Revision of Previously Issued Consolidated Financial Statements

3 Months Ended

Jun. 03, 2023

Revision of Previously Issued Consolidated Financial Statements

Revision of Previously Issued Consolidated Financial Statements

16. Revision of Previously Issued Consolidated Financial Statements

Subsequent to the issuance of the Company’s consolidated financial statements as of and for the fiscal year ended March 4, 2023, management evaluated the materiality of a misstatement in accordance with the U.S. SEC Staff’s Accounting Bulletin Nos. 99, Materiality (“SAB 99”) and 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). The misstatement pertains to the Company’s historical accounting for closed store liabilities. Based on their evaluation, management concluded the misstatement is not material to the Company’s previously issued consolidated financial statements as of and for each of the three fiscal years ended March 4, 2023 and each of the interim and year-to-date periods then ended, (collectively the “previously issued financial statements”). However, as prescribed by SAB 108, in conjunction with the re-issuance of the Company’s previously issued financial statements, the misstatement has been corrected as an immaterial revision of the accompanying condensed consolidated financial statements as of and for each of the thirteen week periods ended June 3, 2023 and May 28, 2022 and the related notes hereto. A summary of the nature of the misstatement and its impact on the Company’s previously issued financial statements is summarized as follows.

The Company adopted ASC 842, Leases, (“ASC 842”) on the first day of fiscal year 2020 under the alternative transition method as permissible under ASC 842. As part of this adoption, the Company elected the practical expedients, as permitted under the transition guidance, which included, among other things, the ability to carry forward existing lease classifications. Based on this election, the Company appropriately eliminated the majority of its closed store and lease exit liabilities as of the date of adoption, which had been accrued in accordance with ASC 420, Exit or Disposal Cost Obligations, (“ASC 420”). Moreover, due to the Company’s practical expedients election, variable costs, consisting primarily of real estate taxes and common area maintenance expenses, associated with store closures that occur subsequent to the adoption of ASC 842 may no longer be accrued under ASC 420, but rather recognized as expense as they are incurred.

Due to an oversight in their evaluation of an amendment to ASC 420 as a result of the adoption of ASC 842, management determined that the Company incorrectly continued to accrue estimated costs associated with store closures

as a liability subsequent to the date of adoption, rather than recognize the costs as they are incurred. The impact of the misstatement resulted in an overstatement of these costs, which have historically been classified within Facility exit and impairment charges in the Company’s Condensed Consolidated Statements of Operations, and an overstatement of store closure liabilities, which have historically been classified within Accrued salaries, wages and other current liabilities (current portion) and Other noncurrent liabilities (long-term portion) in the Company’s Condensed Consolidated Balance Sheets.

A summary of revisions to the Company’s previously reported financial statements is presented below.

As of and for the thirteen week period ended June 3, 2023

	Previously				As
(In 000’s, except per share amounts )	Reported		Adjustment		Revised
Balance Sheet:
Accrued salaries, wages, and other current liabilities	$	772,058	$	(15,143)	$	756,915
Total current liabilities		2,772,571		(15,143)		2,757,428
Other noncurrent liabilities		139,897		(32,709)		107,188
Total liabilities		8,597,866		(47,852)		8,550,014
Accumulated deficit		(6,908,235)		47,852		(6,860,383)
Total stockholders’ (deficit) equity		(947,448)		47,852		(899,596)
Statements of Operations and Comprehensive Loss:
Facility exit and impairment charges	$	20,001	$	(309)	$	19,692
Loss before income taxes		(305,225)		309		(304,916)
Net loss		(306,718)		309		(306,409)
Comprehensive loss		(306,718)		309		(306,409)
Basic and diluted loss per share		(5.56)		0.01		(5.55)
Statement of Cash Flows:
Net loss	$	(306,718)	$	309	$	(306,409)
Facility exit and impairment charges		20,001		(309)		19,692

As of and for the thirteen week period ended May 28, 2022

	Previously				As
(In 000’s, except per share amounts)	Reported		Adjustment		Revised
Balance Sheet:
Accrued salaries, wages, and other current liabilities	$	787,591	$	(13,560)	$	774,031
Total current liabilities		2,828,237		(13,560)		2,814,677
Other noncurrent liabilities		162,457		(27,985)		134,472
Total liabilities		8,558,149		(41,545)		8,516,604
Accumulated deficit		(5,961,772)		41,545		(5,920,227)
Total stockholders’ (deficit) equity		(8,376)		41,545		33,169
Statements of Operations and Comprehensive Loss:
Facility exit and impairment charges	$	66,571	$	(24,750)	$	41,821
Loss before income taxes		(106,694)		24,750		(81,944)
Net loss		(110,191)		24,750		(85,441)
Comprehensive loss		(110,191)		24,750		(85,441)
Basic and diluted loss per share		(2.03)		0.46		(1.57)
Statement of Cash Flows:
Net loss	$	(110,191)	$	24,750	$	(85,441)
Facility exit and impairment charges		66,571		(24,750)		41,821