Restatement and Other Corrections of Previously Issued Consolidated Financial Statements (Tables)

12 Months Ended

Jan. 29, 2023

Accounting Changes and Error Corrections [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

A summary of the impacts of the adjustments on the previously reported financial statements are included below. Note 13. Quarterly Financial Data (Unaudited) discloses the impact of the adjustments on the Company’s unaudited condensed financial information for each interim period within the fiscal year ended January 29, 2023.

	Year Ended
	January 29, 2023				January 30, 2022
(in thousands)	As Previously Reported		As Restated		As Previously Reported		As Revised
Net sales	$	651,545	$	651,179	$	498,239	$	498,239
Gross profit	345,826		343,651		273,345		273,532
Operating income	39,017		36,966		38,441		40,578
Net income	28,242		26,488		45,900		47,488

	As of
	January 29, 2023				January 30, 2022
(in thousands)	As Previously Reported		As Restated		As Previously Reported		As Revised
Total current assets	$	194,041	$	187,715	$	225,158	$	221,731
Total non-current assets	224,013		220,911		146,421		147,353
Total assets	418,054		408,626		371,579		369,084
Total current liabilities	88,839		82,041		118,779		114,696
Total non-current liabilities	135,955		133,491		96,574		96,574
Total liabilities	224,794		215,532		215,353		211,270
Total equity	193,260		193,094		156,226		157,814

BALANCE SHEET

	January 29, 2023
(amounts in thousands, except share and per share amounts)	As Previously Reported		Corrections		Reference	As Restated
Assets
Current Assets
Trade accounts receivable	9,469		(366)		(c)	9,103
Merchandise inventories, net	119,962		(335)		(g)	119,627
Prepaid expenses and other current assets	21,077		(5,625)		(a)(b)(e)(f)	15,452
Total Current Assets	194,041		(6,326)			187,715
Operating lease right-of-use assets	138,271		(2,860)		(b)	135,411
Other Assets
Deferred tax asset	9,420		(743)		(f)	8,677
Other assets	21,863		501		(e)	22,364
Total Other Assets	32,838		(242)			32,596
Total Assets	$	418,054	$	(9,428)		$	408,626
Liabilities and Stockholders' Equity
Current Liabilities
Accrued expenses	23,392		2,025		(a)(b)(f)	25,417
Current operating lease liabilities	21,898		(8,823)		(b)(e)	13,075
Total Current Liabilities	88,839		(6,798)			82,041
Operating Lease Liability, long-term	135,955		(2,464)		(b)	133,491
Total Liabilities	224,794		(9,262)			215,532
Stockholders’ Equity
Accumulated earnings (deficit)	10,706		(166)		(a)(b)(c)(f)(g)	10,540
Stockholders' Equity	193,260		(166)			193,094
Total Liabilities and Stockholders' Equity	$	418,054	$	(9,428)		$	408,626

The description of each error is described above. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $1.0 million, an increase to accrued expenses of $2.3 million, and a decrease to accumulated earnings of $1.3 million at January 29, 2023.

(b) Leases - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of less than $0.1 million, a decrease to operating lease right-of-use assets of $2.9 million, an increase to accrued expenses of $0.2 million, a decrease to current operating lease liabilities of $2.7 million, a decrease to operating lease liability, long-term of $2.5 million, and an increase to accumulated earnings of $2.1 million at January 29, 2023.

(c) Buyer’s Remorse - The correction of these misstatements resulted in a decrease to trade accounts receivable of $0.4 million and a decrease to accumulated earnings of $0.4 million at January 29, 2023.

(e) Balance Sheet Reclassifications - The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $6.7 million, a decrease to current operating lease liabilities of $6.2 million, and an increase to other assets of $0.5 million at January 29, 2023.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to prepaid expenses and other current assets of less than $0.1 million, a decrease to deferred tax asset of $0.7 million, a decrease to accrued expenses of $0.5 million, and a decrease to accumulated earnings of $0.2 million at January 29, 2023.

(g) Inventory and Cost of Goods Sold - The correction of these misstatements resulted in a decrease to merchandise inventories, net of $0.3 million and a decrease to accumulated earnings of $0.3 million at January 29, 2023.

THE LOVESAC COMPANY

STATEMENT OF OPERATIONS

	For the Year Ended January 29, 2023
(amounts in thousands, except per share data and share amounts)	As Previously Reported		Corrections		Reference	As Restated
Net sales	$	651,545	$	(366)	(c)	$	651,179
Cost of merchandise sold	305,719		1,809		(a)(g)	307,528
Gross profit	345,826		(2,175)			343,651
Operating expenses
Selling, general and administration expenses	216,103		(124)		(b)	215,979
Total operating expenses	306,809		(124)			306,685
Operating income (loss)	39,017		(2,051)			36,966
Net income (loss) before taxes	38,900		(2,051)			36,849
(Provision for) benefit from income taxes	(10,658)		297		(f)	(10,361)
Net income (loss)	$	28,242	$	(1,754)		$	26,488
Net income (loss) per common share:
Basic	$	1.86	$	(0.12)		$	1.74
Diluted	$	1.77	$	(0.11)		$	1.66

The description of each error is described above. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to cost of merchandise sold of $1.5 million for the year ended January 29, 2023.

(b) Leases - The correction of these misstatements resulted in a decrease to selling, general and administrative expenses of $0.1 million for the year ended January 29, 2023.

(c) Buyer’s Remorse - The correction of these misstatements resulted in a decrease to net sales of $0.4 million for the year ended January 29, 2023.

(f) Income Taxes - The tax impact of all misstatements resulted in a decrease to provision for income taxes of $0.3 million for the year ended January 29, 2023.

(g) Inventory and Cost of Goods Sold - The correction of these misstatements resulted in an increase to cost of merchandise sold of $0.3 million for the year ended January 29, 2023.

BALANCE SHEET

	January 30, 2022
(amounts in thousands, except share and per share amounts)	As Previously Reported		Revisions		Reference	As Revised
Assets
Current Assets
Prepaid expenses and other current assets	15,726		(3,427)		(a)(b)(e)(f)	12,299
Total Current Assets	225,158		(3,427)			221,731
Other Assets
Deferred tax asset	9,836		(115)		(f)	9,721
Other assets	—		1,047		(e)	1,047
Total Other Assets	11,393		932			12,325
Total Assets	$	371,579	$	(2,495)		$	369,084
Liabilities and Stockholders' Equity
Current Liabilities
Accrued expenses	40,497		362		(a)(f)	40,859
Current operating lease liabilities	16,382		(4,445)		(b)(e)	11,937
Total Current Liabilities	118,779		(4,083)			114,696
Total Liabilities	215,353		(4,083)			211,270
Stockholders’ Equity
Accumulated (deficit) earnings	(17,536)		1,588		(a)(b)(f)	(15,948)
Stockholders' Equity	156,226		1,588			157,814
Total Liabilities and Stockholders' Equity	$	371,579	$	(2,495)		$	369,084

The description of each error is described above. The impact of each error for the corresponding period in the above table is described below:

(a) Last Mile Freight - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.1 million, a decrease to accrued expenses of $0.1 million, and a decrease to accumulated deficit of $0.2 million at January 30, 2022.

(b) Leases - The correction of these misstatements resulted in an increase to prepaid expenses and other current assets of $0.3 million, a decrease to current operating lease liabilities of $1.7 million, and a decrease to accumulated deficit of $2.0 million at January 30, 2022.

(e) Balance Sheet Reclassifications - The correction of these misstatements resulted in a decrease to prepaid expenses and other current assets of $3.8 million, a decrease to current operating lease liabilities of $2.8 million, and an increase to other assets of $1.0 million at January 30, 2022.

(f) Income Taxes - The tax impact of all misstatements resulted in an increase to prepaid expenses and other current assets of less than $0.1 million, a decrease to deferred tax asset of $0.1 million, an increase to accrued expenses of $0.5 million, and an increase to accumulated deficit of $0.5 million at January 30, 2022.