have important consequences to us, including:

      making it more difficult for us to satisfy our obligations with respect to our debt, and any failure to comply with the obligations under our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing our indebtedness increasing our vulnerability to general economic and industry conditions;

      requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our debt, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, selling and marketing efforts, product development, future business opportunities and other purposes;

      exposing us to the risk of increased interest rates as substantially all of our borrowings are at variable rates;

      restricting us from making strategic acquisitions;

      limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and

      limiting our ability to plan for, or adjust to, changing market conditions and placing us at a competitive disadvantage compared to our competitors who may be less highly leveraged.

                The occurrence of any one of these events could have an adverse effect on our business, financial condition, results of operations, and ability to satisfy our obligations under our indebtedness.

                We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the credit agreements governing our ABL Facility and Term Loan Facilities.

                 The ABL Facility and Term Loan Facilities impose significant operating and financial restrictions on us and our subsidiaries that may prevent us from pursuing certain business opportunities and restrict our ability to operate our business.

                The credit agreements governing our ABL Facility and Term Loan Facilities contain covenants that restrict our and our subsidiaries' ability to take various actions, such as:

      incur or guarantee additional indebtedness or issue certain disqualified or preferred stock;

      pay dividends or make other distributions on, or redeem or purchase, any equity interests or make other restricted payments;

      make certain acquisitions or investments;

      create or incur liens;

      transfer or sell assets;

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      incur restrictions on the payments of dividends or other distributions from our restricted subsidiaries;

      alter the business that we conduct;

      enter into transactions with affiliates; and

      consummate a merger or consolidation or sell, assign, transfer, lease or otherwise dispose of all or substantially all of our assets.

                The restrictions in the credit agreements governing our ABL Facility and Term Loan Facilities also limit our ability to plan for or react to market conditions, meet capital needs or otherwise restrict our activities or business plans and adversely affect our ability to finance our operations, enter into acquisitions or to engage in other business activities that could be in our interest.

                In addition, our ability to borrow under the ABL Facility is limited by the amount of our borrowing base. Any negative impact on the elements of our borrowing base, such as accounts receivable and inventory could reduce our borrowing capacity under the ABL Facility.

                 We are dependent upon the services of our senior management and our buyers.

                We are dependent on the services, abilities and experiences of our senior management team. Any loss or interruption of the services of our senior management, or any general instability in the composition of our senior management team, could significantly reduce our ability to effectively manage our operations. Lee Bird, our Chief Executive Officer, joined us in December 2012 and, together with our senior management team, has played an instrumental role in developing and executing our business and operating strategies, which we believe are critical to our ability to maintain strong margins. Therefore, the loss of Mr. Bird's services, or any members of our senior management, could have a material adverse impact on our business, operating results and profitability and there can be no assurance that we will be able to find appropriate replacements for our senior management as needed. In addition, certain members of our management team are relatively new to our business and have not worked as a team with other members of management for a significant period of time. Therefore, there can be no assurance that any new members of our management team will be able to successfully execute our business and operating strategies or continue to follow the same strategies.

                In addition, a number of our buyers have been with us for many years and have developed a deep understanding of our business and our customers. The market for buyers is highly competitive and it may be difficult to find suitable replacements if we lose any of our buyers. If we are unable to find suitable replacements, we may experience difficulties in selecting and sourcing merchandise, which could materially adversely impact our business, revenue and profitability.

                 Failure to attract and retain quality employees could materially adversely affect our performance.

                Our performance depends on attracting and retaining quality people at all levels, including corporate, stores, the distribution center and other areas. Many of our store employees are in entry level or part-time positions with historically high rates of turnover. Our ability to meet our labor needs while controlling labor costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation, changing demographics, health and other insurance costs and governmental labor and employment requirements. In the event of changes in the federal or state minimum wage, living wage requirements or changes in other wage or workplace regulations, including, for example, health care or employee leave regulations, if our overall compensation and benefits fail to remain competitive, then the quality of our workforce could decline, while increasing our costs could impair our profitability. If we do not continue to attract and retain quality employees, our performance could be materially adversely affected.

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                Although none of our employees are currently covered under collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future. If some or all of our workforce were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements or work practices, it could have a material adverse effect on our business, financial condition and results of operations.

                 Difficulties with our vendors may adversely impact our business.

                Our performance depends on our ability to purchase merchandise at sufficient levels and at competitive prices from vendors who can deliver products in a timely and efficient manner and in compliance with our vendor standards and all applicable laws and regulations. We currently have over 500 vendor relationships. Generally, we do not have any long-term purchase agreements or other contractual assurances of continued supply, pricing or access to new products, and any vendor could discontinue selling to us at any time. Historically, we have not relied on any single vendor for our products and have not had difficulties replacing vendors for various products we sell. However, in the future there is no assurance that we will continue to be able to acquire desired merchandise in sufficient quantities or on terms acceptable to us, or be able to develop relationships with new vendors to replace any discontinued vendors. Our inability to acquire suitable merchandise in the future or our failure to replace any one or more vendors may have a material adverse effect on our business, results of operations and financial condition. In addition, any significant change in the payment terms that we have with our suppliers could adversely affect our liquidity.

                Many of our suppliers are small firms that produce a limited number of items. These smaller vendors generally have limited resources, production capacities and operating histories, and some of our vendors have limited the distribution of their merchandise in the past. Accordingly, these vendors may be susceptible to cash flow issues, downturns in economic conditions, production difficulties, quality control issues and difficulty delivering agreed-upon quantities on schedule and in compliance with regulatory requirements. If a vendor fails to deliver on its commitments, whether due to financial difficulties or other reasons, we could experience merchandise out-of-stocks that could lead to lost sales, especially with respect to seasonal and holiday merchandise. In addition, there is no assurance that we would be able, if necessary, to return product to these vendors, obtain refunds of our purchase price or obtain reimbursement or indemnification from any of our vendors should we so desire, and from time to time, we may be in litigation with one or more vendors. Many of these suppliers require extensive advance notice of our requirements in order to supply products in the quantities we need. This long lead time requires us to place orders far in advance of the time when certain products will be offered for sale, exposing us to shifts in consumer demand and discretionary spending.

                 Our business is moderately seasonal and weak performance during one of our historically strong seasonal periods could have a material adverse effect on our operating results for the entire fiscal year.

                Our business is moderately seasonal, with a meaningful portion of our sales dedicated to seasonal and holiday merchandise, resulting in the realization of higher portions of net sales and operating income in the second and fourth fiscal quarters. Due to the importance of our peak sales periods, which include the spring and year-end holiday decorating seasons, the second and fourth fiscal quarters have historically contributed, and are expected to continue to contribute, significantly to our operating results for the entire fiscal year. In anticipation of seasonal increases in sales activity during these periods, we incur significant additional expense prior to and during our peak seasonal periods, which we may finance with additional short-term borrowings. These expenses may include the acquisition of additional inventory, seasonal staffing needs and other similar items. As a result, any factors negatively affecting us during these periods, including adverse weather and unfavorable economic conditions, could have a material adverse effect on our results of operations for the entire fiscal year.

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                 Our quarterly operating results may fluctuate substantially and historical quarterly operating results may not be a meaningful indicator of future performance.

                Our quarterly results of operations have fluctuated in the past and may fluctuate significantly in the future as a result of a variety of factors, many outside of our control, including:

      general economic and political conditions;

      the mix of merchandise sold;

      shifts in consumer tastes and changes in demand for the products that we offer in our stores;

      calendar shifts of holiday or seasonal periods;

      the timing of new store openings and the level of pre-opening expenses associated with new stores;

      the amount and timing of sales contributed by new stores;

      store closings or relocations and costs related thereto;

      expansion of existing or entry of new competitors into our markets;

      pricing and other actions taken by our competitors;

      changes in promotions, advertising or other actions taken by us or our existing or possible new competitors;

      the timing and level of markdowns;

      delays in the flow of merchandise to our stores;

      changes in our operating expenses;

      changes in commodity prices and the cost of fuel;

      foreign exchange rates;

      litigation;

      adverse weather conditions in our markets, particularly on weekends;

      natural or man-made disasters;

      the timing of income tax refunds to our customers;

      the timing or elimination of certain state and local tax holidays; and

      changes in other tenants or landlords or surrounding geographic circumstances in the areas in which we are located.

                Any of these events could have a material adverse effect on our business, financial condition and operating results for the fiscal quarter in which such event occurs as well as for the entire fiscal year. Therefore, period-to-period comparisons of historical quarterly operating results may not be a meaningful indicator of future performance.

                 We may not be able to protect our important intellectual property and we could incur substantial costs if we are subject to claims that our operations infringe on the proprietary rights of others.

                We rely on our proprietary intellectual property, including trademarks, to market, promote and sell our products in our stores, particularly our At Home private label products. We monitor and protect against activities that might infringe, dilute or otherwise violate our trademarks and other

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intellectual property and rely on the trademark and other laws of the United States. However, we may be unable to prevent third parties from using our intellectual property without our authorization. To the extent we cannot protect our intellectual property, unauthorized use and misuse of our intellectual property could harm our competitive position and have a material adverse effect on our financial condition, cash flows or results of operations.

                Additionally, we cannot be certain that we do not or will not in the future infringe on the intellectual property rights of third parties. From time to time, we have been subject to claims from third parties that we have infringed upon their intellectual property rights and we face the risk of such claims in the future. Any intellectual property infringement claims against us could be costly, time-consuming, harmful to our reputation or result in injunctive or other equitable relief that may require us to make changes to our business, any of which could have a material adverse effect on our financial condition, cash flows or results of operations.

                 Increases in commodity prices and supply chain costs could materially adversely affect our results of operations.

                Various commodities are used in our merchandise, such as petroleum, resin, copper, steel, cotton and lumber. These commodities are subject to inflation, price fluctuations and other market disturbances, including supply shortages. Increases in commodity prices or the costs related to our supply chain and distribution network, including currency exchange rates, tariffs, labor, fuel and other transportation costs, could have a material adverse effect on our gross margin, expenses and results of operations. Due to the uncertainty of these price fluctuations and our strategy to maintain everyday low prices, we may not be able to pass some or all of these increased costs on to our customers. Even if we are able to pass these increased costs on to our customers, we may not be able to do so on a timely basis, our gross margins could decline and we may not be able to implement other price increases for our merchandise.

                 If we are required to make significant investments in advertising, marketing or promotions, our margins and profitability could materially decline.

                In general, we employ an everyday low pricing strategy that avoids high-low pricing and promotions and allows us to minimize advertising and marketing expenses incurred by other retailers. However, there is no assurance that we can continue to be successful without significant advertising, marketing and promotions, particularly as we open stores in new markets. We spent over $20 million in capital and expenses in connection with our rebranding initiative during fiscal year 2015 and may need to incur additional expenses to promote our new brand. In addition, if we choose to invest in advertising, marketing and promotions in the future, there is no assurance that such efforts will be successful or result in a positive return on investment. Therefore, if we are required to make significant investments in advertising, marketing or promotions and related expenditures, our margins and profitability could materially decline even if sales increase.

                 Any online services or e-commerce activities that we may launch in the future may require substantial investment and may not be successful.

                We do not currently engage in e-commerce and have a limited online presence through our website and other forms of social media. However, as part of our growth strategy, we are exploring expansion of our online services and could engage in e-commerce activities in the future, which would require substantial investment. The success of any online services or e-commerce business would depend, in part, on factors over which we may not control. We would need to successfully respond to changing consumer preferences and buying trends relating to online or e-commerce usage. We would also be vulnerable to increased risks and uncertainties including: changes in required technology interfaces; website downtime and other technical failures; costs and technical issues related to upgrading website software; computer viruses; changes in applicable federal and state regulations; security breaches; consumer privacy concerns; and keeping up to date with competitive technology

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trends, including the use of new or improved technology, creative user interfaces and other online or e-commerce marketing tools. In addition, any e-commerce platform may be unprofitable, cannibalize sales from our existing stores or not be able to compete successfully against other Internet-based retailers who sell similar merchandise. Our failure to successfully respond to these risks and uncertainties might adversely affect sales in any e-commerce business that we establish in the future and could damage our reputation and brand. Further, in the event that we engage in e-commerce in the future, we will need to establish a shipping and delivery system for items purchased online, for which we do not currently have adequate capability. Our business could be adversely affected if we are not able to successfully develop and integrate such a shipping and delivery system in connection with any e-commerce business in which we may engage in the future.

                 Disruptions to our information systems, or our failure to adequately support, maintain and upgrade these systems, could negatively impact our operations and financial results.

                We depend on our information technology systems for many aspects of our business. We have made significant investments in information technology, including investments in systems and applications for finance and accounting functions, supply chain management software for retail operations and data warehouse management systems and an automated distribution system for our distribution center operations. We purchase our inventory through a centralized inventory management system that operates for the entire chain. Merchandise is bar-coded, enabling management to control inventory and pricing by SKU. Sales are updated daily in the merchandise reporting systems by polling all sales information from each store's point-of sale terminals. Stores are then staffed based on a statistically developed labor model which incorporates the daily and hourly store sales volume. We attempt to mitigate the risk of possible business interruptions caused by disruptions to our information systems by maintaining a disaster recovery plan, which includes maintaining backup systems off-site. However, despite safeguards and careful contingency planning, our systems are still subject to power outages, computer viruses, computer and telecommunication failures, employee usage errors, security breaches, terrorism, natural or man-made disasters and other catastrophic events. A major disruption of our information systems and backup mechanisms may cause us to incur significant costs to repair our systems and experience a critical loss of data. System failures could also disrupt our ability to track, record and analyze sales and inventory and could cause disruptions of our operations, including, among other things, our ability to process and ship inventory, process financial information including credit card transactions, process payrolls or vendor payments or engage in other similar normal business activities.

                In addition, we may be unable to improve, upgrade, integrate or expand upon our existing systems and any costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology could also disrupt or reduce the efficiency of our operations.

                 Unauthorized disclosure of sensitive or confidential customer information could harm our business and standing with our customers.

                The protection of our customer, employee and other company data is critical to us. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as payment card and personal information. Despite the security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, payment card terminal tampering, computer viruses, misplaced, lost or stolen data, programming or human errors or other similar events. The risks associated with our processing of sensitive customer data may be heightened if the amount of such data collected is increased, including via any co-branded or private label credit card or customer loyalty or other similar programs that we may launch in the future. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us or our third-party service providers, could damage our reputation, expose us to risk of litigation and liability, disrupt our operations and harm our business. In addition, as a result

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of recent security breaches at a number of prominent retailers, the media and public scrutiny of information security and privacy has become more intense. As a result, we may incur significant costs to change our business practices or modify our service offerings in connection with the protection of personally identifiable information.

                 Regulatory or litigation developments could materially adversely affect our business operations and financial performance.

                We are subject to numerous statutory, regulatory and legal requirements at a local, state, national and international level because of our business operations, store locations, workforce, sales to consumers and importation of merchandise. In addition, following this offering we will be a publicly traded company and may be exposed to the risk of stockholder litigation if our stock price declines. Laws and regulations affecting our business may change, sometimes frequently and significantly, as a result of political, economic, social or other events. Changes in the regulatory environment in the areas of product safety, environmental protection, privacy and information security, health care, labor and employment, U.S. customs, advertising and taxes, among others, could potentially impact our operations and financial results. For example, more stringent and varied requirements of local and state governmental bodies with respect to zoning, land use and environmental factors could delay or prevent development of new stores in particular locations. Environmental laws and regulations also govern, among other things, discharges of pollutants into the air and water as well as the presence, handling, release and disposal of and exposure to hazardous substances. These laws provide for significant fines and penalties for noncompliance. Third parties may also make personal injury, property damage or other claims against us associated with actual or alleged release of, or exposure to, hazardous substances at our properties. We could also be strictly liable, without regard to fault, for certain environmental conditions at properties we formerly owned or operated as well as at our current properties. We could be negatively impacted by developments in these areas due to the costs of compliance, and if we fail to comply with a law or regulation, we may be subject to claims, lawsuits, fines, penalties, loss of a license or permit and adverse publicity or other consequences that could have a material adverse effect on our business and results of operations.

                 Product recalls and/or product liability, as well as changes in product safety and other consumer protection laws, may adversely impact our operations, merchandise offerings, reputation, results of operations, cash flow and financial condition.

                We are subject to regulations by a variety of federal, state and international regulatory authorities, including The Consumer Product Safety Commission. A large portion of our merchandise is manufactured in foreign countries. As such, one or more of our vendors might not adhere to product safety requirements or our quality control standards, and we might not identify the deficiency before merchandise ships to our stores. If our merchandise offerings do not meet applicable safety standards or our customers' expectations regarding safety, we could experience lost sales and increased costs and be exposed to legal and reputational risk. We could be required to recall some of those products or could expose ourselves to government enforcement action or private litigation, such as product liability claims, which could result in significant fines, penalties, monetary damages and other remedies as well as harm to our reputation. We could also be subject to litigation related to injuries or other accidents at our stores or distribution center.

                Moreover, changes in product safety or other consumer protection laws could lead to increased costs to us for certain merchandise, or additional labor costs associated with readying merchandise for sale. Long lead times on merchandise ordering cycles increase the difficulty for us to plan and prepare for potential changes to applicable laws. In particular, The Consumer Product Safety Improvement Act of 2008 imposes significant requirements on manufacturing, importing, testing and labeling requirements for some of our products. In the event that we are unable to timely comply with regulatory changes, significant fines or penalties could result, and could adversely affect our reputation, results of operations, cash flow and financial condition.

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                 Inadequacy of our insurance coverage could have a material adverse effect on our business.

                We maintain third party insurance coverage against various liability risks and risks of property loss and business interruption, as well directors and officers liability insurance coverage. While we believe these arrangements are an effective way to insure against liability and property damage risks, the potential liabilities associated with those risks or other events could exceed the coverage provided by such arrangements. Significant uninsured liabilities could have a material adverse effect on our Company.

                 Our continued success is substantially dependent on positive perceptions of At Home.

                We are highly dependent on our reputation amongst home décor enthusiasts. To remain successful in the future, we must continue to preserve, grow and utilize the value of our reputation as the destination retailer for our customers' home décor needs. Reputational value is based in large part on perceptions of subjective qualities, and even isolated incidents may erode trust and confidence. Events that can damage our reputation include, but are not limited to, legal violations, litigation, actual or perceived ethical problems, product safety issues, actual or perceived poor employee relations, actual or perceived poor customer service, store appearance or operational issues, unauthorized use or other misappropriation of our trade name, data security or events outside of our control that could generate negative publicity with respect to At Home, whether in traditional media or social media outlets. Any event that has the potential to negatively impact our trade name or our reputation with customers, employees, suppliers, communities, governmental officials and others could have a material adverse effect on our business and results of operations.

                 Our operating results and financial position could be negatively impacted by accounting policies, rules and regulations.

                Our operating results and financial position could be negatively impacted by implementation of our various accounting policies as well as changes to accounting rules and regulations or new interpretations of existing accounting standards. These changes may include, without limitation, changes to lease accounting standards. For example, while we are still evaluating the impact of our pending adoption of ASU No. 2016-02, "Leases" on our consolidated financial statements, we expect that upon adoption we will recognize right of use, or ROU, assets and liabilities that could be material to our financial statements. In addition, from time to time we could incur impairment charges that adversely affect our operating results. For example, changes in economic or operating conditions impacting our estimates and assumptions could result in the impairment of intangible assets (such as our goodwill or trade name) or long-lived assets in accordance with applicable accounting guidance. In the event that we determine our intangible or long-lived assets are impaired, we may be required to record a significant charge to earnings in our financial statements that could have a material adverse effect on our results of operations.

                 We incurred net losses in fiscal years 2014 and 2015 and we may experience net losses in the future.

                We experienced net losses of $22.3 million and $0.4 million, respectively, for the fiscal years ended January 25, 2014 and January 31, 2015. There is no guarantee that we will be successful in realizing net income or otherwise achieving profitability or sustaining positive cash flow in future periods. Any failure to achieve net income could, among other things, impair our ability to complete future financings or the cost of obtaining financing or force us to seek additional capital through sales of our equity securities, which could dilute the value of any shares of common stock you purchase in this offering. In addition, a lack of profitability could adversely affect the price of our common stock.

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                 Changes in our effective income tax rate could affect our results of operations.

                Our effective income tax rate is influenced by a number of factors. Changes in the tax laws, the interpretation of existing laws or our failure to sustain our reporting positions on examination could adversely affect our effective tax rate. Further, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings or by changes to existing accounting rules or regulations.

                 We are a holding company with no operations of our own, and we depend on our subsidiaries for cash.

                We are a holding company and do not have any material assets or operations other than ownership of equity interests of our subsidiaries. Our operations are conducted almost entirely through our subsidiaries, and our ability to generate cash to meet our obligations or to pay dividends, if any, is highly dependent on the earnings of, and receipt of funds from, our subsidiaries through dividends or intercompany loans. The ability of our subsidiaries to generate sufficient cash flow from operations to allow us and them to make scheduled payments on our debt obligations will depend on their future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control. We cannot assure you that the cash flow and earnings of our operating subsidiaries will be adequate for our subsidiaries to service their debt obligations. If our subsidiaries do not generate sufficient cash flow from operations to satisfy corporate obligations, we may have to undertake alternative financing plans (such as refinancing), restructure debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. We cannot assure you that any such alternative refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Our inability to generate sufficient cash flow to satisfy our obligations, or to refinance our obligations on commercially reasonable terms, could have a material adverse effect on our business, financial condition and results of operations.

                Furthermore, we and our subsidiaries may incur substantial additional indebtedness in the future that may severely restrict or prohibit our subsidiaries from making distributions, paying dividends, if any, or making loans to us.

Risks Related to our Common Stock and this Offering

                 There is no existing market for our common stock and we do not know if one will develop to provide you with adequate liquidity. If our stock price fluctuates after this offering, you could lose a significant part of your investment.

                Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market on the New York Stock Exchange, or NYSE, or otherwise or how active and liquid that market may come to be. If an active trading market does not develop, you may have difficulty selling any of the common stock that you buy. Negotiations between us and the underwriters will determine the initial public offering price for our common stock, which may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid in this offering. The market price of our common stock may be influenced by many factors including:

      quarterly variations in our operating results compared to market expectations;

      changes in the preferences of our customers;

      low comparable store sales growth compared to market expectations;

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      delays in the planned openings of new stores;

      the failure of securities analysts to cover the Company after this offering or changes in analysts' financial estimates;

      economic, legal and regulatory factors unrelated to our performance;

      changes in consumer spending or the housing market;

      increased competition or stock price performance of our competitors;

      future sales of our common stock or the perception that such sales may occur;

      changes in senior management or key personnel;

      investor perceptions of us and the retail industry;

      new regulatory pronouncements and changes in regulatory guidelines;

      lawsuits, enforcement actions and other claims by third parties or governmental authorities;

      action by institutional stockholders or other large stockholders;

      failure to meet any guidance given by us or any change in any guidance given by us, or changes by us in our guidance practices;

      speculation in the press or investment community;

      events beyond our control, such as war, terrorist attacks, transportation and fuel prices, natural disasters, severe weather and widespread illness; and

      the other factors listed in this "Risk Factors" section.

                As a result of these factors, investors in our common stock may not be able to resell their shares at or above the initial offering price. In addition, our stock price may be volatile. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. Accordingly, these broad market and industry factors may significantly reduce the market price of the our common stock, regardless of our operating performance.

                 Because the Sponsors control a significant percentage of our common stock, they may control all major corporate decisions and their interests may conflict with your interests as an owner of our common stock and those of the Company.

                We are controlled by the Sponsors, which currently indirectly own 100% of our common stock and will own approximately 85% after the completion of this offering. Accordingly, the Sponsors currently control the election of the majority of our directors and could exercise a controlling interest over our business, affairs and policies, including the appointment of our management and the entering into of business combinations or dispositions and other corporate transactions. The directors so elected have the authority to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders. In addition, pursuant to the stockholders' agreement, for a period of two years following this offering, Starr Investments will agree to vote 9,611,804 of their shares of our common stock on all matters presented to the stockholders in the same manner that AEA votes on such matters. In addition, following the consummation of this offering, and for so long as certain affiliates of AEA and Starr Investments hold an aggregate of at least 10% of our outstanding common stock, such Sponsors shall be entitled to nominate at least one individual for election to our board, and our board and nominating committee thereof shall nominate and recommend to our stockholders that such individual be elected to our board, and each party to the stockholders' agreement agrees to vote all of their shares to elect such individual to our board.

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                The Sponsors may have interests that are different from yours and may vote in a way with which you disagree and which may be adverse to your interests. Further, AEA and Starr Investments may have differing views from each other, neither of which may align with your interests. In addition, the Sponsors' concentration of ownership could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of our common stock to decline or prevent our stockholders from realizing a premium over the market price for their common stock.

                Additionally, the Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or supply us with goods and services. The Sponsors may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. Stockholders should consider that the interests of the Sponsors may differ from their interests in material respects.

                 You will incur immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering.

                Prior investors have paid substantially less per share for our common stock than the price in this offering. The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock prior to completion of the offering. Accordingly, based on an initial public offering price of $15.00 per share (the midpoint of the price range set forth on the cover page of this prospectus), if you purchase our common stock in this offering, you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $16.36 per share in net tangible book value of our common stock. See "Dilution."

                 Sales of a substantial number of shares of our common stock in the public market by our existing stockholders could cause our stock price to fall.

                Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Substantially all of our existing stockholders are subject to lock-up agreements with the underwriters of this offering that restrict the stockholders' ability to transfer shares of our common stock for 180 days from the date of this prospectus, subject to certain exceptions. The lock-up agreements limit the number of shares of common stock that may be sold immediately following the public offering. After this offering, we will have 59,503,727 outstanding shares of common stock based on the number of shares outstanding as of April 30, 2016. Subject to limitations, approximately 50,836,727 shares will become eligible for sale upon expiration of the lock-up period, as calculated and described in more detail in the section entitled "Shares Eligible for Future Sale." In addition, shares issued or issuable upon exercise of options vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of stock by these stockholders could have a material adverse effect on the trading price of our common stock.

                Moreover, after this offering, holders of approximately 85% of our outstanding common stock will have rights, subject to certain conditions such as the 180-day lock-up arrangement described above, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. Registration of these shares under the Securities Act of 1933, as amended, or the Securities Act, would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by our affiliates as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

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                 If securities or industry analysts do not publish or cease publishing research or reports about At Home, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.

                The trading market for our common stock will depend in part on the research and reports that third-party securities analysts publish about At Home and the retail industry. One or more analysts could downgrade our common stock or issue other negative commentary about At Home or our industry. In addition, we may be unable or slow to attract research coverage. Alternatively, if one or more of these analysts cease coverage of At Home, we could lose visibility in the market. As a result of one or more of these factors, the trading price of our common stock could decline.

                 Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

                Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws, as well as provisions of the Delaware General Corporation Law, or DGCL, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions include:

      establishing a classified board of directors such that not all members of the board are elected at one time;

      allowing the total number of directors to be determined exclusively (subject to the rights of holders of any series of preferred stock to elect additional directors) by resolution of our board of directors and granting to our board the sole power (subject to the rights of holders of any series of preferred stock or rights granted pursuant to the stockholders' agreement) to fill any vacancy on the board;

      limiting the ability of stockholders to remove directors without cause if AEA ceases to own, or have the right to direct the vote of, 50% or more of the voting power of our common stock;

      authorizing the issuance of "blank check" preferred stock by our board of directors, without further stockholder approval, to thwart a takeover attempt;

      prohibiting stockholder action by written consent (and, thus, requiring that all stockholder actions be taken at a meeting of our stockholders), if AEA ceases to own, or have the right to direct the vote of, 50% or more of the voting power of our common stock;

      eliminating the ability of stockholders to call a special meeting of stockholders, except for AEA, so long as AEA owns, or has the right to direct the vote of, 50% or more of the voting power of our common stock;

      establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at annual stockholder meetings; and

      requiring the approval of the holders of at least two-thirds of the voting power of all outstanding stock entitled to vote thereon, voting together as a single class, to amend or repeal our certificate of incorporation or bylaws if AEA ceases to own, or have the right to direct the vote of, 50% or more of the voting power of our common stock.

                In addition, while we have opted out of Section 203 of the DGCL, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain

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"business combinations" with any "interested stockholder" for a three-year period following the time that the stockholder became an interested stockholder, unless:

      prior to such time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

      upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or

      at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least two-thirds of our outstanding voting stock that is not owned by the interested stockholder.

                Generally, a "business combination" includes a merger, asset or stock sale or other transaction provided for or through our Company resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an "interested stockholder" is a person who owns 15% or more of our outstanding voting stock and the affiliates and associates of such person. For purposes of this provision, "voting stock" means any class or series of stock entitled to vote generally in the election of directors. Our amended and restated certificate of incorporation will provide that AEA, Starr Investments, their respective affiliates and any of their respective direct or indirect designated transferees (other than in certain market transfers and gifts) and any group of which such persons are a party do not constitute "interested stockholders" for purposes of this provision.

                Under certain circumstances, this provision will make it more difficult for a person who qualifies as an "interested stockholder" to effect certain business combinations with our Company for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our board of directors in order to avoid the stockholder approval requirement if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that our stockholders may otherwise deem to be in their best interests. See "Description of Capital Stock".

                These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our Company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.

                 We will be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

                We are in the process of evaluating our internal controls systems to allow management to report on, and our independent auditors to audit, our internal controls over financial reporting. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and, if required, the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the management certification requirements of Section 404 in our annual report on Form 10-K for the year following our first annual report that is filed with the SEC (subject to any change in applicable SEC rules). We will be required to comply with Section 404 in full (including an auditor attestation on management's internal controls report) in our annual report on Form 10-K at the later of the year following our first annual report required to be filed with the SEC or the date on which we are no longer an emerging growth company (subject to any change in applicable SEC rules). Furthermore, upon completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and PCAOB rules and regulations that remain unremediated. As a public company, we will be required to

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report, among other things, control deficiencies that constitute a "material weakness" or changes in internal controls that, or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A "significant deficiency" is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

                To comply with the requirements of being a public company, we have undertaken various actions, and may need to take additional actions, such as implementing and enhancing our internal controls and procedures and hiring additional accounting or internal audit staff. Testing and maintaining internal controls can divert our management's attention from other matters that are important to the operation of our business. Additionally, when evaluating our internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. For example, in the past, certain matters involving our internal controls over financial reporting that constituted "material weaknesses" were identified and have since been remediated, which related to our limited accounting personnel and other resources at the time, as well as our adoption of public company standards. More recently, we identified an internal control deficiency that required us to restate our financial statements for the thirteen and thirty-nine weeks ended October 31, 2015 to correct an error in the recorded tax provision for those periods, as set forth in Note 17 to our consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus. We concluded that this deficiency represented a material weakness, which was remediated in the fourth quarter of fiscal 2016 through improved internal controls with respect to income tax accounting. If we identify any additional material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, if we are required to make further restatements of our financial statements, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting once we are no longer an emerging growth company, investors may lose confidence in the accuracy, completeness or reliability of our financial reports and the trading price of our common stock may be adversely affected, and we could become subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources. In addition, if we fail to remedy any material weakness, our financial statements could be inaccurate and we could face restricted access to the capital markets.

                 We do not currently expect to pay any cash dividends.

                The continued operation and expansion of our business will require substantial funding. Accordingly, we do not currently expect to pay any cash dividends on shares of our common stock. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deems relevant. We are a holding company, and substantially all of our operations are carried out by our operating subsidiaries. Under our ABL Facility and Term Loan Facilities, our operating subsidiaries are significantly restricted in their ability to pay dividends or otherwise transfer assets to us, and we expect these limitations to continue in the future. Our ability to pay dividends may also be limited by the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.

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                 The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and the NYSE, may strain our resources, increase our costs and divert management's attention, and we may be unable to comply with these requirements in a timely or cost-effective manner.

                As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the corporate governance standards of the Sarbanes-Oxley Act and the NYSE. These requirements will place a strain on our management, systems and resources and we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company. The Exchange Act will require us to file annual, quarterly and current reports with respect to our business and financial condition within specified time periods and to prepare a proxy statement with respect to our annual meeting of stockholders. The Sarbanes-Oxley Act will require that we maintain effective disclosure controls and procedures and internal controls over financial reporting. The NYSE will require that we comply with various corporate governance requirements. To maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting and comply with the Exchange Act and the NYSE's requirements, significant resources and management oversight will be required. This may divert management's attention from other business concerns and lead to significant costs associated with compliance, which could have a material adverse effect on us and the price of our common stock.

                The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in governance and reporting requirements. We cannot predict or estimate the amount of additional costs we may incur or the timing of these costs. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

                 We are a "controlled company" within the meaning of the NYSE rules and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements.

                Following the consummation of this offering, the Sponsors will continue to control a majority of the voting power of our outstanding common stock. As a result, we expect to be a "controlled company" within the meaning of the NYSE corporate governance standards. A company of which more than 50% of the voting power is held by an individual, a group or another company is a "controlled company" within the meaning of the NYSE rules and may elect not to comply with certain corporate governance requirements of the NYSE, including:

    the requirement that a majority of our board of directors consist of independent directors;

    the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities;

    the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and

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    the requirement for an annual performance evaluation of the nominating and corporate governance and compensation committees.

                Following this offering, we intend to rely on all of the exemptions listed above. If we do utilize the exemptions, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors. As a result, our board of directors and those committees may have more directors who do not meet the NYSE's independence standards than they would if those standards were to apply. The independence standards are intended to ensure that directors who meet those standards are free of any conflicting interest that could influence their actions as directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE.

                 Taking advantage of the reduced disclosure requirements applicable to "emerging growth companies" may make our common stock less attractive to investors.

                As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include:

    we are not required to engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

    we are not required to comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

    we are not required to submit certain executive compensation matters to stockholder advisory votes, such as "say-on-pay", "say-on-frequency" and "say-on-golden parachutes"; and

    we are not required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

                We may take advantage of these provisions until the last day of our fiscal year following the fifth anniversary of the completion of this offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. We have elected to adopt the reduced disclosure in this prospectus.

                The JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to irrevocably "opt out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted.

                We cannot predict if investors will find our common stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common stock.

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                 Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.

                Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed to us or our stockholders by any of our directors, officers, employees or agents, (iii) any action asserting a claim against us arising under the DGCL or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine. By becoming a stockholder in our Company, you will be deemed to have notice of and have consented to the provisions of our amended and restated certificate of incorporation related to choice of forum. The choice of forum provision in our amended and restated certificate of incorporation may limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

                This prospectus contains forward-looking statements. You can generally identify forward-looking statements by our use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "seek," "vision" or "should," or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, expected new store openings, potential growth opportunities and future capital expenditures and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions or future events or performance contained in this prospectus under the headings "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" are forward-looking statements. In addition, our preliminary estimated financial results for the thirteen weeks ending July 30, 2016 contained in this prospectus are forward-looking statements.

                We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this prospectus under the headings "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

      general economic factors that may materially adversely affect our business, revenue and profitability;

      volatility or disruption in the financial markets;

      consumer spending on home décor products which could decrease or be displaced by spending on other activities;

      our ability to successfully implement our growth strategy on a timely basis or at all;

      our failure to manage inventory effectively and our inability to satisfy changing consumer demands and preferences;

      losses of, or disruptions in, or our inability to efficiently operate our distribution network;

      adverse events in the geographical regions in which we operate;

      risks related to our imported merchandise;

      the success of our rebranding;

      risks associated with leasing substantial amounts of space;

      risks associated with our sale-leaseback strategy;

      the highly competitive retail environment in which we operate;

      risks related to our substantial indebtedness and the significant operating and financial restrictions imposed on us and our subsidiaries by the ABL Facility and Term Loan Facilities;

      our dependence upon the services of our management team and our buyers;

      the failure to attract and retain quality employees;

      difficulties with our vendors;

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      the seasonality of our business;

      fluctuations in our quarterly operating results;

      the failure or inability to protect our intellectual property rights;

      risks associated with third party claims that we infringe upon their intellectual property rights;

      increases in commodity prices and supply chain costs;

      the need to make significant investments in advertising, marketing or promotions;

      the success of any online services or e-commerce activities that we may launch in the future and the substantial investment related thereto;

      disruptions to our information systems or our failure to adequately support, maintain and upgrade those systems;

      unauthorized disclosure of sensitive or confidential customer information;

      regulatory or litigation developments;

      risks associated with product recalls and/or product liability, as well as changes in product safety and other consumer protection laws;

      inadequacy of our insurance coverage;

      our substantial dependence upon our reputation and positive perceptions of At Home;

      the potential negative impact of changes to our accounting policies, rules and regulations;

      changes in our effective income tax rate;

      net losses incurred in fiscal years 2014 and 2015 and the potential to experience net losses in the future;

      the Sponsors' control of us; and

      other risks and uncertainties, including those listed under "Risk Factors."

                Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this prospectus are not guarantees of future performance and our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this prospectus, they may not be predictive of results or developments in future periods.

                Any forward-looking statement that we make in this prospectus speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

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USE OF PROCEEDS

                We estimate that the net proceeds to us from our sale of 8,667,000 shares in this offering will be approximately $115.8 million (or $134.0 million if the underwriters' option to purchase additional shares is exercised in full), based on the assumed initial public offering price of $15.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to repay approximately $115.8 million of principal amount of indebtedness under the Second Lien Facility. To the extent that the underwriters do not exercise their option to purchase additional shares, we intend to use borrowings under the ABL Facility to repay the remaining principal amount of the Second Lien Facility. We expect to use cash to pay any accrued and unpaid interest and premium on the outstanding principal amount of the Second Lien Facility.

                The total amount required to repay the Second Lien Facility in full is approximately $130.1 million, including premium, plus accrued and unpaid interest, if any. Interest accrues on the Second Lien Facility at an annual rate of 9.0%, or approximately $250 per day for each $1.0 million of principal amount. Interest is payable on the last business day of January, April, July and October in each year, and was last paid on April 29, 2016. We expect to make the next payment of interest on the Second Lien Facility on July 29, 2016, which will be before the closing date of this offering. Borrowings under the Second Lien Facility mature on June 5, 2023.

                Each $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $8.1 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares sold in this offering, as set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $14.0 million, assuming the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing. To the extent any proceeds from this offering remain after the repayment in full of our Second Lien Facility, including any accrued and unpaid interest and premium thereon, we intend to use such remaining proceeds for general corporate purposes.

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DIVIDEND POLICY

                We do not currently expect to pay any cash dividends on our common stock for the foreseeable future. Instead, we intend to retain future earnings, if any, for the future operation and expansion of our business and the repayment of debt. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors may deem relevant. Our business is conducted through our subsidiaries. Dividends, distributions and other payments from, and cash generated by, our subsidiaries will be our principal sources of cash to repay indebtedness, fund operations and pay dividends. Accordingly, our ability to pay dividends to our stockholders is dependent on the earnings and distributions of funds from our subsidiaries. In addition, the covenants in the agreements governing our existing indebtedness, including the ABL Facility and the Term Loan Facilities, significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. See "Description of Certain Indebtedness", "Risk Factors—Risks Relating to our Business—We are a holding company with no operations of our own, and we depend on our subsidiaries for cash" and "Risk Factors—Risks Related to our Common Stock and this Offering—We do not currently expect to pay any cash dividends."

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CAPITALIZATION

                The following table sets forth our cash and cash equivalents and our consolidated capitalization as of April 30, 2016:

      on an actual basis; and

      on an as adjusted basis to give effect to our issuance and sale of 8,667,000 shares of our common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the net proceeds from this offering, together with cash and borrowings under the ABL Facility, to repay in full all obligations under the Second Lien Facility, in each case as described in "Use of Proceeds".

                You should read the data set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes included elsewhere in this prospectus.

 
  As of April 30, 2016  
 
  Actual   As Adjusted(1)(2)  
 
  (in thousands, except share
and per share data)

 

Cash and cash equivalents

  $ 8,909   $ 8,767 (3)

Debt:

             

ABL Facility(4)

  $ 85,600   $ 99,761 (3)

Notes payable

    9,918     9,918  

First Lien Facility(5)

    297,000     297,000  

Second Lien Facility(5)

    130,000     (3)

Total debt

    522,518     406,679  

Stockholders' equity:

             

Common stock, Class A; $0.01 par value; 32,535,505 shares issued and outstanding actual(6)               

    325      

Common stock, Class B; $0.01 par value; 18,301,222 shares issued and outstanding actual(6)               

    183      

Common stock; $0.01 par value; 59,503,727 shares issued and outstanding as adjusted(6)               

        595  

Additional paid-in capital

    410,907     526,659  

Accumulated deficit

    (33,775 )   (37,110 )(7)

Total equity

    377,640     490,144  

Total capitalization

  $ 900,158   $ 896,823  

(1)
Each $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, additional paid-in-capital, total stockholders' equity and total capitalization by approximately $8.1 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares sold in this offering, as set forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, additional paid-in-capital, total stockholders' equity and total capitalization by approximately

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    $14.0 million, assuming the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(2)
Our estimate of the net proceeds that we will receive from this offering reflects the deduction of an estimated $5.1 million of expenses relating to the offering; however, as of the date hereof, we have already paid approximately $4.1 million of such expenses.

(3)
The net proceeds from this offering will be used to repay approximately $115.8 million of principal amount of indebtedness under the Second Lien Facility. To the extent that the underwriters do not exercise their option to purchase additional shares, we intend to use borrowings under the ABL Facility to repay the remaining principal amount of the Second Lien Facility. We expect to use cash to pay any accrued and unpaid interest and premium on the outstanding principal amount of the Second Lien Facility. The table above reflects the use of (i) approximately $14.2 million of additional borrowings under the ABL Facility to repay in full the remaining principal amount of the Second Lien Facility and (ii) approximately $0.1 million of cash to pay premium on the Second Lien Facility, which represents a 1% prepayment premium applicable to voluntary prepayments of principal other than with the proceeds of this offering. See "Description of Certain Indebtedness—Term Loan Facilities—Optional and Mandatory Prepayments". There was an immaterial amount of accrued and unpaid interest as of April 30, 2016, as interest on the Second Lien Facility was last paid on April 29, 2016; accordingly, such interest payment is already reflected in the "Actual" column in the table above. Interest is payable on the last business day of January, April, July and October in each year, and we expect to make the next payment of interest on the Second Lien Facility on July 29, 2016, which will be before the closing date of this offering. Interest accrues on the Second Lien Facility at an annual rate of 9.0%, or approximately $250 per day for each $1.0 million of principal amount. We expect to use cash to fund any payments of interest on the outstanding principal amount of the Second Lien Facility.

(4)
As of April 30, 2016, we had $53.6 million of borrowing availability under the ABL Facility. In June 2016, we amended our ABL Facility to increase the aggregate revolving commitments thereunder to $215 million. As of July 2, 2016, we had $108.8 million of borrowings outstanding under the ABL Facility and $57.8 million available for future borrowings under the ABL Facility.

(5)
Amounts shown exclude unamortized debt issuance costs of $12.3 million as of April 30, 2016 associated with the First Lien Facility and Second Lien Facility, which were included as a direct reduction of long-term debt in the condensed consolidated balance sheet included elsewhere in this prospectus. Amounts shown also exclude an accrued exit fee relating to the Second Lien Facility in the amount of $1.1 million.

(6)
In connection with this offering, the Class A common stock and Class B common stock will be subject to the 128.157393-to-one stock split and converted into shares of a single class of common stock, which is the same class as the shares being sold in this offering.

(7)
The change in accumulated deficit relates to an approximately $3.3 million loss on early extinguishment of debt for the repayment of the Second Lien Facility with proceeds from this offering and additional borrowings under the ABL Facility.

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DILUTION

                If you purchase any of the shares offered by this prospectus, you will experience dilution to the extent of the difference between the offering price per share that you pay in this offering and the net tangible book value (deficit) per share of our common stock immediately after this offering.

                Our net tangible book value (deficit) as of April 30, 2016 was $(193.5) million, or $(3.81) per share of common stock. Net tangible book value (deficit) per share is determined by dividing our net tangible book value (deficit), which is total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding, after giving effect to our 128.157393-for-one stock split on July 22, 2016. Tangible assets represent total assets excluding goodwill and other intangible assets. Dilution in net tangible book value (deficit) per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the pro forma net tangible book value (deficit) per share of our common stock immediately afterwards.

                After giving effect to (i) our 128.157393-for-one stock split and (ii) our sale of 8,667,000 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, our pro forma net tangible book value (deficit) as of April 30, 2016 would have been approximately $(80.9) million, or $(1.36) per share. This represents an immediate increase in net tangible book value (deficit) of $2.45 per share to our existing stockholders and an immediate dilution of $16.36 per share to new investors purchasing shares of common stock in this offering.

                The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share

        $ 15.00  

Historical net tangible book value (deficit) per share

  $ (3.81 )      

Increase per share attributable to this offering

    2.45        

Pro forma net tangible book value (deficit) per share after this offering

        $ (1.36 )

Dilution per share to new investors

        $ 16.36  

                Each $1.00 increase (decrease) in the assumed initial offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would affect our net tangible book value (deficit) after this offering by approximately $8.1 million, the net tangible book value (deficit) per share after this offering by $0.14 per share, and the dilution per common share to new investors by $0.86 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting commissions and discounts and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares sold in this offering, as set forth on the cover page of this prospectus, would affect our net tangible book value (deficit) after this offering by approximately $14.0 million, the net tangible book value (deficit) per share after this offering by $0.25 per share, and the dilution per common share to new investors by $(0.25) per share, assuming the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting commissions and discounts and estimated offering expenses payable by us.

                The following table summarizes, as of April 30, 2016, on an as adjusted basis, the number of shares of common stock purchased or to be purchased from us, the total consideration paid or to be paid to us and the average price per share paid or to be paid by existing stockholders and by new

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investors purchasing shares of common stock in this offering, before deducting the underwriting commissions and discounts and estimated offering expenses payable by us.

 
  Shares Purchased   Total
Consideration
  Average Price
Per Share
 
 
  (dollars in thousands, except share and per share data)
 
 
  Number   Percent   Amount   Percent    
 

Existing stockholders

    50,836,727     85 % $ 396,674     75 % $ 7.80  

New investors

    8,667,000     15 % $ 130,005     25 % $ 15.00  

Total

    59,503,727     100 % $ 526,679     100 % $ 8.85  

                Each $1.00 increase (decrease) in the assumed initial offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) total consideration paid by new investors, total consideration paid by all stockholders and average price per share paid by all stockholders by $8.7 million, $8.7 million and $0.15 per share, respectively, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1.0 million shares in the number of shares sold in this offering, as set forth on the cover page of this prospectus, would increase (decrease) total consideration paid by new investors, total consideration paid by all stockholders and average price per share paid by all stockholders by $15.0 million, $15.0 million and $0.10 per share, respectively, assuming the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

                If the underwriters exercise in full their option to purchase 1,300,050 additional shares of our common stock in this offering, the as adjusted net tangible book value (deficit) per share would be $(1.03) per share and the dilution to new investors in this offering would be $16.03 per share. If the underwriters exercise such option in full, the number of shares held by new investors will increase to 9,967,050 shares of our common stock, or approximately 16% of the total number of shares of our common stock outstanding after this offering. The number of shares of our common stock to be outstanding immediately following this offering set forth above excludes:

    5,620,199 shares of common stock issuable upon the exercise of options outstanding under our 2012 Option Plan as of April 30, 2016 at a weighted average exercise price of approximately $10.18 per share;

    2,478,702 shares of common stock issuable upon the exercise of options to be granted in connection with this offering under our 2016 Equity Plan and 28,311 shares of common stock issuable upon the exercise of options to be granted in connection with this offering under our 2012 Option Plan, each at an exercise price equal to the initial public offering price; and

    3,718,053 shares of common stock reserved for future issuance under our 2016 Equity Plan.

                To the extent any options are granted and exercised in the future, there may be additional economic dilution to new investors. Pro forma diluted weighted average shares outstanding for the thirteen weeks ended April 30, 2016 as calculated under the treasury stock method include the dilutive effect of 1,770,767 options outstanding under our 2012 Option Plan. Options to be granted in connection with this offering under our 2012 Option Plan and our 2016 Equity Plan would be anti-dilutive on the date of grant. See note 5 to the pro forma statement of operations data included under "Selected Consolidated Financial Data".

                In addition, we may choose to raise additional capital due to market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

                Our selected consolidated statements of operations, cash flow and balance sheet data presented below as of January 31, 2015 and January 30, 2016 and for each of the three fiscal years in the period ended January 30, 2016 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. Our selected consolidated balance sheet data as of January 25, 2014 has been derived from our audited consolidated financial statements not included in this prospectus. Our selected condensed consolidated statements of operations, cash flow and balance sheet data presented below as of and for the thirteen weeks ended May 2, 2015 and April 30, 2016 has been derived from the unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements were prepared on a basis consistent with that used in preparing our audited consolidated financial statements and include all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of our financial position and results of operations for the unaudited periods.

                The historical results presented below are not necessarily indicative of the results to be expected for any future period. The selected consolidated financial data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.

 
  Fiscal Year Ended   Thirteen Weeks Ended  
 
  January 25,
2014
  January 31,
2015
  January 30,
2016
 
May 2,
2015
  April 30,
2016
 
 
  (in thousands, except share and per share data)
 

Statement of Operations Data:

                               

Net sales

  $ 403,966   $ 497,733   $ 622,161   $ 141,217   $ 172,079  

Cost of sales

    272,021     335,617     421,750     93,912     113,773  

Gross profit

    131,945     162,116     200,411     47,305     58,306  

Operating expenses

                               

Selling, general and administrative expenses

    74,255     110,503     135,716     29,941     37,444  

Impairment of trade name

    37,500                  

Depreciation and amortization

    1,262     5,310     2,476     466     892  

Total operating expenses

    113,017     115,813     138,192     30,407     38,336  

Operating income

    18,928     46,303     62,219     16,898     19,970  

Interest expense, net

    41,152     42,382     36,759     10,806     8,193  

Loss on extinguishment of debt

            36,046          

(Loss) income before income taxes

    (22,224 )   3,921     (10,586 )   6,092     11,777  

Income tax provision (benefit)

    59     4,357     (14,160 )   4,324     4,451  

Net (loss) income

  $ (22,283 ) $ (436 ) $ 3,574   $ 1,768   $ 7,326  

Per Share Data:

                               

Net (loss) income per common share:

                               

Basic

  $ (0.44 ) $ (0.01 ) $ 0.07   $ 0.03   $ 0.14  

Diluted

  $ (0.44 ) $ (0.01 ) $ 0.07   $ 0.03   $ 0.14  

Weighted average shares outstanding:

                               

Basic

    50,836,727     50,836,727     50,836,727     50,836,727     50,836,727  

Diluted

    50,836,727     50,836,727     51,732,752     52,705,000     52,607,494  

Cash Flow Data:

                               

Net cash provided by (used in) operating activities

  $ 35,695   $ 15,321   $ 14,913   $ (971 ) $ 25,840  

Net cash used in investing activities

    (30,310 )   (100,098 )   (39,727 )   (264 )   (30,418 )

Net cash (used in) provided by financing activities

    (4,032 )   84,512     25,536     3,936     8,059  

Net increase (decrease) in cash and cash equivalents

    1,353     (265 )   722     2,701     3,481  

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  January 25,
2014
  January 31,
2015
  January 30,
2016
 
May 2,
2015
  April 30,
2016
 
 
  (in thousands)
 

Balance Sheet Data:

                               

Cash and cash equivalents

  $ 4,971   $ 4,706   $ 5,428   $ 7,407   $ 8,909  

Inventories, net

    109,125     142,256     176,388     146,073     175,472  

Property and equipment, net

    111,786     220,084     272,776     231,775     296,649  

Net working capital(1)(2)

    43,844     59,280     95,839     69,351     87,638  

Total assets(2)

    824,742     968,315     1,054,810     972,649     1,081,399  

Total debt(2)(3)

    372,351     445,661     515,136     449,972     523,667  

Total shareholders' equity

    357,101     360,916     369,153     363,794     377,640  

 

 
  Fiscal Year Ended
January 30, 2016
  Thirteen Weeks Ended
April 30, 2016
 
 
  (dollars in thousands, except share
and per share data)

 

Pro Forma Statement of Operations Data:

             

Pro forma net income(4)

  $ 15,976   $ 9,937  

Pro forma weighted average shares outstanding(5)

             

Basic

    59,503,727     59,503,727  

Diluted

    60,399,752     61,274,494  

Pro forma net income per share(4)(5)

             

Basic

  $ 0.27   $ 0.17  

Diluted

  $ 0.26   $ 0.16  

(1)
Net working capital is defined as current assets (excluding cash and cash equivalents) less current liabilities (excluding the current portion of long-term debt and revolving line of credit).

(2)
On January 30, 2016, we elected to early adopt Accounting Standards Update ("ASU") No. 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which changes the presentation of unamortized debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the carrying value of the debt, similar to the presentation of debt discounts. We applied the new guidance retrospectively to all prior periods presented to conform to our fiscal year 2016 and first quarter of fiscal year 2017 presentation. As a result, $8.4 million, $7.5 million and $7.5 million of unamortized deferred debt issuance costs related to our long-term debt as of January 25, 2014, January 31, 2015 and May 2, 2015, respectively, were reclassified from debt issuance costs to the associated long-term debt in our consolidated balance sheet data. For more information, see Note 1 to our consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus. The impact of the adoption of ASU 2015-03 has been excluded from this presentation of total debt; accordingly, amounts shown for total debt exclude unamortized debt issuance costs of $8.4 million, $7.5 million, $12.7 million, $7.5 million and $12.3 million as of January 25, 2014, January 31, 2015, January 30, 2016, May 2, 2015 and April 30, 2016, respectively, which were included as a direct reduction of long-term debt in the consolidated balance sheets included elsewhere in this prospectus.


In addition, on January 30, 2016, we elected to early adopt ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"). ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. We applied the new guidance retrospectively to all prior periods presented to conform to our fiscal year 2016 and first quarter of fiscal year 2017 presentation. Accordingly, current deferred tax assets and noncurrent deferred tax liabilities in the net amount of $0.4 million, $2.4 million and $2.6 million as of January 25, 2014, January 31, 2015

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    and May 2, 2015, respectively, have been classified as noncurrent deferred tax assets in our consolidated balance sheet data. For more information, see Note 1 to our consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus.

(3)
Total debt consists of the current and long-term portions of the Senior Secured Notes, the First Lien Facility, the Second Lien Facility and mortgage loans, as well as outstanding borrowings under the ABL Facility, as applicable, in each case before giving effect to any deduction of unamortized debt issuance costs, as described in note 2 above. The current portion of long-term debt, per our consolidated balance sheets as of January 30, 2016 and April 30, 2016 included elsewhere in this prospectus, includes $0.5 million and $0.6 million, respectively, for the current portion of financing obligations that has been excluded from this presentation of total debt. Amounts shown for total debt also exclude an accrued exit fee relating to the Second Lien Facility in the amount of $0.8 million and $1.1 million as of January 30, 2016 and April 30, 2016, respectively.

(4)
For the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, amounts are shown pro forma to give effect to the following transactions as if they had occurred as of the beginning of the periods presented: (i) this offering, (ii) the repayment of indebtedness from the proceeds of this offering as described in "Use of Proceeds" and (iii) each of the related adjustments mentioned below. Amounts for the fiscal year ended January 30, 2016 are also shown pro forma to give effect to the June 2015 Refinancing as if it had occurred as of the beginning of the period presented.

Adjustments to net income for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016 reflect (i) a $17.0 million and $3.3 million decrease in interest expense, respectively (see the reconciliation of historical interest expense to pro forma interest expense below), (ii) an $8.2 million and $1.6 million increase in income tax expense, respectively, due to higher income before taxes relating to our pro forma net income and (iii) the removal of $3.6 million and $0.9 million of the Sponsors' management fees, respectively.

The following is a reconciliation of historical net income to pro forma net income for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016:

 
  Fiscal Year Ended
January 30, 2016
  Thirteen Weeks
Ended
April 30, 2016
 
 
  (in thousands)
 

Net income

  $ 3,574   $ 7,326  

Decrease in interest expense, net(a)

    16,989     3,297  

Increase in income tax expense(b)

    (8,199 )   (1,587 )

Removal of management fee(c)

    3,612     901  

Pro forma net income(d)

  $ 15,976   $ 9,937  

(a)
See the reconciliation of historical interest expense to pro forma interest expense below.

(b)
Reflects an increase in income tax expense for the related tax effects of the pro forma adjustments. For the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, the tax impact is based upon an increase of pro forma income before taxes of $20.6 million and $4.2 million, respectively, and an effective tax rate of 39.8% and 37.8%, respectively.

(c)
Reflects the removal of management fees payable to the Sponsors. In connection with this offering, the management agreement will be terminated. See "Certain Relationships and Related Party Transactions".

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(d)
For the fiscal year ended January 30, 2016, we recognized a loss on extinguishment of debt in the amount of approximately $36.0 million in connection with the redemption of the Senior Secured Notes in June 2015. Pro forma net income excludes any adjustments related to loss on extinguishment of debt that may result from this offering.

    The following is a reconciliation of historical interest expense to pro forma interest expense for the fiscal year ended January 30, 2016 and thirteen weeks ended April 30, 2016.

 
  Fiscal Year Ended
January 30,
2016
  Thirteen Weeks
Ended
April 30, 2016
 
 
  (in thousands)
 

Interest expense, net

  $ 36,759   $ 8,193  

Decrease resulting from the June 2015 Refinancing(a)

    (3,868 )    

Decrease resulting from use of proceeds of this offering(b)

    (13,404 )   (3,368 )

Increase resulting from the use of ABL borrowings(c)

    283     71  

Pro forma interest expense, net

  $ 19,770   $ 4,896  

(a)
For the fiscal year ended January 30, 2016, reflects redemption in full of the Senior Secured Notes with the proceeds of the Term Loan Facilities.

(b)
Assumes repayment of indebtedness under the Second Lien Facility, which bears interest at a rate of 9.0% per annum, using the proceeds of this offering, as if it had occurred as of the beginning of the periods presented.

(c)
Assumes that the underwriters do not exercise their option to purchase additional shares and, as a result, net proceeds to us from this offering are insufficient to repay the borrowings outstanding under the Second Lien Facility in full, in which case we intend to use borrowings under the ABL Facility to repay the remaining $14.2 million in outstanding principal. We expect to use cash to pay any accrued and unpaid interest and premium on the outstanding principal amount of the Second Lien Facility. The effective interest rate on the ABL Facility was approximately 2.00% for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016.
(5)
Gives effect to (i) the 128.157393-for-one stock split effected on July 22, 2016 and (ii) the 8,667,000 shares of our common stock to be issued by us in this offering. Pro forma basic net income per share consists of pro forma net income divided by the pro forma basic weighted average common shares outstanding. Pro forma diluted net income per share consists of pro forma net income divided by the pro forma diluted weighted average shares outstanding. Pro forma diluted weighted average shares outstanding include the dilutive effect of 896,025 and 1,770,767 options outstanding under our 2012 Option Plan for the fiscal year ended January 30, 2016 and the thirteen weeks ended April 30, 2016, respectively. Options to be granted in connection with this offering under our 2012 Option Plan and our 2016 Equity Plan would be anti-dilutive on the date of grant.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                You should read the following discussion and analysis of our financial condition and results of operations together with the "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" sections of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

                We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the last Saturday in January. In a 52-week fiscal year, each quarter contains 13 weeks of operations; in a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations. References to a fiscal year mean the year in which that fiscal year ends. References herein to "fiscal year 2013" relate to the 52 weeks ended January 26, 2013, references herein to "fiscal year 2014" relate to the 52 weeks ended January 25, 2014, references herein to "fiscal year 2015" relate to the 53 weeks ended January 31, 2015, references herein to "fiscal year 2016" relate to the 52 weeks ended January 30, 2016 and references herein to "fiscal year 2017" relate to the 52 weeks ending January 28, 2017. References herein to "the first quarter of fiscal year 2016" and "the first quarter of fiscal year 2017" relate to the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively.

Overview

                At Home is the leading home décor superstore based on the number of our locations and our large format stores that we believe dedicate more space per store to home décor than any other player in the industry. We are focused on providing the broadest assortment of products for any room, in any style, for any budget. We utilize our space advantage to out-assort our competition, offering over 50,000 SKUs throughout our stores. Our differentiated merchandising strategy allows us to identify on-trend products and then value engineer those products to provide desirable aesthetics at attractive price points for our customers. Over 70% of our products are unbranded, private label or specifically designed for us. We believe that our broad and comprehensive offering and compelling value proposition combine to create a leading destination for home décor with the opportunity to continue taking market share in a large, fragmented and growing market.

                We were founded in 1979 in Garden Ridge, Texas, a suburb of San Antonio. After we were acquired in 2011 by a group of investors led by AEA, including affiliates of Starr Investments, we began a series of strategic investments in our business that we believe have laid the foundation for continued profitable growth. During fiscal years 2014 and 2015, we invested approximately $85 million in capital in connection with the following strategic initiatives:

      To take advantage of the concentration of retail talent in the Dallas / Fort Worth area, we moved our Company headquarters from Houston to Plano.

      In addition to building out our executive team, we significantly increased the number of people within all functional areas, resulting in a well-rounded team with a deep bench of experience.

      We have implemented rigorous, systematic processes which have allowed us to accelerate new store openings while delivering strong financial results.

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      We upgraded and automated our distribution center and expanded its capacity to service our growing store base.

      In fiscal year 2015, we completed the rebranding of our Company from Garden Ridge to At Home, an important milestone which has strengthened our brand message and better communicates our position as the leading home décor superstore.

                Our strengthened management team, new brand identity, improved real estate capabilities, upgraded and automated distribution center and enhanced information systems should enable us to expand our store base while maintaining our industry-leading profitability.

                Our current store base is comprised of 115 large format stores across 29 states and 65 markets, averaging approximately 120,000 square feet per store. Over the past five fiscal years we have opened 59 new stores and we believe there is significant whitespace opportunity to increase our store count in both existing and new markets.

Trends and Other Factors Affecting Our Business

                Various trends and other factors affect or have affected our operating results, including:

                Overall economic trends.    The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending in our stores, while economic weakness results in a reduction of customer spending. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include employment rates, business conditions, changes in the housing market, the availability of credit, interest rates, tax rates and fuel and energy costs.

                Consumer preferences and demand.    Our ability to maintain our appeal to existing customers and attract new customers depends on our ability to originate, develop and offer a compelling product assortment responsive to customer preferences and design trends. If we misjudge the market for our products, we may be faced with excess inventories for some products and may be required to become more promotional in our selling activities, which would impact our net sales and gross profit.

                New store openings.    We expect new stores will be the key driver of the growth in our sales and operating profit in the future. Our results of operations have been and will continue to be materially affected by the timing and number of new store openings. The performance of new stores may vary depending on various factors such as the store opening date, the time of year of a particular opening, the amount of store opening costs, the amount of store occupancy costs and the location of the new store, including whether it is located in a new or existing market. For example, we typically incur higher than normal employee costs at the time of a new store opening associated with set-up and other opening costs. In addition, in response to the interest and excitement generated when we open a new store, the new stores generally experience higher net sales during the initial period of one to three months after which the new store's net sales will begin to normalize as it reaches maturity within six months of opening, as further discussed below.

                Our planned store expansion will place increased demands on our operational, managerial, administrative and other resources. Managing our growth effectively will require us to continue to enhance our store management systems, financial and management controls and information systems. We will also be required to hire, train and retain store management and store personnel, which together with increased marketing costs, affects our operating margins.

                A new store typically reaches maturity, meaning the store's annualized targeted sales volume has been reached, within six months of opening. New stores are included in the comparable store base during the sixteenth full fiscal month following the store's opening, which we believe represents the most appropriate comparison. We also periodically explore opportunities to relocate a limited number

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of existing stores to improve location, lease terms, store layout or customer experience. Relocated stores typically achieve a level of operating profitability comparable to our company-wide average for existing stores more quickly than new stores.

                Rebranding initiative.    During the fiscal year ended January 31, 2015, we launched a significant rebranding initiative through which we spent over $20 million in capital and expenses to change our brand and corporate name and convert and refresh all of our stores. We changed our name from "Garden Ridge" to "At Home", a name that we believe better communicates our positioning as the leading home décor superstore. We completed the rebranding initiative during the first nine months of fiscal year 2015 and now all of our stores operate under the At Home brand.

                Infrastructure investment.    Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that our strengthened management team, new brand identity, upgraded and automated distribution center and enhanced information systems, including our warehouse management and POS systems, enable us to replicate our profitable store format and differentiated shopping experience. In addition, during fiscal year 2016, we upgraded our inventory allocation system to better manage inventory for each store and corresponding customer base. We expect these infrastructure investments to support our successful operating model over a significantly expanded store base.

                Pricing strategy.    We are committed to providing our products at everyday low prices. We value engineer products in collaboration with our suppliers to recreate the "look" that we believe our customer wants while eliminating the costly construction elements that she does not value. We believe our customer views shopping At Home as an in-person experience through which she can see and feel the quality of our products and physically assemble her desired aesthetic. This design approach allows us to deliver an attractive value to our customers, as our products are typically less expensive than other branded products with a similar look. We employ a simple everyday low pricing strategy that consistently delivers savings to our customers without the need for extensive promotions, as evidenced by 80% of our net sales occurring at full price.

                Our ability to source and distribute products effectively.    Our net sales and gross profit are affected by our ability to purchase our products in sufficient quantities at competitive prices. While we believe our vendors have adequate capacity to meet our current and anticipated demand, our level of net sales could be adversely affected in the event of constraints in our supply chain, including the inability of our vendors to produce sufficient quantities of some merchandise in a manner that is able to match market demand from our customers, leading to lost sales.

                Fluctuation in quarterly results.    Our quarterly results have historically varied depending upon a variety of factors, including our product offerings, promotional events, store openings and shifts in the timing of holidays, among other things. As a result of these factors, our working capital requirements and demands on our product distribution and delivery network may fluctuate during the year.

                Adverse weather conditions in fourth quarter of fiscal year 2014.    During the fourth quarter of fiscal year 2014, we experienced negative comparable stores sales due to significant weather events that affected Texas and a number of the markets in which we do business. Two ice storms hit the region during December 2013, resulting in lower than expected sales and requiring us to take early markdowns on some of our merchandise during an important compressed holiday shopping period.

                Inflation and deflation trends.    Our financial results can be expected to be directly impacted by substantial increases in product costs due to commodity cost increases or general inflation which could lead to a reduction in our sales as well as greater margin pressure as costs may not be able to be

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passed on to consumers. To date, changes in commodity prices and general inflation have not materially impacted our business. In response to increasing commodity prices or general inflation, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mix or increasing our pricing when necessary.

                Refinancings.    In June 2015, we entered into a $300 million senior secured first lien term loan facility and a $130 million senior secured second lien term loan facility. The proceeds of these term loans were used to refinance and redeem in full our 10.75% senior secured notes due 2019, which reduced our overall cost of capital. In addition, we expect to use the proceeds of this offering to repay the senior secured second lien term loan facility, which will further reduce our cost of capital and debt service obligations. For more information, please see "—Liquidity and Capital Resources".

                53rd week.    Our fiscal year 2015 consisted of 53 weeks. Fiscal years 2014 and 2016 each consisted of 52 weeks. The 53rd week of fiscal year 2015 contributed $7.8 million to net sales. Please see "—Results of Operations" below for further discussion of the impact of the 53rd week on net sales.

How We Assess the Performance of Our Business

                In assessing our performance, we consider a variety of performance and financial measures. The key measures include net sales, gross profit and gross margin, and selling, general and administrative expenses. In addition, we also review other important metrics such as Adjusted EBITDA and Store-level Adjusted EBITDA.

Net Sales

                Net sales are derived from direct retail sales to customers in our stores, net of merchandise returns and discounts. Growth in net sales is impacted by opening new stores and increases in comparable store sales.

    New store openings

                The number of new store openings reflects the new stores opened during a particular reporting period, including any relocations of existing stores during such period. Before we open new stores, we incur pre-opening costs, as described below. The total number of new stores per year and the timing of store openings has, and will continue to have, an impact on our results as described above in "—Trends and Other Factors Affecting Our Business".

    Comparable store sales

                A store is included in the comparable store sales calculation on the first day of the sixteenth full fiscal month following the store's opening, which is when we believe comparability is achieved. When a store is being relocated or remodeled, we exclude sales from that store in the calculation of comparable store sales until the first day of the sixteenth full fiscal month after it reopens. In addition, when applicable, we adjust for the effect of the 53rd week. There may be variations in the way in which some of our competitors and other retailers calculate comparable or "same store" sales. As a result, data in this prospectus regarding our comparable store sales may not be comparable to similar data made available by other retailers.

                Comparable store sales allow us to evaluate how our store base is performing by measuring the change in period-over-period net sales in stores that have been open for the applicable period. Various factors affect comparable store sales, including:

    consumer preferences, buying trends and overall economic trends;

    our ability to identify and respond effectively to customer preferences and trends;

    our ability to provide an assortment of high quality and trend-right product offerings that generate new and repeat visits to our stores;

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    the customer experience we provide in our stores;

    our ability to source and receive products accurately and timely;

    changes in product pricing, including promotional activities;

    the number of items purchased per store visit;

    weather; and

    timing and length of holiday shopping periods.

                Opening new stores is an important part of our growth strategy. As we continue to pursue our growth strategy, we anticipate that an increasing percentage of our net sales will come from stores not included in our comparable store sales calculation. Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy.

Gross Profit and Gross Margin

                Gross profit is determined by subtracting cost of sales from our net sales. Gross margin measures gross profit as a percentage of net sales.

                Cost of sales consists of various expenses related to the cost of selling our merchandise. Cost of sales consists of the following: (1) cost of merchandise, net of inventory shrinkage, damages and vendor allowances; (2) inbound freight and internal transportation costs such as distribution center-to-store freight costs; (3) costs of operating our distribution center, including labor, occupancy costs, supplies, and depreciation and (4) store occupancy costs including rent, insurance, taxes, common area maintenance, utilities, repairs and maintenance and depreciation. The components of our cost of sales expenses may not be comparable to other retailers.

Selling, General and Administrative Expenses

                Selling, general and administrative expenses ("SG&A") consist of various expenses related to supporting and facilitating the sale of merchandise in our stores. These costs include payroll, benefits and other personnel expenses for corporate and store employees, including stock-based compensation expense, consulting, legal and other professional services expenses, marketing and advertising expenses, occupancy costs for our corporate headquarters and various other expenses.

                SG&A includes both fixed and variable components and, therefore, is not directly correlated with net sales. In addition, the components of our SG&A expenses may not be comparable to those of other retailers. We expect that our SG&A expenses will increase in future periods due to our continuing store growth and in part due to additional legal, accounting, insurance and other expenses that we expect to incur as a result of being a public company, including compliance with the Sarbanes-Oxley Act. In addition, any increase in future stock option or other stock-based grants or modifications will increase our stock-based compensation expense included in SG&A. In particular, the one-time bonus grant of stock options to be made to certain members of our senior management team in connection with the consummation of this offering will result in increased non-cash stock-based compensation expense, which will be incremental to our ongoing stock-based compensation expense. This stock-based compensation expense will be finalized upon the pricing of this offering and is expected to be expensed beginning in the fiscal quarter in which this offering closes and continuing over the following eight fiscal quarters. For more information, please see "Executive Compensation—2016 Equity Plan Awards—Special IPO Transaction Bonus Grant".

Adjusted EBITDA

                Adjusted EBITDA is a key metric used by management and our board of directors to assess our financial performance. Adjusted EBITDA is also the basis for performance evaluation under our current executive compensation programs. In addition, Adjusted EBITDA is frequently used by

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analysts, investors and other interested parties to evaluate companies in our industry. In addition to covenant compliance and executive performance evaluations, we use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures.

                Adjusted EBITDA is defined as net (loss) income before interest expense, net, loss from early extinguishment of debt, income tax (benefit) provision and depreciation and amortization, adjusted for the impact of certain other items as defined in our debt agreements, including certain legal settlements and consulting and other professional fees, costs associated with new store openings, relocation and employee recruiting incentives, management fees and expenses, stock-based compensation expense, impairment of our trade name and non-cash rent. For a reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, see "—Non-GAAP Financial Measures".

Store-level Adjusted EBITDA

                We use Store-level Adjusted EBITDA as a supplemental measure of our performance, which represents our Adjusted EBITDA excluding the impact of certain corporate overhead expenses that we do not consider in our evaluation of the ongoing operating performance of our stores from period to period. Store-level Adjusted EBITDA is a supplemental measure of operating performance of our stores and our calculations thereof may not be comparable to similar measures reported by other companies. We believe that Store-level Adjusted EBITDA is an important measure to evaluate the performance and profitability of each of our stores, individually and in the aggregate, especially given the level of investments we have made in our home office and infrastructure over the past four years to support future growth. We also believe that Store-level Adjusted EBITDA is a useful measure in evaluating our operating performance because it removes the impact of general and administrative expenses, which are not incurred at the store level, and the costs of opening new stores, which are non-recurring at the store-level, and thereby enables the comparability of the operating performance of our stores during the period. We use Store-level Adjusted EBITDA information to benchmark our performance versus competitors. Store-level Adjusted EBITDA should not be used as a substitute for consolidated measures of profitability of performance because it does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA.

                For a reconciliation of Store-level Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, see "—Non-GAAP Financial Measures".

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Results of Operations

                The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of our net sales:

 
  Fiscal Year Ended   Thirteen Weeks Ended  
 
  January 25,
2014
  January 31,
2015
  January 30,
2016
  May 2,
2015
  April 30,
2016
 
 
  (in thousands, except percentages and operational data)
 

Statement of Operations Data:

                               

Net sales

  $ 403,966   $ 497,733   $ 622,161   $ 141,217   $ 172,079  

Cost of sales

    272,021     335,617     421,750     93,912     113,773  

Gross profit

    131,945     162,116     200,411     47,305     58,306  

Operating expenses

                               

Selling, general and administrative expenses

    74,255     110,503     135,716     29,941     37,444  

Impairment of trade name

    37,500                  

Depreciation and amortization

    1,262     5,310     2,476     466     892  

Total operating expenses

    113,017     115,813     138,192     30,407     38,336  

Operating income

    18,928     46,303     62,219     16,898     19,970  

Interest expense, net

    41,152     42,382     36,759     10,806     8,193  

Loss on extinguishment of debt

            36,046          

(Loss) income before income taxes

    (22,224 )   3,921     (10,586 )   6,092     11,777  

Income tax provision (benefit)

    59     4,357     (14,160 )   4,324     4,451  

Net (loss) income

  $ (22,283 ) $ (436 ) $ 3,574   $ 1,768   $ 7,326  

Percentage of Net Sales:

                               

Net sales

    100.0 %   100.0 %   100.0 %   100.0 %   100.0 %

Cost of sales

    67.3 %   67.4 %   67.8 %   66.5 %   66.1 %

Gross profit

    32.7 %   32.6 %   32.2 %   33.5 %   33.9 %

Operating Expenses

                               

Selling, general and administrative expenses

    18.4 %   22.2 %   21.8 %   21.2 %   21.8 %

Impairment of trade name

    9.3 %                

Depreciation and amortization

    0.3 %   1.1 %   0.4 %   0.3 %   0.5 %

Total operating expenses

    28.0 %   23.3 %   22.2 %   21.5 %   22.3 %

Operating income

    4.7 %   9.3 %   10.0 %   12.0 %   11.6 %

Interest expense, net

    10.2 %   8.5 %   5.9 %   7.7 %   4.8 %

Loss on extinguishment of debt

            5.8 %        

(Loss) income before income taxes

    (5.5 )%   0.8 %   (1.7 )%   4.3 %   6.8 %

Income tax provision (benefit)

        0.9 %   (2.3 )%   3.1 %   2.6 %

Net (loss) income

    (5.5 )%   (0.1 )%   0.6 %   1.2 %   4.2 %

Operational Data:

                               

Total stores at end of period

    68     81     100     86     106  

New stores opened

    10     16     20     5     6  

Comparable store sales

    (0.4 )%   8.3 %   3.9 %   3.8 %   1.9 %

Store-level Adjusted EBITDA

  $ 112,945   $ 133,122   $ 168,573   $ 41,466   $ 49,256  

Store-level Adjusted EBITDA margin

    28.0 %   26.7 %   27.1 %   29.4 %   28.6 %

Adjusted EBITDA

  $ 86,968   $ 95,552   $ 115,270   $ 29,399   $ 33,962  

Adjusted EBITDA margin

    21.5 %   19.2 %   18.5 %   20.8 %   19.7 %

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Thirteen Weeks Ended April 30, 2016 Compared to Thirteen Weeks Ended May 2, 2015

Net Sales

                Net sales increased $30.9 million, or 21.9%, to $172.1 million for the thirteen weeks ended April 30, 2016 from $141.2 million for the thirteen weeks ended May 2, 2015. The increase was primarily driven by approximately $28.4 million of incremental revenue from the net addition of 20 new stores opened since May 2, 2015, as well as an approximately $2.5 million increase from comparable store sales, which increased 1.9% during the thirteen weeks ended April 30, 2016, driven primarily by our merchandising initiatives.

Cost of Sales

                Cost of sales increased $19.9 million, or 21.1%, to $113.8 million for the thirteen weeks ended April 30, 2016 from $93.9 million for the thirteen weeks ended May 2, 2015. This increase was primarily driven by the 21.9% increase in net sales for the thirteen weeks ended April 30, 2016 compared to the thirteen weeks ended May 2, 2015, which resulted in a $14.3 million increase in merchandise costs. In addition, during the thirteen weeks ended April 30, 2016, we recognized a $1.4 million increase in depreciation and amortization and a $3.8 million increase in store occupancy costs, in each case as a result of new store openings since May 2, 2015.

Gross Profit and Gross Margin

                Gross profit was $58.3 million, or 33.9% of net sales, for the thirteen weeks ended April 30, 2016, an increase from $47.3 million, or 33.5% of net sales, for the thirteen weeks ended May 2, 2015. The increase in gross profit was primarily driven by increased sales volume from the net addition of 20 new stores opened since May 2, 2015 as well as a 1.9% increase in comparable stores sales. Gross margin increased 40 basis points during the thirteen weeks ended April 30, 2016 when compared to the thirteen weeks ended May 2, 2015. The 40 basis point increase is primarily due to favorable freight costs as well as leveraging of occupancy costs. Gross margins for new stores did not materially differ from those of comparable stores during the thirteen weeks ended April 30, 2016 or the thirteen weeks ended May 2, 2015, primarily as a result of the short six month period to maturity of new stores, as discussed under "—Trends and Other Factors Affecting Our Business—New store openings", following which the performance of new stores was consistent with comparable stores in each such period.

Selling, General and Administrative Expenses

                Selling, general and administrative expenses were $37.4 million for the thirteen weeks ended April 30, 2016 compared to $29.9 million for the thirteen weeks ended May 2, 2015, an increase of $7.5 million or 25.1%. As a percentage of sales, SG&A for the thirteen weeks ended April 30, 2016 was 21.8% compared to 21.2% for the thirteen weeks ended May 2, 2015. SG&A expenses include corporate overhead expenses, which represented $2.1 million of the increase, resulting from additional home office support capabilities as well as increased payroll and marketing and advertising expenses incurred to support our growth strategies. The remaining $5.4 million in increased selling, general and administrative expenses was contributed by store operations and was primarily driven by a $2.5 million increase in payroll expenses due to new store headcount and a $1.7 million increase in advertising expenses resulting from our efforts to continue to build brand awareness. Additionally, there was a $0.6 million increase in store pre-opening costs due to the timing of new store openings during fiscal year 2017 compared to fiscal year 2016 as well as increases in various other administrative costs to support the continued growth in our store base.

Interest Expense, Net

                Interest expense, net decreased to $8.2 million in the thirteen weeks ended April 30, 2016 from $10.8 million in the thirteen weeks ended May 2, 2015, a decrease of $2.6 million. The decrease in interest expense resulted from the June 2015 Refinancing. See "—Liquidity and Capital Resources".

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Income Tax Provision

                Income tax expense was $4.5 million for the thirteen weeks ended April 30, 2016 compared to $4.3 million for the thirteen weeks ended May 2, 2015. The effective tax rate for the thirteen weeks ended April 30, 2016 was 37.8% compared to 71.0% for the thirteen weeks ended May 2, 2015. The effective tax rate for the thirteen weeks ended April 30, 2016 differs slightly from the federal statutory rate primarily due to the impact of state and local income taxes and, to a lesser extent, the increase of our reserve for uncertain tax positions. The effective tax rate for the thirteen weeks ended May 2, 2015 differs significantly from the federal statutory rate primarily due to the impact of state income taxes and changes in the valuation allowance on our deferred tax assets.

                We concluded that deferred tax assets of $0.6 million related to state income tax net operating loss carryforwards would likely not be realizable in the future and that a valuation allowance for state deferred tax assets was still appropriate as of April 30, 2016.

Fiscal Year Ended January 30, 2016 Compared to Fiscal Year Ended January 31, 2015

Net Sales

                Net sales increased $124.5 million, or 25.0%, to $622.2 million for the fiscal year ended January 30, 2016 from $497.7 million for the fiscal year ended January 31, 2015. The increase was primarily driven by approximately $114.8 million of incremental revenue from the net addition of 19 new stores since January 31, 2015, as well as an approximately $17.5 million increase from comparable store sales, which increased 3.9% during the fiscal year ended January 30, 2016, driven primarily by our merchandising initiatives. The fiscal year ended January 31, 2015 had 53 weeks and this additional week contributed approximately $7.8 million in additional net sales during the period. Excluding the impact of the 53rd week, net sales increased 27.0% during the fiscal year ended January 30, 2016 compared to the fiscal year ended January 31, 2015. In addition, comparable store sales for the fiscal year ended January 31, 2015 reflected the impact of our rebranding initiative during fiscal year 2015, which resulted in an 8.3% increase in comparable store sales as compared to the fiscal year ended January 25, 2014.

Cost of Sales

                Cost of sales increased $86.2 million, or 25.7%, to $421.8 million for the fiscal year ended January 30, 2016 from $335.6 million for the fiscal year ended January 31, 2015. This increase was primarily driven by the 25.0% increase in net sales for the fiscal year ended January 30, 2016 compared to the fiscal year ended January 31, 2015, which resulted in a $55.5 million increase in merchandise costs. In addition, during the fiscal year ended January 30, 2016, we recognized an $8.2 million increase in depreciation and amortization and a $14.2 million increase in store occupancy costs, in each case as a result of new store openings during the period.

Gross Profit and Gross Margin

                Gross profit was $200.4 million, or 32.2% of net sales, for the fiscal year ended January 30, 2016, an increase from $162.1 million, or 32.6% of net sales, for the fiscal year ended January 31, 2015. The increase in gross profit was primarily driven by increased sales volume from the net addition of 19 new stores opened since January 31, 2015 as well as a 3.9% increase in comparable stores sales. Gross margin declined 40 basis points during the fiscal year ended January 30, 2016 primarily due to increased depreciation expense during the period as a result of purchased stores and ground up builds that were opened throughout fiscal year 2015 and fiscal year 2016. Gross margins for new stores did not materially differ from those of comparable stores during the fiscal year ended January 30, 2016 or the fiscal year ended January 31, 2015, primarily as a result of the short six month period to maturity of new stores, as discussed under "—Trends and Other Factors Affecting Our Business—New store

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openings", following which the performance of new stores was consistent with comparable stores in each such period.

Selling, General and Administrative Expenses

                Selling, general and administrative expenses were $135.7 million for the fiscal year ended January 30, 2016 compared to $110.5 million for the fiscal year ended January 31, 2015, an increase of $25.2 million or 22.8%. As a percentage of sales, SG&A for the fiscal year ended January 30, 2016 was 21.8% compared to 22.2% for the fiscal year ended January 31, 2015. SG&A expenses include corporate overhead expenses, which represented $14.3 million of the increase, resulting from additional home office support capabilities as well as increased marketing and advertising expenses, occupancy and consulting and professional fees incurred to support our growth strategies. In addition, corporate overhead expenses for the fiscal year ended January 31, 2015 reflected the impact of a $2.1 million reduction due to proceeds received on an insurance matter. The remaining $10.9 million in increased selling, general and administrative expenses that was contributed by store operations was primarily driven by a $7.5 million increase in payroll expenses resulting from new store headcount. Additionally, there was a $3.3 million increase in store pre-opening costs for new stores opening during fiscal years 2016 and 2017 and various other administrative costs to support the continued growth in our store base. These increases were partially offset by a $1.8 million gain recognized on the sale of a property in Houston, Texas in the fiscal year ended January 30, 2016.

Interest Expense, Net

                Interest expense, net decreased to $36.8 million in the fiscal year ended January 30, 2016 from $42.4 million in the fiscal year ended January 31, 2015, a decrease of $5.6 million. The decrease in interest expense resulted from the June 2015 Refinancing. See "—Liquidity and Capital Resources".

Loss on Extinguishment of Debt

                During the fiscal year ended January 30, 2016, we recognized a loss on extinguishment of debt of approximately $36.0 million resulting from the June 2015 Refinancing. The loss on extinguishment of debt also includes the write-off of $7.0 million of unamortized deferred debt issuance costs.

Income Tax Provision

                Income tax benefit was $14.2 million for the fiscal year ended January 30, 2016 compared to income tax expense of $4.4 million for the fiscal year ended January 31, 2015. The effective tax rate for the fiscal year ended January 30, 2016 was 133.8% compared to 111.1% for the fiscal year ended January 31, 2015. The effective tax rate for the fiscal year ended January 30, 2016 differs significantly from the federal statutory rate primarily due to the impact of the reversal of the valuation allowance we had historically maintained on our deferred tax assets and, to a lesser extent, the reduction of our reserve for uncertain tax positions. The effective tax rate for the fiscal year ended January 31, 2015 differs from the federal statutory rate because of the impact of state income taxes as well as changes in reserves for uncertain tax positions and changes in our federal valuation allowance on deferred tax assets.

                When evaluating our valuation allowance, we are required to assess the available positive and negative evidence to estimate if sufficient future income will be generated to utilize deferred tax assets. In making our assessment as of January 30, 2016, we considered the four sources of taxable income described in Accounting Standards Codification ("ASC") 740-10-30-18 and determined that three sources of future income were available: (1) future taxable income exclusive of reversing temporary differences and carryforwards; (2) reversing taxable temporary differences; and (3) the carryback of losses resulting from the reversals of deductible temporary differences in excess of reversing taxable temporary differences. We did not, however, identify any tax planning strategies which would serve as a source of future income.

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                We believe the cumulative pre-tax income is a significant piece of positive evidence that allows us to consider other subjective evidence such as future forecasted pre-tax income. For the fiscal year ended January 31, 2015, we determined we had three years of cumulative pre-tax income after excluding the $37.5 million tradename impairment recognized during the fiscal year 2014, which we consider to be unusual in nature because it was a result of our rebranding initiative. However, we did not believe that our three year cumulative pre-tax income position was positive evidence that we could consider because our rebranding efforts were still in the early stages and we had not yet demonstrated our ability to forecast our results of operations. For the fiscal year ended January 30, 2016, after excluding the tradename impairment, we determined that we continued to have three years of cumulative pre-tax income. In addition, taxable income (loss) exceeded pretax income (loss) for the fiscal year ended January 30, 2016 and for each of the two preceding fiscal years. As of January 30, 2016, we have completed approximately 18 months of operations following our rebranding initiative as well as demonstrated our ability to more accurately forecast the results of our operations. We concluded that because of this positive evidence, along with taxable income in the prior two fiscal years to absorb loss carrybacks that would be generated by reversing deductible differences in excess of reversing taxable differences, as well as cumulative pre-tax income (exclusive of the tradename impairment) in recent fiscal years, it was more likely than not that our deferred tax assets would be realized in future years. Accordingly, during fiscal year 2016 we reversed $6.0 million of the valuation allowance on deferred tax assets, with an offsetting credit to the provision for income taxes.

                We concluded that deferred tax assets of $0.6 million related to state income tax net operating loss carryforwards would likely not be realizable in the future and that a valuation allowance for state deferred tax assets was appropriate as of January 30, 2016.

Fiscal Year Ended January 31, 2015 Compared to Fiscal Year Ended January 25, 2014

Net Sales

                Net sales increased $93.7 million, or 23.2%, to $497.7 million for the fiscal year ended January 31, 2015 from $404.0 million for the fiscal year ended January 25, 2014. This increase was primarily driven by $54.6 million of incremental revenue primarily from the net addition of 13 new stores opened during fiscal year 2015 as well as growth from stores opened during fiscal year 2014, a $31.3 million increase in comparable store sales, as well as $7.8 million in net sales earned during the 53rd week of fiscal year 2015. Comparable store sales increased 8.3% during fiscal year 2015 driven primarily by our rebranding initiatives. In addition, during the fourth quarter of fiscal year 2014, we experienced negative comparable stores sales due to significant weather events that affected Texas and a number of the markets in which we do business. Two ice storms hit the region during December 2013, resulting in lower than expected sales and requiring us to take early markdowns on some of our merchandise.

Cost of Sales

                Cost of sales increased $63.6 million, or 23.4%, to $335.6 million for the fiscal year ended January 31, 2015 from $272.0 million for the fiscal year ended January 25, 2014. The primary driver of the year over year increase was the 23.2% increase in net sales which resulted in a $41.3 million increase in merchandise costs, as well as a $6.1 million increase in depreciation and amortization and a $7.8 million increase in store occupancy costs as a result of new store openings over the last twelve months.

Gross Profit and Gross Margin

                Gross profit was $162.1 million, or 32.6% of net sales, for the fiscal year ended January 31, 2015, an increase from $131.9 million, or 32.7% of net sales, for the fiscal year ended January 25, 2014. The growth in gross profit was primarily driven by increased sales volume from the net addition of 13 new stores opened during fiscal year 2015 as well as growth from stores opened during fiscal year 2014,

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growth in comparable store sales, and an additional $7.8 million in net sales earned during the 53rd week of fiscal year 2015. Gross margins for new stores did not materially differ from those of comparable stores during the fiscal year ended January 31, 2015 or the fiscal year ended January 25, 2014, primarily as a result of the short six month period to maturity of new stores, as discussed under "—Trends and Other Factors Affecting Our Business—New store openings", following which the performance of new stores was consistent with comparable stores in each such period.

Selling, General and Administrative Expenses

                Selling, general and administrative expenses were $110.5 million for the fiscal year ended January 31, 2015 compared to $74.3 million for the fiscal year ended January 25, 2014. As a percentage of sales, SG&A for fiscal year 2015 was 22.2% compared to 18.4% for fiscal year 2014. SG&A increased $36.2 million, or 48.8%, during fiscal year 2015 compared to fiscal year 2014. Selling, general and administrative expenses include corporate overhead expenses which represented $13.9 million of the increase resulting from additional home office support capabilities as well as increased marketing and advertising expenses and consulting and professional fees incurred to support our growth. The remaining $22.3 million increase in selling, general and administrative expenses that was contributed by store operations was due primarily to a $7.2 million increase in payroll expenses resulting from new store headcount, a $6.0 million increase in store pre-opening costs and various other administrative costs as well as a $3.8 million increase in marketing and advertising, all of which were incurred to support the continued growth in our store base.

Impairment of Trade Name

                During the fiscal year ended January 25, 2014, we recognized a $37.5 million impairment charge related to our former Garden Ridge trade name intangible asset as a result of our rebranding initiative. The remaining value of the Garden Ridge trade name of $4.0 million was reclassified as a definite-lived intangible asset and amortized over the first nine months of fiscal year 2015 during which we completed our rebranding initiative. As of January 31, 2015, the Garden Ridge trade name definite-lived intangible asset was fully amortized and the carrying value of the At Home trade name was approximately $0.9 million. No impairment charges were recognized during the fiscal year ended January 31, 2015.

Interest Expense, Net

                Interest expense, net increased to $42.4 million for the fiscal year ended January 31, 2015 from $41.2 million for the fiscal year ended January 25, 2014, an increase of $1.2 million, or 3.0%. The increase in interest expense resulted from interest expense incurred from the use of the ABL Facility as well as the financing obligations that were recorded for various leases during fiscal year 2015.

Income Tax Provision

                Income tax expense was $4.4 million for the fiscal year ended January 31, 2015 compared to $0.1 million for the fiscal year ended January 25, 2014. The effective tax rate for fiscal year 2015 differs from the federal statutory rate because of the impact of state income taxes of $1.3 million as well as changes in reserves for uncertain tax positions of $0.7 million and changes in our federal valuation allowance on deferred tax assets of $1.0 million on pre-tax earnings of $3.9 million. The effective tax rate for fiscal year 2014 differs from the federal statutory rate because of the impact of state income taxes of $2.5 million as well as the impact of changes in reserves for uncertain tax positions of $0.7 million and changes in our federal valuation allowance on deferred tax assets of $4.7 million on a pre-tax loss of $22.2 million. State taxes in fiscal year 2015 and 2014 were significant when compared to consolidated pre-tax (loss) earnings because state tax deductions were not available for certain corporate expenses for purposes of calculating state income taxes owed by the Company. A valuation allowance has been recorded in fiscal year 2014 and fiscal year 2015 because we concluded that it is more likely than not that certain net deferred tax assets will not be realized.

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Non-GAAP Financial Measures

                We present Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin, which are not recognized financial measures under GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as interest, depreciation, amortization, loss on extinguishment of debt and taxes, as well as costs related to new store openings, which are incurred on a limited basis with respect to any particular store when opened and are not indicative of ongoing core operating performance. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA and Store-level Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA. In particular, Store-level Adjusted EBITDA does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA. Our presentation of Adjusted EBITDA and Store-level Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Store-level Adjusted EBITDA following this offering, and any such modification may be material. In addition, Adjusted EBITDA, Adjusted EBITDA margin, Store-level Adjusted EBITDA and Store-level Adjusted EBITDA margin may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

                Management believes Adjusted EBITDA is helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We also use Adjusted EBITDA in connection with performance evaluations for our executives; to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and to compare our performance against that of other peer companies using similar measures. In addition, we utilize Adjusted EBITDA in certain calculations under our ABL Facility (defined therein as "Consolidated EBITDA") and our Term Loan Facilities (defined therein as "Consolidated Cash EBITDA"). Management believes Store-level Adjusted EBITDA is helpful in highlighting trends because it facilitates comparisons of store operating performance from period to period by excluding the impact of certain corporate overhead expenses, such as certain costs associated with management, finance, accounting, legal and other central corporate functions.

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                The following table reconciles our net (loss) income to EBITDA (excluding loss on extinguishment of debt), Adjusted EBITDA and Store-level Adjusted EBITDA for the periods presented (in thousands):

 
  Fiscal Year Ended   Thirteen Weeks Ended  
 
  January 25,
2014
  January 31,
2015
  January 30,
2016
  May 2,
2015
  April 30,
2016
 

Net (loss) income

  $ (22,283 ) $ (436 ) $ 3,574   $ 1,768   $ 7,326  

Interest expense, net

    41,152     42,382     36,759     10,806     8,193  

Loss on extinguishment of debt

            36,046          

Income tax provision (benefit)

    59     4,357     (14,160 )   4,324     4,451  

Depreciation and amortization(a)

    13,132     23,317     28,694     6,175     8,006  

EBITDA

  $ 32,060   $ 69,620   $ 90,913   $ 23,073   $ 27,976  

Legal settlements and consulting and other professional services(b)

    2,874     4,633     3,506     978     567  

Costs associated with new store openings(c)

    2,023     6,848     9,801     2,028     2,522  

Relocation and employee recruiting costs(d)

    4,442     2,928     724     167     87  

Management fees and expenses(e)

    3,690     3,596     3,612     887     901  

Stock-based compensation expense(f)

    4,373     4,251     4,663     1,109     1,162  

Impairment of trade name(g)

    37,500                  

Non-cash rent(h)

    1,367     1,795     2,398     214     747  

Other(i)

    (1,361 )   1,881     (347 )   943      

Adjusted EBITDA

  $ 86,968   $ 95,552   $ 115,270   $ 29,399   $ 33,962  

Corporate overhead expenses(j)

    25,977     37,570     53,303     12,067     15,294  

Store-level Adjusted EBITDA

  $ 112,945   $ 133,122   $ 168,573   $ 41,466   $ 49,256  

(a)
Includes the portion of depreciation and amortization expenses that are classified as cost of sales in the statements of operations included elsewhere in this prospectus.

(b)
Primarily consists of (i) consulting and other professional fees with respect to completed projects to enhance our accounting and finance capabilities as well as other public company readiness initiatives, of $2.2 million, $2.8 million and $3.5 million for fiscal years 2014, 2015 and 2016, respectively; and $1.0 million and $0.6 million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively and (ii) litigation settlement charges and related legal fees for certain pre-Acquisition claims and legal costs for other matters that have concluded in the amounts of $0.7 million and $1.8 million for fiscal years 2014 and 2015, respectively. Adjustments related to such items for the other periods presented were not material.

(c)
Non-capital expenditures associated with opening new stores, including marketing and advertising, labor and cash occupancy expenses. We anticipate that we will continue to incur cash costs as we open new stores in the future. We opened ten, 16 and 20 new stores in fiscal years 2014, 2015 and 2016, respectively, and five and six new stores during the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively.

(d)
Primarily reflects (i) relocation expenses associated with moving our corporate headquarters from Houston, Texas, to Plano, Texas, late in fiscal year 2014 and related relocation bonuses and (ii) employee recruiting and relocation costs in connection with the build-out of our management team. Corporate relocation expenses were $3.2 million for fiscal year 2014 and $2.1 million for fiscal year 2015. There were no adjustments related to corporate relocation costs for the other periods presented. Employee recruiting and relocation costs were $1.2 million, $0.8 million and

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    $0.7 million for fiscal years 2014, 2015 and 2016, respectively, and $0.2 million and $0.1 million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively.

(e)
Reflects management fees paid to our Sponsors in accordance with our management agreement. In connection with this offering, the management agreement will be terminated and our Sponsors will no longer receive management fees from us.

(f)
Consists of non-cash stock-based compensation expense related to stock option awards.

(g)
Reflects the impairment of the Garden Ridge trade name as a result of our rebranding initiative.

(h)
Consists of the non-cash portion of rent, which reflects (i) the extent to which our GAAP straight-line rent expense recognized exceeds or is less than our cash rent payments, partially offset by (ii) the amortization of deferred gains on sale-leaseback transactions that are recognized to rent expense on a straight-line basis through the applicable lease term. The offsetting amounts relating to the amortization of deferred gains on sale-leaseback transactions were $(0.3) million, $(1.8) million and $(3.2) million for fiscal years 2014, 2015 and 2016, respectively, and $(0.7) million and $(1.0) million for the thirteen weeks ended May 2, 2015 and April 30, 2016, respectively. There were no adjustments related to the amortization of deferred gains on sale-leaseback transactions for the other periods presented. The GAAP straight-line rent expense adjustment can vary depending on the average age of our lease portfolio, which has been impacted by our significant growth over the last four fiscal years. For newer leases, our rent expense recognized typically exceeds our cash rent payments while for more mature leases, rent expense recognized is typically less than our cash rent payments.

(i)
Other adjustments include amounts our management believes are not representative of our ongoing operations, including:

    for fiscal year 2014, an insurance reimbursement of $(1.6) million and a prior year audit refund of $(0.5) million;

    for fiscal year 2015, asset retirements related to our rebranding of $0.6 million and $0.4 million for a store relocation; and

    for fiscal year 2016, gain on the sale of our property in Houston, Texas of $(1.8) million and $(0.3) million related to various refunds for prior period taxes and audits, slightly offset by $0.5 million in expenses incurred for a store closure.

(j)
Reflects corporate overhead expenses, which are not directly related to the profitability of our stores, to facilitate comparisons of store operating performance as we do not consider these corporate overhead expenses when evaluating the ongoing performance of our stores from period to period. Corporate overhead expenses, which are a component of selling, general and administrative expenses, are comprised of various home office general and administrative expenses such as payroll expenses, occupancy costs, marketing and advertising, and consulting and professional fees. See our discussion of the changes in selling, general and administrative expenses presented in "—Results of Operations". Store-level Adjusted EBITDA should not be used as a substitute for consolidated measures of profitability or performance because it does not reflect corporate overhead expenses that are necessary to allow us to effectively operate our stores and generate Store-level Adjusted EBITDA. We anticipate that we will continue to incur corporate overhead expenses in future periods.

Quarterly Results of Operations and Seasonality

                Our business is moderately seasonal in nature. Historically, our business has realized a slightly higher portion of net sales and operating income in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday decorating season, respectively. However,

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our broad and comprehensive product offering makes us less susceptible to holiday shopping seasonal patterns than many other retailers. In addition, our marketing plan is designed to minimize volatility and seasonal fluctuations of sales across periods. Our quarterly results have been and will continue to be affected by the timing of new store openings and their associated pre-opening costs. As a result of these factors, our financial and operating results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year.

                The following table sets forth certain unaudited financial and operating information for each fiscal quarter during fiscal years 2015 and 2016 and the first quarter of fiscal year 2017. The quarterly information includes all adjustments (consisting of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the information presented. This information should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this prospectus.

 
  Fiscal Year 2015   Fiscal Year 2016   Fiscal
Year 2017
 
 
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter(1)
  First
Quarter
  Second
Quarter(2)
  Third
Quarter(3)
  Fourth
Quarter
  First
Quarter
 
 
  (in thousands, except percentages and other operating data)
 

Net sales

  $ 107,471   $ 122,443   $ 112,884   $ 154,935   $ 141,217   $ 156,007   $ 139,431   $ 185,506   $ 172,079  

Gross profit

    36,152     43,146     33,379     49,439     47,305     52,772     41,438     58,896     58,306  

Income (loss) from operations

    13,903     17,361     (169 )   15,208     16,898     20,951     4,638     19,732     11,777  

Net (loss) income

    (1,357 )   (2,715 )   4,906     (1,270 )   1,768     (46,110 )   (10,857 )   58,773     7,326  

Percentage of Net Sales:

                                                       

Net sales

    100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %

Gross profit

    33.6 %   35.2 %   29.6 %   31.9 %   33.5 %   33.8 %   29.7 %   31.7 %   33.9 %

Income (loss) from operations

    12.9 %   14.2 %   (0.1 )%   9.8 %   12.0 %   13.4 %   3.3 %   10.6 %   6.8 %

Net income (loss)

    (1.3 )%   (2.2 )%   4.3 %   (0.8 )%   1.2 %   (29.6 )%   (7.8 )%   31.7 %   4.2 %

Other operating data:

                                                       

Total stores at end of period

    68     72     81     81     86     93     100     100     106  

Comparable store sales

    6.5 %   9.8 %   11.4 %   6.1 %   3.8 %   3.5 %   1.2 %   6.4 %   1.9 %

Store-Level Adjusted EBITDA(4)

  $ 30,251   $ 35,980   $ 24,735   $ 42,156   $ 41,466   $ 45,267   $ 33,024   $ 48,818   $ 49,256  

Store-Level Adjusted EBITDA margin

    28.1 %   29.4 %   21.9 %   27.2 %   29.4 %   29.0 %   23.7 %   26.3 %   28.6 %

Adjusted EBITDA(4)

  $ 23,590   $ 27,257   $ 13,941   $ 30,763   $ 29,399   $ 33,250   $ 18,811   $ 33,812   $ 33,962  

Adjusted EBITDA margin

    22.0 %   22.3 %   12.3 %   19.9 %   20.8 %   21.3 %   13.5 %   18.2 %   19.7 %

(1)
The fourth quarter of fiscal year 2015 contained 14 weeks, as compared to the fourth quarter of fiscal year 2016, which contained 13 weeks.

(2)
The second quarter of fiscal year 2016 includes a $36.0 million loss on extinguishment of debt that was recognized as a result of the redemption of the Senior Secured Notes.

(3)
The third quarter of fiscal year 2016 has been restated to correct an error related to the income tax treatment of the sale-leaseback transaction completed in September 2015. For more information, see Note 17 to the accompanying consolidated financial statements for the fiscal year ended January 30, 2016 included elsewhere in this prospectus.

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(4)
A reconciliation of net income (loss) to EBITDA (excluding loss on extinguishment of debt), Adjusted EBITDA and Store-level Adjusted EBITDA is set forth below:

 
  Fiscal Year 2015   Fiscal Year 2016   Fiscal
Year 2017
 
 
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter
  First
Quarter
  Second
Quarter
  Third
Quarter
  Fourth
Quarter
  First
Quarter
 
 
  (in thousands)
 

Net (loss) income

  $ (1,357 ) $ (2,715 ) $ 4,906   $ (1,270 ) $ 1,768   $ (46,110 ) $ (10,857 ) $ 58,773   $ 7,326  

Interest expense, net

    10,360     10,193     10,830     10,999     10,806     8,961     8,409     8,582     8,193  

Loss on extinguishment of debt

                        36,046              

Income tax provision (benefit)

    4,900     9,882     (15,904 )   5,479     4,324     22,054     7,086     (47,623 )   4,451  

Depreciation and amortization(a)

    5,386     5,032     6,218     6,681     6,175     7,019     7,648     7,852     8,006  

EBITDA

    19,289     22,392     6,050     21,889     23,073     27,970     12,286     27,584     27,976  

Legal settlements and consulting and other professional services(b)

    487     444     1,589     2,113     978     970     123     1,436     567  

Costs associated with new store openings(c)

    807     941     2,215     2,884     2,028     2,304     3,448     2,021     2,522  

Relocation and employee recruiting costs(d)

    564     348     1,475     541     167     69     67     420     87  

Management fees and expenses(e)

    875     900     875     946     887     948     902     875     901  

Stock-based compensation expense(f)

    1,047     1,061     1,065     1,078     1,109     1,183     1,185     1,186     1,162  

Impairment of trade name(g)