Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Oct. 02, 2021 | Dec. 06, 2021 | Apr. 03, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Amendment Flag | false | ||
Document Period End Date | Oct. 2, 2021 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LESL | ||
Entity Registrant Name | LESLIE’S, INC. | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Central Index Key | 0001821806 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Current Fiscal Year End Date | --10-02 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 4.3 | ||
Entity Common Stock, Shares Outstanding | 189,978,541 | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Transition Report | false | ||
Entity File Number | 001-39667 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-8397425 | ||
Entity Address, Address Line One | 2005 East Indian School Road | ||
Entity Address, City or Town | Phoenix | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85016 | ||
City Area Code | 602 | ||
Local Phone Number | 366-3999 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the Registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2022, which definitive proxy statement shall be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Annual Report on Form 10-K relates. | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Current assets | ||
Cash and cash equivalents | $ 345,057 | $ 157,072 |
Accounts and other receivables, net | 38,860 | 31,481 |
Inventories | 198,789 | 148,966 |
Prepaid expenses and other current assets | 20,564 | 22,661 |
Total current assets | 603,270 | 360,180 |
Property and equipment, net | 70,335 | 66,391 |
Operating lease right-of-use assets | 212,284 | 177,655 |
Goodwill and other intangibles, net | 129,020 | 121,186 |
Deferred tax assets | 3,734 | 6,583 |
Other assets | 25,148 | 14,443 |
Total assets | 1,043,791 | 746,438 |
Current liabilities | ||
Accounts payable and accrued expenses | 235,156 | 193,539 |
Operating lease liabilities | 61,071 | 54,459 |
Income taxes payable | 6,945 | 1,857 |
Current portion of long-term debt | 8,100 | 8,341 |
Total current liabilities | 311,272 | 258,196 |
Operating lease liabilities, noncurrent | 160,037 | 130,234 |
Long-term debt, net | 786,125 | 1,179,550 |
Other long-term liabilities | 3,915 | 5,457 |
Total liabilities | 1,261,349 | 1,573,437 |
Commitments and contingencies | ||
Stockholders’ deficit | ||
Common stock, $0.001 par value, 1,000,000,000 shares authorized and 189,821,011 issued and outstanding as of October 2, 2021 and 156,500,000 shares authorized, issued and outstanding as of October 3, 2020, respectively. | 190 | 157 |
Additional paid in capital (deficit) | 204,711 | (278,063) |
Retained deficit | (422,459) | (549,093) |
Total stockholders’ deficit | (217,558) | (826,999) |
Total liabilities and stockholders’ deficit | $ 1,043,791 | $ 746,438 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Oct. 02, 2021 | Oct. 03, 2020 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 156,500,000 |
Common stock, shares issued | 189,821,011 | 156,500,000 |
Common stock, shares outstanding | 189,821,011 | 156,500,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Income Statement [Abstract] | |||
Sales | $ 1,342,917 | $ 1,112,229 | $ 928,203 |
Cost of merchandise and services sold | 747,757 | 651,516 | 548,463 |
Gross profit | 595,160 | 460,713 | 379,740 |
Selling, general and administrative expenses | 386,075 | 314,338 | 258,152 |
Operating income | 209,085 | 146,375 | 121,588 |
Other expense: | |||
Interest expense | 34,410 | 84,098 | 98,578 |
Loss on debt extinguishment | 9,169 | ||
Other expenses, net | 2,377 | 1,089 | 7,453 |
Total other expense | 45,956 | 85,187 | 106,031 |
Income before taxes | 163,129 | 61,188 | 15,557 |
Income tax expense | 36,495 | 2,627 | 14,855 |
Net income | $ 126,634 | $ 58,561 | $ 702 |
Net income per share: | |||
Basic | $ 0.68 | $ 0.37 | $ 0 |
Diluted | $ 0.67 | $ 0.37 | $ 0 |
Weighted average shares outstanding: | |||
Basic | 185,412 | 156,500 | 156,500 |
Diluted | 190,009 | 156,500 | 156,500 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect Period of Adoption Adjustment | Common Stock | Additional Paid in Capital (Deficit) | Retained Deficit | Retained DeficitCumulative Effect Period of Adoption Adjustment |
Beginning Balance at Sep. 29, 2018 | $ (888,949) | $ 157 | $ (281,978) | $ (607,128) | ||
Beginning Balance, Shares at Sep. 29, 2018 | 156,500 | |||||
Equity-based compensation | 2,130 | 2,130 | ||||
Payment of dividend | (1,240) | (1,240) | ||||
Net income | 702 | 702 | ||||
Ending Balance at Sep. 28, 2019 | (887,357) | $ 12 | $ 157 | (279,848) | (607,666) | $ 12 |
Ending Balance, Shares at Sep. 28, 2019 | 156,500 | |||||
Equity-based compensation | 1,785 | 1,785 | ||||
Net income | 58,561 | 58,561 | ||||
Ending Balance at Oct. 03, 2020 | (826,999) | $ 157 | (278,063) | (549,093) | ||
Ending Balance, Shares at Oct. 03, 2020 | 156,500 | |||||
Vesting of restricted stock units | 3 | $ 3 | ||||
Vesting of restricted stock units, Shares | 3,321 | |||||
Issuance of common stock upon initial public offering, net of offering costs | 458,587 | $ 30 | 458,557 | |||
Issuance of common stock upon initial public offering, net of offering costs, Shares | 30,000 | |||||
Equity-based compensation | 24,217 | 24,217 | ||||
Net income | 126,634 | 126,634 | ||||
Ending Balance at Oct. 02, 2021 | $ (217,558) | $ 190 | $ 204,711 | $ (422,459) | ||
Ending Balance, Shares at Oct. 02, 2021 | 189,821 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Operating Activities | |||
Net income | $ 126,634 | $ 58,561 | $ 702 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 26,553 | 28,925 | 30,424 |
Equity-based compensation | 24,217 | 1,785 | 2,130 |
Amortization of deferred financing costs and debt discounts | 2,483 | 3,489 | 3,240 |
Provision for doubtful accounts | 2,105 | 577 | 463 |
Deferred income taxes | 2,848 | (7,823) | (754) |
(Gain) loss on disposition of assets | (1,606) | 785 | 1,751 |
Loss on debt extinguishment | 9,169 | ||
Changes in operating assets and liabilities: | |||
Accounts and other receivables | (9,484) | 1,813 | (5,632) |
Inventories | (47,787) | 1,762 | (3,797) |
Prepaid expenses and other current assets | 2,674 | (14,959) | (1,670) |
Other assets | (11,164) | (13,023) | 4,518 |
Accounts payable and accrued expenses | 36,044 | 39,336 | 23,832 |
Income taxes payable | 5,088 | (4,856) | 2,614 |
Operating lease assets and liabilities, net | 1,786 | 7,037 | |
Net cash provided by operating activities | 169,560 | 103,409 | 57,821 |
Investing Activities | |||
Purchases of property and equipment | (28,931) | (20,630) | (27,444) |
Business acquisitions, net of cash acquired | (8,868) | (6,188) | (9,616) |
Proceeds from disposition of fixed assets | 2,444 | 7 | 64 |
Net cash used in investing activities | (35,355) | (26,811) | (36,996) |
Financing Activities | |||
Borrowings on revolving commitment | 238,750 | 190,900 | |
Payments on revolving commitment | (238,750) | (190,900) | |
Repayment of long term debt | (396,135) | (10,425) | (6,255) |
Issuance of long term debt | 907 | ||
Payment of deferred financing costs | (9,579) | ||
Payment of dividend | (1,240) | ||
Proceeds from issuance of common stock upon initial public offering, net | 458,587 | ||
Net cash provided by (used in) financing activities | 53,780 | (10,425) | (7,495) |
Net increase in cash and cash equivalents | 187,985 | 66,173 | 13,330 |
Cash and cash equivalents, beginning of year | 157,072 | 90,899 | 77,569 |
Cash and cash equivalents, end of year | 345,057 | 157,072 | 90,899 |
Supplemental Information: | |||
Interest | 36,408 | 88,678 | 90,478 |
Income taxes, net of refunds received | $ 28,559 | $ 15,305 | $ 12,944 |
Business and Operations
Business and Operations | 12 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Business and Operations | Note 1—Business and Operations Leslie’s, Inc. (“Leslie’s,” “we,” “our,” “us,” “its,” or the “Company”) is the leading direct-to-consumer pool and spa care brand. We market and sell pool and spa supplies and related products and services, which primarily consist of maintenance items such as chemicals, equipment and parts, cleaning accessories, as well as safety, recreational, and fitness-related products. We currently market our products through 952 company-operated locations in 38 states and e-commerce websites. Initial Public Offering In November 2020, we completed an initial public offering (“IPO”) of 30.0 million shares of common stock at a public offering price of $ 17.00 per share for net proceeds of $ 458.6 million, after deducting underwriting discounts and commissions of $ 45.0 million and offering costs of $ 6.3 million. We used the net proceeds from the IPO to repay the entire outstanding amount related to our $ 390.0 million senior unsecured notes. The remaining proceeds were used for working capital and general corporate purposes. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2—Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation We prepared the accompanying consolidated financial statements following United States generally accepted accounting principles (“GAAP”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. Our consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. All share and per share information included in the accompanying consolidated financial statements has been retroactively adjusted to reflect a 156,500-for-1 stock split which was effected on October 23, 2020. The par value of the common stock was not adjusted as the result of the stock split. Fiscal Periods We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. 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 fiscal 2021, 2020 and 2019 refer to the 52 weeks ended October 2, 2021, 53 weeks ended October 3, 2020 and 52 weeks ended September 28, 2019, respectively. Segment Reporting Our Chief Operating Decision Maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance. We operate all of our locations in the United States and offer consumers similar products, services, and methods of distribution through our retail locations and e-commerce websites. As a result, we have a single reportable segment. Use of Estimates To prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our most significant estimates relate to sales returns, inventory obsolescence reserves, lease assumptions, vendor rebate programs, income taxes, self-insurance, valuation of intangible assets and goodwill and intangible asset impairment evaluations. We continually review our estimates and make adjustments as necessary, but actual results could be significantly different from what we expected when we made these estimates. Prior Period Reclassifications Reclassifications of certain immaterial prior period amounts have been made to conform to current period presentation. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, demand deposits, money market funds and credit and debit card transactions. Our cash balance at financial institutions may exceed the FDIC insurance coverage limit. We consider all investments with an original maturity of three months or less and money market funds to be cash equivalents. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. Fair Value Measurements We measure certain financial instruments and other items at fair value. To determine the fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The fair value hierarchy is as follows, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation. Fair Value of Financial Instruments We use fair value measurements to record fair value of certain assets and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. The fair value of our amended and restated term loan credit agreement (“Term Loan”) due in 2028 was determined to be $ 802.9 million and $ 796.5 million as of October 2, 2021 and October 3, 2020, respectively. The fair value of our senior unsecured notes was estimated to be $ 390.0 million as of October 3, 2020. We did no t have any senior unsecured notes outstanding as of October 2, 2021. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The fair value of our interest rate cap agreements, which expired in March 2021 , was determined to be Level 2 and is included in other assets in our consolidated balance sheets as of October 3, 2020. Changes in fair value of the interest rate cap are recorded in other expenses, net in our consolidated statements of operations. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. There were no transfers between levels in the fair value hierarchy during fiscal 2 0 21, 2020 and 2 0 19, respectively. Vendor Rebates Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve various measures. These measures generally relate to the volume level of purchases from our vendors. We generally account for vendor programs as a reduction of the prices of the vendor’s products and therefore a reduction of inventory until we sell the product, at which time we recognize such consideration as a reduction of cost of merchandise and services sold in our consolidated statements of operations. Accounts and other receivables include vendor rebate receivables of $ 20.2 million and $ 15.9 million as of October 2, 2021 and October 3, 2020, respectively . Allowance for Doubtful Accounts Allowance for doubtful accounts is calculated based on historical experience, counterparty credit risk, consumer credit risk and application of the specific identification method. Inventories, Net Inventories are stated at the lower of cost or market or net realizable value. We value inventory using the weighted-average cost method. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on historical purchase cost, selling price, margin, and current business trends. When an inventory item is sold or disposed, the associated reserve is released at that time. Business Combinations We account for business combinations using the acquisition method of accounting. This method requires that the purchase price of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed is recorded as goodwill. We use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the fair values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in our consolidated statements of operations. Our consolidated financial statements include the results of operations from the date of acquisition for each business combination. We expense all acquisition-related costs as incurred in selling, general and administrative expenses (“SG&A”) in our consolidated statements of operations. Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of normal maintenance and repairs are charged to expense as incurred. Major replacements or improvements of property and equipment are capitalized. When items are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is included in our consolidated statements of operations. Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life We evaluate our long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The evaluation for long-lived assets (asset group) is performed at the lowest level of identifiable cash flows, which, for location assets, is the individual location level. The assets of a physical location with indicators of impairment are evaluated for recoverability by comparing its undiscounted future cash flows with its carrying value. If the carrying value is greater than the undiscounted future cash flows, we then measure the asset’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value. There was no impairment charge in fiscal 2021. The impairment charges for long-lived assets were not material to our consolidated financial statements in fiscal 2020 or fiscal 2019. Impairment charges are recorded in SG&A in our consolidated statements of operations. Cloud Computing Arrangements From time to time, we enter into various agreements with unaffiliated third parties for assistance with technical development work related to our security-related software and systems and other ongoing projects. Expenditures for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor are capitalized generally in the same manner as internal use software and are recorded as other assets in our consolidated balance sheets. Such costs are amortized over the life of the related cloud computing arrangement. As of October 2, 2021, approximately $ 5.2 million associated with these agreements are included in prepaid and other current assets in our consolidated balance sheets. In addition, as of October 2, 2021, approximately $ 23.1 million associated with these agreements are included other assets in our consolidated balance sheets. Internal Use Software Expenditures for software developed for internal use are capitalized and amortized over the estimated useful life of the software. Our policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, we also capitalize certain payroll and payroll-related costs for employees who are directly associated with internal use computer software development projects. The amount of payroll costs capitalized with respect to these employees is limited to the time directly spent on such projects in the applicable development phase. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred . See Note 8 — Property and Equipment for further discussion. Goodwill and Other Intangibles, Net Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition. We review goodwill and indefinite lived intangible assets for impairment annually (in the fourth quarter) or on an interim basis whenever events or changes in circumstances indicate the fair value of such assets may be below their carrying amount. The Company’s impairment evaluation of goodwill consists of a qualitative assessment to determine if it is more likely than not that the fair value of its single reporting unit is less than its carrying amount. The Company’s qualitative assessment considered factors including changes macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease, and any reporting unit specific events. If this qualitative assessment indicates it is more likely than not that the estimated fair value of a reporting unit exceeds its carrying value, no further analysis is required and goodwill is not impaired. Otherwise, we compare the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value. The impairment evaluation for the Company’s indefinite-lived intangible assets consists of a qualitative assessment similar to that for goodwill, for each indefinite-lived intangible asset. If the qualitative assessment indicates it is more likely than not that the estimated fair value of an indefinite-lived intangible asset exceeds its carrying value, no further analysis is required and the asset is not impaired. Otherwise, the Company compares the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value. We evaluate whether certain trade names continue to have an indefinite life annually. Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed. We evaluate amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Intangible assets useful lives are reviewed annually. After we made our qualitative assessments, it was determined that there were no indicators of impairment related to goodwill or other indefinite-lived intangible assets during fiscal 2021, 2020 and 2019, respectively. Leases We adopted ASU 2016-02, Leases (“Topic 842”) on September 29, 2019 using the modified retrospective approach and elected the package of practical expedients to use in transition, which permitted us not to reassess, under the new standard, our prior conclusions about lease identification and lease classification. We enter into contractual arrangements for the utilization of certain non-owned assets which are evaluated as finance or operating leases upon commencement, and are accounted for accordingly. Specifically, a contract is or contains a lease when (1) the contract contains an explicitly or implicitly identified asset and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. We lease certain retail locations, warehouse and distribution space, office space, equipment, and vehicles. A substantial majority of our leases have an initial lease term of five years , typically with the option to extend the lease for at least one additional five-year term. Some of our leases may include the option to terminate in less than five years. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these considerations, we generally conclude that the exercise of renewal options would not be reasonably certain in calculating our operating lease liability at commencement. The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a periodic basis as the discount rate for the present value of lease payments. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under our lease agreements. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligation for those payments is incurred. For variable payments dependent upon an index or rate, we apply the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the measurement of our operating lease liabilities as they cannot be reasonably estimated, and are recognized in the period in which the obligation for those payments is incurred. Leases that have a term of 12 months or less upon commencement are considered short-term in nature and as such are not included in the measurement of our operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets and are expensed on a straight line basis over the lease term. In addition, we do separate lease and non-lease components (e.g. common area maintenance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue from merchandise sales at retail locations is recognized at the point of sale, revenue from services are recognized when the services are rendered. Revenue from e-commerce merchandise sales is recognized either at the time of pick-up at one of our locations or at the time of shipment depending on the customer’s order designation. Revenue is recorded net of related discounts and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operators are based on our credit requirements and generally have terms of less than 60 days . When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Shipping and h andling are treated as costs to fulfill the contract and not a separate performance obligation. We estimate a liability for sales returns based on current sales levels and historical return trends. At each financial reporting date, we assess our estimates of expected returns, and a corresponding adjustment to cost of sales for our right to recover the goods returned by the customer, net of any expected recovery cost. Adjustments related to changes in return estimates were immaterial in all periods presented. During the last quarter of fiscal 2021, we completed the implementation of our new loyalty program (“Pool Perks”) to all locations which allows members to earn reward points based on their purchases. Once a loyalty member achieves a certain point level, the member earns an award that may be used on future purchases, which are valid for 12 months from issuance. Pool Perks represents a material right to the customer and points may be redeemed on future products and services. We defer revenue related to points earned that have not yet been redeemed. The amount of deferred revenue is based on the estimated standalone selling price of points earned by members and reduced by the percentage of points expected to be redeemed. The estimated redemption percentage is based on historical redemption trends and considers current information or trends. Revenue is recognized when the rewards are redeemed, expired or based on estimated breakage. Pool Perks increased the number of points earned on qualifying purchases, accelerates the timing of when points covert into rewards, extended the use of points to a 12 month period, and converted award certificates into digital format that may be used in locations, online or on our mobile app. Accordingly, we recorded an incremental $ 1.6 million liability related to the conversion of our prior loyalty program awards to Pool Perks awards during the last quarter of fiscal 2021. As of October 2, 2021, deferred revenue related to the loyalty program was $ 5.9 million and is included in accounts payable and accrued expenses in our consolidated balance sheets. Cost of Merchandise and Services Sold Cost of merchandise and services sold reflects the direct cost of purchased merchandise, costs to package certain chemical products, including direct materials and labor, costs to provide services, including labor and materials, as well as distribution and occupancy costs. Distribution costs include warehousing and transportation expenses, including costs associated with third-party fulfillment centers. Occupancy costs include the rent, common area maintenance, real estate taxes, and depreciation and amortization costs of all retail locations . Selling, General and Administrative Expenses Our SG&A includes selling and operating expenses at our retail locations and corporate level general and administrative expenses. Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs. Corporate expenses include payroll, bonus, and benefit costs for our corporate and field support functions, equity-based compensation, marketing and advertising, insurance, utilities, occupancy costs related to our corporate office facilities, professional services, and depreciation and amortization for all assets, except those related to our retail locations and distribution operations, which are included in cost of merchandise and services sold. Advertising We expense advertising costs as incurred. Advertising costs for fiscal 2021, 2020 and 2019 were approximately $ 25.4 million, $ 19.4 million and $ 18.0 million, respectively. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. Deferred tax assets, including the benefit of net operating loss and tax credit carryforwards, are evaluated based on the guidelines for realization and are reduced by a valuation allowance if it is deemed more likely than not that such assets will not be realized. We consider several factors in evaluating the realizability of our deferred tax assets, including the nature, frequency and severity of recent losses, the remaining years available for carryforwards, changes in tax laws, the future profitability of the operations in the jurisdiction, and tax planning strategies. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change, resulting in an increase or decrease to income tax expense in any period. The ultimate realization of deferred tax assets can be dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. On a quarterly basis, we evaluate whether it is more likely than not that our deferred tax assets will be realized in the future and conclude whether a valuation allowance must be established. We record a liability for uncertain tax positions to the extent a tax position taken or expected to be taken in a tax return does not meet certain recognition or measurement criteria. Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing authority rulings. Our judgments and estimates may change as a result of the evaluation of new information, such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations, resulting in an increase or decrease to income tax expense in any period. Interest and penalties accrued, if any, relating to uncertain tax positions will be recognized as a component of the income tax provision. We determined there were no material uncertain tax positions as of October 2, 2021 and October 3, 2020. Equity-Based Compensation Stock-based compensation expense is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period for awards expected to vest. See Note 16 - Equity-Based Compensation for further discussion. Self-Insurance Reserves We are self-insured for losses relating to workers’ compensation, general liability, and employee medical. Stop-loss coverage has been purchased to limit exposure to any material level of claims. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. We utilize various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Dilutive earnings per share is computed giving effect to all potentially dilutive shares, unless their effect is antidilutive. We apply the treasury stock method for dilutive share-based awards. Performance-based share-based awards are included in diluted shares only if the related performance conditions have been considered satisfied as of the end of the reporting period. Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions related to intraperiod tax allocations, foreign subsidiaries and interim reporting that are present within existing GAAP rules. The ASU also provides updated guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items. In addition, ASU 2019-12 clarifies that the effect of a change in tax laws or rates should be reflected in the annual effective tax rate computation during the interim period that includes the enactment date. The ASU is effective for annual and interim periods beginning after December 15, 2020. We expect to early adopt ASU 2019-12 as of October 3, 2022. In anticipation of the adoption and based on management’s initial evaluation of the projected impact to our consolidated financial statements, we do not estimate there to be a material impact. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (“Topic 805”): Accounting for contract assets and contract liabilities from contracts with customers, which includes certain amendments to improve, simplify, and provide consistency for recognition and measurement of acquired contract assets and contract liabilities from revenue contracts in a business combination. The amendments require that an acquirer recognize and measure such contract assets and contract liabilities under Topic 606, Revenue from Contracts with Customers, as if it had originated the contracts. The amendments also allow for election of certain practical expedients, which are applied on an acquisition-by-acquisition basis. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including for any interim period, and if elected, the amendments are applied retrospectively for any acquisitions that occurred in the fiscal year of interim adoption. We expect to early adopt ASU 2021-08 as of October 3, 2022. |
Business Combinations
Business Combinations | 12 Months Ended |
Oct. 02, 2021 | |
Business Combinations [Abstract] | |
Business Combinations | Note 3—Business Combinations In fiscal 2021, we completed three acquisitions of retailers of supplies and services for hot tubs, swim spas and fireplaces with eight locations in Denver, Colorado, Medford, Oregon, and the Washington, DC area. In fiscal 2020, we acquired the assets of a retailer of sup plies and services for hot tubs, swim spas and saunas with six locations in the Portland, Oregon area. In addition, during fiscal 2020, we acquired a retailer of supplies and services for swimming pools, hot tubs, barbecues and fireplaces with nine locations in the Pacific Northwest. These acquisitions did not have a material impact on our financial position or results of operations. Our consolidated financial statements include the results of operations of these acquisitions from the date of acquisition. The total purchase consideration was allocated to the assets acquired and the liabilities assumed at their estimated fair values as of the date of acquisition, as determined by management. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed has been recorded as goodwill. The goodwill resulting from these acquisitions is expected to be deductible for income tax purposes. Our estimates and assumptions are subject to change as we gather additional information throughout the measurement period, which is up to 12 months after the acquisition date, and if we make changes to the amounts recorded, suc h amounts are recorded in the period in which they are identified. No such adjustments were made during fiscal 2021, 2020 or 2019. |
Goodwill and Other Intangibles,
Goodwill and Other Intangibles, Net | 12 Months Ended |
Oct. 02, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangibles, Net | Note 4 —Goodwill and Other Intangibles, Net Goodwill The carrying amounts of goodwill are as follows (in thousands): October 2, 2021 October 3, 2020 Balance at beginning of the year $ 93,295 $ 89,739 Acquisitions 7,819 3,556 Balance at the end of the year $ 101,114 $ 93,295 Other Intangible Assets Other intangible assets consisted of the following as of October 2, 2021 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 2.6 $ 5,940 $ ( 5,274 ) $ 666 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 7.5 8,633 ( 7,123 ) 1,510 Consumer relationships 6.4 19,000 ( 11,688 ) 7,312 Other intangibles 7.0 6,620 ( 5,952 ) 668 Total $ 57,943 $ ( 30,037 ) $ 27,906 Other intangible assets are as follows as of October 3, 2020 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 3.6 $ 5,540 $ ( 5,139 ) $ 401 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 8.3 8,633 ( 6,872 ) 1,761 Consumer relationships 6.1 17,200 ( 10,118 ) 7,082 Other intangibles 7.4 6,584 ( 5,687 ) 897 Total $ 55,707 $ ( 27,816 ) $ 27,891 Amortization expense was $ 2.2 million, $ 2.6 million and $ 2.5 million in fiscal 2021, 2020 and 2019, respectively. No impairment of goodwill or other intangible assets was recorded during fiscal 2021, 2020 and 2019. The following table summarizes the estimated future amortization expense related to finite-lived intangible assets on our balance sheet as of October 2, 2021 (in thousands): Amount 2022 $ 2,202 2023 1,969 2024 1,331 2025 1,234 2026 988 Thereafter 2,432 Total $ 10,156 |
Accounts and Other Receivables,
Accounts and Other Receivables, Net | 12 Months Ended |
Oct. 02, 2021 | |
Receivables [Abstract] | |
Accounts and Other Receivables, Net | Note 5—Accounts and Other Receivables, Net Accounts and other receivables, net consisted of the following (in thousands): October 2, 2021 October 3, 2020 Vendor and other rebates receivable $ 23,222 $ 18,044 Customer receivables 13,473 9,511 Other receivables 4,621 4,590 Allowance for doubtful accounts ( 2,456 ) ( 664 ) Total $ 38,860 $ 31,481 |
Inventories, Net
Inventories, Net | 12 Months Ended |
Oct. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories, Net | Note 6—Inventories, Net Inventories, net consisted of the following (in thousands): October 2, 2021 October 3, 2020 Raw materials $ 4,244 $ 1,967 Finished goods 194,545 146,999 Inventories $ 198,789 $ 148,966 Changes in inventory excess and obsolescence reserves were as follows (in thousands): Additions Deductions Balance at Beginning of Period Charged to Costs and Expenses Sale or Disposal of Inventories Balance at 2021 $ 4,939 $ 1,993 $ ( 1,076 ) $ 5,856 2020 $ 3,622 $ 2,659 $ ( 1,342 ) $ 4,939 2019 $ 3,545 $ 1,345 $ ( 1,268 ) $ 3,622 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Oct. 02, 2021 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepaid Expenses and Other Current Assets | Note 7—Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): October 2, 2021 October 3, 2020 Prepayment for inventory $ — $ 11,500 Prepaid occupancy costs 8,326 3,016 Prepaid other 4,488 4,089 Other current assets 7,750 4,056 Total $ 20,564 $ 22,661 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Oct. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 8—Property and Equipment Property and equipment consist of the following (in thousands): October 2, 2021 October 3, 2020 Land $ 5,813 $ 5,813 Buildings and improvements 10,017 16,148 Vehicles, machinery and equipment 38,738 34,639 Leasehold improvements 171,281 164,501 Office furniture, computers and software 155,511 154,570 Construction in process 10,911 9,960 $ 392,271 $ 385,631 Less: accumulated depreciation and amortization ( 321,936 ) ( 319,240 ) Total $ 70,335 $ 66,391 Depreciation and amortization expense on property and equipment was $ 26.6 million, $ 28.9 million and $ 27.9 million in fiscal 2021, 2020 and 2019, respectively. Construction in process is primarily composed of internal use software currently being developed and leasehold improvements related to new or remodeled locations where construction had not been completed by the end of the period. Capitalized software additions placed into service were $ 2.8 million, $ 3.0 million and $ 4.0 million in fiscal 2021, 2020 and 2019, respectively. Capitalized software accumulated amortization totaled approximately $ 15.0 million and $ 11.1 million as of October 2, 2021 and October 3, 2020, respectively. Capitalized software and development costs remaining to be amortized were approximately $ 6.9 million and $ 7.0 million, as of October 2, 2021 and October 3, 2020, respectively. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Oct. 02, 2021 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 9—Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following (in thousands): October 2, 2021 October 3, 2020 Accounts payable $ 100,960 $ 92,372 Accrued payroll and employee benefits 40,071 32,420 Customer deposits 21,420 13,286 Interest 4,898 9,377 Inventory related accruals 12,444 11,340 Loyalty and deferred revenue 6,685 2,532 Sales taxes 13,975 11,164 Self-insurance reserves 7,679 6,518 All other accrued liabilities 27,024 14,530 Total $ 235,156 $ 193,539 As of October 2, 2021, October 3, 2020, and September 28, 2019, approximately $ 1.5 million, $ 1.1 million, and $ 0 of capital expenditures are included in other accrued liabilities, respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Oct. 02, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 10—Long-Term Debt Our debt obligations consisted of the following (in thousands, except interest rates): Effective (1) October 2, 2021 October 3, 2020 Term Loan—due on March 9, 2028 3.25 % (2) $ 805,950 $ 811,178 ABL Credit Facility 1.25 % (3) — — Senior Unsecured Notes — 390,000 Total long-term debt 805,950 1,201,178 Less: current portion of long-term debt ( 8,100 ) ( 8,341 ) Less: unamortized discount ( 3,285 ) ( 9,348 ) Less: deferred financing charges ( 8,440 ) ( 3,939 ) Long-term debt, net $ 786,125 $ 1,179,550 (1) Effective interest rates as of October 2, 2021. (2) Carries interest at a specified margin over LIBOR between 2.50 % and 2.75 % with a minimum LIBOR of 0.50 %. (3) Carries interest at a specific margin between 0.25 % and 0.75 % with respect to Base Rate loans and between 1.25 % and 1.75 % with respect to Eurodollar Rate loans. Term Loan In March 2021, we entered into an amendment to our Term Loan. The amended Term Loan provides for an $ 810.0 million secured term loan facility, decreased pricing by 75 basis points and extended the maturity date to March 9, 2028 . The other material terms of the Term Loan prior to the amendment remained substantially unchanged. In addition, as a result of the Term Loan, during fiscal 2021, we recognized a $ 1.9 million loss on early debt extinguishment related to the prepayment of the underlying loan tranches prepaid in connection with the amended Term Loan. Borrowings under the Term Loan have an initial applicable rate, at our option of, (i) 2.75 % for loans that are LIBOR loans and (ii) 1.75 % of loans that are ABR loans. The applicable rate of the Term Loan is based on our first lien leverage ratio as follows: (a) if the first lien leverage ratio is greater than 2.75 to 1.00 , the applicable rate will be 2.75 % for LIBOR loans and 1.75 % for ABR loans and (b) the first lien leverage ratio is less than or equal to 2.75 to 1.00 , the applicable rate will be 2.50 % for LIBOR loans and 1.50 % for ABR loans. For LIBOR loans, the loans will bear interest at the adjusted LIBOR rate plus the applicable rate, where the adjusted LIBOR rate will not be less than 0.50 %. Substantially all of our assets are pledged as collateral to secure our indebtedness. The Term Loan does not require us to comply with any financial covenants. The Term Loan contains customary events of default and no event of default had occurred under the Term Loan as of October 2, 2021 or October 3, 2020. ABL Credit Facility On April 12, 2021, we entered into Amendment No. 5 to our $ 200.0 million credit facility (the “ABL Credit Facility”) maturing on August 13, 2025 (the “Amendment”). The Amendment (i) decreased the applicable margin on the Base Rate loans to a range of 0.25 % to 0.75 % from 0.75 % to 1.00 %, (ii) decreased the applicable margin on the Eurodollar Rate loans to a range of 1.25 % to 1.75 % from 1.75 % to 2.00 %, (iii) changed the LIBOR floor to 0 % from 0.75 %, and (iv) decreased our commitment fee rate to 0.25 % from 0.375 %. The other terms of the ABL Credit Facility prior to the amendment thereof remain substantially unchanged. In addition, we are also obligated to pay a commission on all outstanding letters of credit as well as customary administrative, issuance, fronting, amendment, payment, and negotiation fees. As of October 2, 2021 and October 3, 2020, no amounts were outstanding on the ABL Credit Facility. The amount available was reduced by $ 9.2 m illion and $ 11.6 million of existing standby letters of credit as of October 2, 2021 and October 3, 2020, respectively. Substantially all of our assets are pledged as collateral to secure our indebtedness The ABL Credit Facility does not require us to comply with any financial covenants. The ABL Credit Facility contains customary events of default, including default upon the nonpayment of principal, interest, fees or other amounts, or the occurrence of a change of control. No event of default has occurred under the ABL Credit Facility as of October 2, 2021 or October 3, 2020. Senior Unsecured Notes The senior unsecured notes principal of $ 390.0 million was paid in full on November 3, 2020, resulting in a loss on debt extinguishment of $ 7.3 million during fiscal 2021. The senior unsecured notes were guaranteed on a senior basis by us and all our present and future domestic wholly owned subsidiaries. Interest-only payments on the senior unsecured notes were payable quarterly on January 10, April 10, July 10, and October 10 of each year. We incurred interest of 8.50 % plus LIBOR, subject to a minimum rate of 1.00 %, on the senior unsecured notes. The senior unsecured notes had restrictive covenants that limited the ability to, among other things, incur or guarantee additional indebtedness or issue preferred stock; pay dividends and make other restricted payments; incur restrictions on the payment of dividends or other distributions; create or incur certain liens; make certain investments; transfer or sell assets; engage in transactions with affiliates; and merge or consolidate with other companies or transfer all or substantially all of our assets. Interest Rate Cap Agreements In March 2017, we entered into interest rate cap agreements in order to manage the variability of cash flows related to a portion of our floating rate indebtedness. Pursuant to the agreements, we capped LIBOR at 3.00 % with respect to the aggregate notional amount of $ 750.0 million. In March 2021, our interest rate cap agreements expired. The fair value of our interest rate cap agreements were zero as of October 2, 2021, October 3, 2020 and September 28, 2019. We did no t recognize any gain or loss on our interest rate cap agreements in fiscal 2021 and 2020. We recognized a loss related to our interest rate cap agreements of $ 4.3 million in fiscal 2019, which was recorded in other expenses in our consolidated statements of operations. Future Debt Maturities The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of October 2, 2021 (in thousands): Amount 2022 $ 8,100 2023 8,100 2024 6,075 2025 10,125 2026 8,100 Thereafter 765,450 Total $ 805,950 |
Leases
Leases | 12 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Leases | Note 11—Leases Operating Leases We lease certain locations, office, distribution, and manufacturing facilities under operating leases that expire at various dates through December 2031 . We are obligated to make cash payments in connection with various lease obligations and purchase commitments. All of these obligations require cash payments to be made by us over varying periods of time. Certain leases are renewable at our option typically for periods of five or more years. Certain of these arrangements are cancelable on short notice and others require payments upon early termination. We do not have any finance leases. In April 2020, the Financial Accounting Standards Board issued Staff Q&A - Topic 842 and Topic 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic. This guidance provides entities with the option to elect to account for certain lease concessions as though the enforceable rights and obligations had existed in the original lease. As a result, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can elect to apply or not to apply the lease modificat ion guidance in Accounting Standards Codification Topic 842, Leases, to those contracts. The following table summarizes the components of lease expense (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Operating lease expense $ 68,130 $ 66,642 $ 63,640 Variable lease expense 1,129 819 517 Total net lease expense $ 69,259 $ 67,461 $ 64,157 As of October 2, 2021 and October 3, 2020, operating lease right-of-use assets obtained in exchange for operating lease liabilities totaled $ 9.7 million and $ 4.7 million, respectively. The following table presents the weighted-average remaining lease term and discount rate for operating leases: October 2, 2021 October 3, 2020 Weighted-average remaining lease term 4.3 years 4.2 years Weighted-average discount rate 5.1 % 5.9 % The following table summarizes the future annual minimum lease payments as of October 2, 2021 (in thousands): Amount 2022 $ 75,997 2023 55,028 2024 47,619 2025 32,832 2026 22,178 Thereafter 11,376 Total $ 245,030 Less: amount of lease payments representing imputed interest 23,922 Present value of future minimum lease payments 221,108 Less: current operating lease liabilities 61,071 Operating lease liabilities, noncurrent $ 160,037 |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 12—Income Taxes The provision for income taxes consists of the following (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Current: Federal $ 25,914 $ 8,188 $ 14,072 State 7,733 2,262 1,537 Total Current 33,647 10,450 15,609 Deferred: Federal 2,633 ( 5,844 ) ( 418 ) State 215 ( 1,979 ) ( 336 ) Total Deferred 2,848 ( 7,823 ) ( 754 ) Total income tax provision $ 36,495 $ 2,627 $ 14,855 A reconciliation of the provision for income taxes to the amount computed at the federal statutory rate is as follows (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Federal income tax at statutory rate $ 34,257 $ 12,851 $ 3,198 Equity-based compensation ( 2,360 ) 375 447 Section 162(m) limitation 2,826 — — Permanent differences 564 89 100 Change in valuation allowance ( 5,425 ) ( 11,373 ) 11,060 State taxes, net of federal benefit 7,072 2,503 54 Other ( 439 ) ( 1,818 ) ( 4 ) Total income tax provision $ 36,495 $ 2,627 $ 14,855 Our effective rate for fiscal 2021 was 22.4 % as compared to 4.3 % in fiscal 2020. During the first quarter of fiscal 2021, we released a $ 5.4 million valuation allowance for our interest limitation carryforward as a result of our IPO and subsequent paydown of debt. During fiscal 2020, the tax provision reflects a decrease in the valuation allowance for our interest limitation carryforward due to favorable provisions of the CARES Act. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are summarized below (in thousands): October 2, 2021 October 3, 2020 Deferred tax assets: Compensation accruals $ 5,674 $ 5,433 Inventory — 1,053 Interest limitation — 6,919 Lease liabilities 54,489 46,644 Equity-based compensation 1,646 — Reserves and other accruals 1,138 354 Total deferred tax assets 62,947 60,403 Deferred tax liabilities: Property, plant, and equipment ( 1,392 ) ( 611 ) Intangibles ( 3,849 ) ( 3,258 ) Lease assets ( 52,264 ) ( 44,014 ) Deferred financing cost ( 399 ) ( 512 ) Other ( 1,309 ) — Total deferred tax liabilities ( 59,213 ) ( 48,395 ) Valuation allowance ( 5,425 ) Deferred tax assets (liabilities), net $ 3,734 $ 6,583 Valuation Allowance consists of the following (in thousands): Balance at Additions Deductions Balance at End 2021 $ 5,425 $ — $ ( 5,425 ) $ — 2020 $ 16,798 $ — $ ( 11,373 ) $ 5,425 Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. The interest expense limitation passed in the CARES Act created a deferred tax asset for the fiscal year ended October 3, 2020 that we did not anticipate realizing in the immediate future; as a result, a valuation allowance was recorded. The valuation allowance was removed during the first quarter of fiscal 2021 due to the Company’s paydown of debt with proceeds from the IPO, which decreased interest expense. We are subject to United States federal and state taxes in the normal course of business and our income tax returns are subject to examination by the relevant tax authorities. We are no longer subject to United States federal examinations by taxing authorities for calendar years before 2018 and are no longer subject to state examinations for calendar years before 2017. We have not identified any material uncertain tax positions. |
Commitments & Contingencies
Commitments & Contingencies | 12 Months Ended |
Oct. 02, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments & Contingencies | Note 13—Commitments & Contingencies Contingencies We are defendants in lawsuits or potential claims encountered in the normal course of business. When the potential liability from a matter can be estimated and the loss is considered probable, we record the estimated loss. Due to uncertainties related to the resolution of lawsuits, investigations and claims, the ultimate outcome may differ from the estimates. We do not expect that the resolutions of any of these matters will have a material effect to our consolidated financial position or results of operations. We did not record any material loss contingencies as of October 2, 2021, October 3, 2020, and June 27, 2020. Our workers’ compensation insurance program, general liability insurance program, and employee group medical plan have self-insurance retention features of up to $ 0.4 million per event a s of October 2, 2021 and October 3, 2020. We had standby letters of credit outstanding in the amounts of $ 9.2 million and $ 11.6 million as of October 2, 2021 and October 3, 2020, respectively, for the purpose of securing such obligations under our workers’ compensation self-insurance programs. Purchase Commitments In addition to our lease obligations, we maintain future purchase commitments related to inventory and operational requirements. The following table summarizes the future minimum purchase commitments as of October 2, 2021 (in thousands): Amount 2022 $ 32,478 2023 32,482 2024 32,479 2025 32,477 2026 8,119 Thereafter — Total $ 138,035 |
401(K) Plan
401(K) Plan | 12 Months Ended |
Oct. 02, 2021 | |
Retirement Benefits [Abstract] | |
401(K) Plan | Note 14—401(K) Plan We provide for the benefit of our employees a voluntary defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. The plan covers all eligible employees and provides for a matching contribution by us of 50 % of each participant’s contribution of up to 4 % of the individual’s compensation as defined. The expenses related to this plan wer e $ 0.8 million, $ 1.1 million and $ 1.0 million in fiscal 2021, 2020 and 2019, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Oct. 02, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 15—Related Party Transactions In February 2017, we entered into a management services agreement with our private equity sponsors in connection with our acquisition in February 2017. The management services agreement provides that we will pay an annual fee for them to provide management and advisory services to us and our affiliates, including general management consulting services, support and analysis with respect to financing alternatives and strategic planning functions. The management services agreement terminated in October 2020 in connection with the completion of our IPO. During fiscal 2020 and 2019, we paid or accrued management fees in the amount of $ 4.9 million and $ 4.5 million, respectively. |
Equity-Based Compensation
Equity-Based Compensation | 12 Months Ended |
Oct. 02, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Note 16—Equity-Based Compensation Equity-Based Compensation 2020 Omnibus Incentive Plan In October 2020, we adopted the Leslie’s, Inc. 2020 Omnibus Incentive Plan (the “Plan”). The Plan provides for the grant of awards such as stock options to purchase Leslie’s common stock (each, a “Stock Option”) and restricted stock units (“RSUs”) which may settle in Leslie’s, Inc. common stock to our directors, executives and eligible employees of the Company. Stock Options granted under the Plan generally expire ten years from the date of grant and consist of Stock Options that vest upon the satisfaction of time-based requirements (“Service Stock Option”) and performance-based Stock Options that vest upon satisfaction of a performance-based requirement (“Performance Stock Options”). RSUs consist of grants that vest ratably upon the satisfaction of time-based requirements (“Service RSU”) and performance-based RSUs that vest upon satisfaction of performance-based requirements (“Performance RSU”). In each case, vesting of the Company’s outstanding and unvested Stock Options and RSUs is contingent upon the holder’s continued service through the date of each applicable vesting event. As of October 2, 2021, we had approximately 7.3 million shares of Common Stock available for future grants under the Plan. As of October 2, 2021, the aggregate unamortized value of all outstanding equity-based compensation awards, excluding equity-based compensation expense associated with Performance Stock Options which have not yet been issued for accounting purposes, was approximately $ 34.8 million, which is expected to be recognized over a weighted average period of approximately 3.0 years. Stock Options The fair value of each non-qualified stock option (“Stock Option”) granted is estimated on the grant date using the Black-Scholes option pricing model. The expected life is based on the SEC simplified method and a mid-point assumption. Expected price volatility is determined based on the implied volatilities of comparable companies over a historical period that matches the expected life of the Stock Options. The risk-free interest rate is based on the expected United States Treasury rate over the expected life. The dividend yield is based on the expectation that no dividends will be paid. The following table summarizes the weighted average assumptions used for Stock Options for the fiscal year ended: October 2, 2021 Expected volatility 28.9 % Risk-free interest rate 0.7 % Dividend yield 0.0 % Expected term (in years) 6.3 The following tables summarizes our Stock Option activity under the Plan for the fiscal year ended (in thousands, except per share amounts): October 2, 2021 Number of Options Weighted Average Exercise Price Outstanding, Beginning — $ — Granted 5,372 18.43 Exercised — — Cancelled/forfeited ( 495 ) 17.26 Balance, Ending 4,877 $ 18.22 As of October 2, 2021 Aggregate intrinsic value of options outstanding $ 14,698 Unamortized value of unvested stock options $ 16,022 Weighted average period (years) that expense is expected to be recognized 2.5 Weighted average remaining contractual life (years) for options outstanding 9.7 There were no options that were exercisable as of October 2, 2021. Restricted Stock Units The following table summarizes our RSU activity under the Plan for the fiscal year ended (in thousands, except per share amounts): October 2, 2021 Number of RSUs Weighted Average Outstanding, Beginning — $ — Converted from Incentive Awards (1) 6,038 17.00 Granted 725 25.95 Vested ( 3,321 ) 17.00 Cancelled/forfeited ( 307 ) 18.19 Balance, Ending 3,135 $ 18.87 (1) Represents approximately 4.8 millio n Service and Performance Incentive Awards converted to RSUs in connection with the IPO and adoption of t he Plan during fiscal 2021. As of October 2, 2021 Unamortized value of unvested RSUs $ 18,819 Weighted average period (years) expense is expected to be recognized 3.4 In connection with the IPO, we issued RSUs that vest only upon achievement of volume weighted average price (“VWAP”) targets established by the compensation committee of the board of directors (Performance RSUs). The VWAP target was measured over rolling 20 -day trading periods commencing on the six-month anniversary of the consummation of the IPO. The VWAP targets were satisfied in May 2021 and are included in the vested RSUs in the table above. Incentive Grant Agreements Prior to the IPO, our then parent company granted profits interests to our employees (“Incentive Awards”) through incentive unit grant agreements (“Incentive Agreements”). The Incentive Awards had economic characteristics similar to stock options and had the right to share in the appreciation of the equity value of our then parent company. The sole asset of our then parent company was indirect ownership of Leslie’s, Inc. We concluded such Incentive Awards were classified as equity awards. The Incentive Awards were spread over two tiers, a service-based (time) award tier (“Service Incentive Awards”) and a performance-based award tier (“Performance Incentive Awards”). The Service Incentive Awards vested over a four-year period at a rate of 25 % annually on each anniversary of the date of grant. The Performance Incentive Awards vested based on performance conditions as defined in the Incentive Agreements. In connection with the IPO and adoption of the Plan, all Incentive Awards granted under Incentive Agreements were converted to RSUs under the Plan with substantially similar service and performance conditions as defined in the Incentive Agreements. The fair value of the Incentive Awards was estimated on the date of grant using the Black-Scholes option pricing model, which treated the Incentive Unit Grant Agreements as implicit call options with exercise prices determined based on their respective rights to participate in distributions. The Black-Scholes option pricing model required the use of a number of assumptions, including expected volatility, risk-free interest rate, expected dividends, and expected term. The following table summarizes the assumptions and fair value used for Incentive Awards in each of the fiscal years ended: October 3, 2020 September 28, 2019 Expected volatility 23.5 % 22.9 % Risk-free interest rate 1.4 % 2.5 % Dividend yield 0.0 % 0.0 % Expected term (in years) 4.0 4.0 The following tables summarizes our Incentive Awards activity (in thousands, except per share amounts): October 2, 2021 October 3, 2020 September 28, 2019 Number of Awards Weighted Average Exercise Price Number of Awards Weighted Average Exercise Price Number of Awards Weighted Average Exercise Price Outstanding, Beginning 13,267 10,263 7,946 Cancelled upon IPO ( 8,450 ) — — Converted to RSUs ( 4,817 ) — — Granted — 5,980 $ 1.87 3,402 $ 1.69 Exercised — — — Cancelled/forfeited — ( 2,976 ) ( 1,085 ) Balance, Ending — 13,267 10,263 In fiscal 2021, equity-based compensation expense totaled $ 25.6 million including the related Company payroll tax expense and is reported in SG&A in our consolidated statements of operations. This also included approximately $ 10.7 million associated with the acceleration of certain Incentive Awards in connection with the completion of our IPO. Equity-based compensation expense was $ 1.8 million and $ 2.1 million in fiscal 2020 and 2019, respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Oct. 02, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 17—Earnings Per Share The following is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Numerator: Net income $ 126,634 $ 58,561 $ 702 Denominator: Weighted average shares outstanding - basic 185,412 156,500 156,500 Effect of dilutive securities: Stock options 567 — — RSUs 4,030 — — Weighted average shares outstanding - diluted 190,009 156,500 156,500 Basic earnings per share $ 0.68 $ 0.37 $ 0.00 Diluted earnings per share $ 0.67 $ 0.37 $ 0.00 The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted net income per share because the effect of including such shares would have been antidilutive (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Stock options 321 — — RSUs 2 — — 323 — — Dilutive weighted-average shares outstanding excludes approximately 0.6 million stock options with performance conditions that have not yet been met or were not yet established as of October 2, 2021. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Oct. 02, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18—Subsequent Events On December 3, 2021, the Board of Directors authorized a share repurchase program for up to an aggregate amount of $ 300 million of its outstanding shares of common stock over the next three years . The level of repurchases depends on a number of factors, including its financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors its management may deem relevant. The timing, volume and nature of repurchases, are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any time. Shares may be repurchased from time to time on the open market, in privately negotiated transactions, or otherwise. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation We prepared the accompanying consolidated financial statements following United States generally accepted accounting principles (“GAAP”). The financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results. Our consolidated financial statements include the accounts of Leslie’s, Inc. and our subsidiaries. All significant intercompany accounts and transactions have been eliminated. All share and per share information included in the accompanying consolidated financial statements has been retroactively adjusted to reflect a 156,500-for-1 stock split which was effected on October 23, 2020. The par value of the common stock was not adjusted as the result of the stock split. |
Fiscal Periods | Fiscal Periods We operate on a fiscal calendar that results in a fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to September 30th. 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 fiscal 2021, 2020 and 2019 refer to the 52 weeks ended October 2, 2021, 53 weeks ended October 3, 2020 and 52 weeks ended September 28, 2019, respectively. |
Segment Reporting | Segment Reporting Our Chief Operating Decision Maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance. We operate all of our locations in the United States and offer consumers similar products, services, and methods of distribution through our retail locations and e-commerce websites. As a result, we have a single reportable segment. |
Use of Estimates | Use of Estimates To prepare financial statements that conform to GAAP, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Our most significant estimates relate to sales returns, inventory obsolescence reserves, lease assumptions, vendor rebate programs, income taxes, self-insurance, valuation of intangible assets and goodwill and intangible asset impairment evaluations. We continually review our estimates and make adjustments as necessary, but actual results could be significantly different from what we expected when we made these estimates. |
Prior Period Reclassifications | Prior Period Reclassifications Reclassifications of certain immaterial prior period amounts have been made to conform to current period presentation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, demand deposits, money market funds and credit and debit card transactions. Our cash balance at financial institutions may exceed the FDIC insurance coverage limit. We consider all investments with an original maturity of three months or less and money market funds to be cash equivalents. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. |
Fair Value Measurements | Fair Value Measurements We measure certain financial instruments and other items at fair value. To determine the fair value, we maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. The fair value hierarchy is as follows, of which the first two are considered observable and the last unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Value is determined using pricing models, discounted cash flow methodologies, or similar techniques and also includes instruments for which the determination of fair value requires significant judgment or estimation. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We use fair value measurements to record fair value of certain assets and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. The fair value of our amended and restated term loan credit agreement (“Term Loan”) due in 2028 was determined to be $ 802.9 million and $ 796.5 million as of October 2, 2021 and October 3, 2020, respectively. The fair value of our senior unsecured notes was estimated to be $ 390.0 million as of October 3, 2020. We did no t have any senior unsecured notes outstanding as of October 2, 2021. These fair value estimates, determined to be Level 2, are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The fair value of our interest rate cap agreements, which expired in March 2021 , was determined to be Level 2 and is included in other assets in our consolidated balance sheets as of October 3, 2020. Changes in fair value of the interest rate cap are recorded in other expenses, net in our consolidated statements of operations. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. There were no transfers between levels in the fair value hierarchy during fiscal 2 0 21, 2020 and 2 0 19, respectively. |
Vendor Rebates | Vendor Rebates Many of our vendor arrangements provide for us to receive specified amounts of consideration when we achieve various measures. These measures generally relate to the volume level of purchases from our vendors. We generally account for vendor programs as a reduction of the prices of the vendor’s products and therefore a reduction of inventory until we sell the product, at which time we recognize such consideration as a reduction of cost of merchandise and services sold in our consolidated statements of operations. Accounts and other receivables include vendor rebate receivables of $ 20.2 million and $ 15.9 million as of October 2, 2021 and October 3, 2020, respectively |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Allowance for doubtful accounts is calculated based on historical experience, counterparty credit risk, consumer credit risk and application of the specific identification method. |
Inventories, Net | Inventories, Net Inventories are stated at the lower of cost or market or net realizable value. We value inventory using the weighted-average cost method. We evaluate inventory for excess and obsolescence and record necessary reserves. We provide provisions for losses related to inventories based on historical purchase cost, selling price, margin, and current business trends. When an inventory item is sold or disposed, the associated reserve is released at that time. |
Business Combinations | Business Combinations We account for business combinations using the acquisition method of accounting. This method requires that the purchase price of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the amounts allocated to assets acquired and liabilities assumed is recorded as goodwill. We use our best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the acquisition date. Our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill to the extent we identify adjustments to the preliminary purchase price allocation. Upon the conclusion of the measurement period or final determination of the fair values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in our consolidated statements of operations. Our consolidated financial statements include the results of operations from the date of acquisition for each business combination. We expense all acquisition-related costs as incurred in selling, general and administrative expenses (“SG&A”) in our consolidated statements of operations. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Costs of normal maintenance and repairs are charged to expense as incurred. Major replacements or improvements of property and equipment are capitalized. When items are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and any resulting gain or loss is included in our consolidated statements of operations. Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life We evaluate our long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The evaluation for long-lived assets (asset group) is performed at the lowest level of identifiable cash flows, which, for location assets, is the individual location level. The assets of a physical location with indicators of impairment are evaluated for recoverability by comparing its undiscounted future cash flows with its carrying value. If the carrying value is greater than the undiscounted future cash flows, we then measure the asset’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying value, an impairment loss is recognized for the difference between the carrying value and the estimated fair value. There was no impairment charge in fiscal 2021. The impairment charges for long-lived assets were not material to our consolidated financial statements in fiscal 2020 or fiscal 2019. Impairment charges are recorded in SG&A in our consolidated statements of operations. |
Cloud Computing Arrangements | Cloud Computing Arrangements From time to time, we enter into various agreements with unaffiliated third parties for assistance with technical development work related to our security-related software and systems and other ongoing projects. Expenditures for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor are capitalized generally in the same manner as internal use software and are recorded as other assets in our consolidated balance sheets. Such costs are amortized over the life of the related cloud computing arrangement. As of October 2, 2021, approximately $ 5.2 million associated with these agreements are included in prepaid and other current assets in our consolidated balance sheets. In addition, as of October 2, 2021, approximately $ 23.1 million associated with these agreements are included other assets in our consolidated balance sheets. |
Internal Use Software | Internal Use Software Expenditures for software developed for internal use are capitalized and amortized over the estimated useful life of the software. Our policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, we also capitalize certain payroll and payroll-related costs for employees who are directly associated with internal use computer software development projects. The amount of payroll costs capitalized with respect to these employees is limited to the time directly spent on such projects in the applicable development phase. Costs associated with preliminary project stage activities, training, maintenance and all other post-implementation stage activities are expensed as incurred . See Note 8 — Property and Equipment for further discussion. |
Goodwill and Other Intangibles, Net | Goodwill and Other Intangibles, Net Goodwill and intangible assets are recorded at their estimated fair values at the date of acquisition. We review goodwill and indefinite lived intangible assets for impairment annually (in the fourth quarter) or on an interim basis whenever events or changes in circumstances indicate the fair value of such assets may be below their carrying amount. The Company’s impairment evaluation of goodwill consists of a qualitative assessment to determine if it is more likely than not that the fair value of its single reporting unit is less than its carrying amount. The Company’s qualitative assessment considered factors including changes macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease, and any reporting unit specific events. If this qualitative assessment indicates it is more likely than not that the estimated fair value of a reporting unit exceeds its carrying value, no further analysis is required and goodwill is not impaired. Otherwise, we compare the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value. The impairment evaluation for the Company’s indefinite-lived intangible assets consists of a qualitative assessment similar to that for goodwill, for each indefinite-lived intangible asset. If the qualitative assessment indicates it is more likely than not that the estimated fair value of an indefinite-lived intangible asset exceeds its carrying value, no further analysis is required and the asset is not impaired. Otherwise, the Company compares the estimated fair value of the asset to its carrying amount with an impairment loss recognized for the amount, if any, by which carrying value exceeds estimated fair value. We evaluate whether certain trade names continue to have an indefinite life annually. Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed. We evaluate amortizable intangible assets for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. Intangible assets useful lives are reviewed annually. After we made our qualitative assessments, it was determined that there were no indicators of impairment related to goodwill or other indefinite-lived intangible assets during fiscal 2021, 2020 and 2019, respectively. |
Leases | Leases We adopted ASU 2016-02, Leases (“Topic 842”) on September 29, 2019 using the modified retrospective approach and elected the package of practical expedients to use in transition, which permitted us not to reassess, under the new standard, our prior conclusions about lease identification and lease classification. We enter into contractual arrangements for the utilization of certain non-owned assets which are evaluated as finance or operating leases upon commencement, and are accounted for accordingly. Specifically, a contract is or contains a lease when (1) the contract contains an explicitly or implicitly identified asset and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract. We lease certain retail locations, warehouse and distribution space, office space, equipment, and vehicles. A substantial majority of our leases have an initial lease term of five years , typically with the option to extend the lease for at least one additional five-year term. Some of our leases may include the option to terminate in less than five years. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these considerations, we generally conclude that the exercise of renewal options would not be reasonably certain in calculating our operating lease liability at commencement. The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a periodic basis as the discount rate for the present value of lease payments. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under our lease agreements. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, are excluded and recognized in the period in which the obligation for those payments is incurred. For variable payments dependent upon an index or rate, we apply the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the measurement of our operating lease liabilities as they cannot be reasonably estimated, and are recognized in the period in which the obligation for those payments is incurred. Leases that have a term of 12 months or less upon commencement are considered short-term in nature and as such are not included in the measurement of our operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheets and are expensed on a straight line basis over the lease term. In addition, we do separate lease and non-lease components (e.g. common area maintenance). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customer, in an amount that reflects the consideration we expect to be entitled to in exchange for such goods or services. Revenue from merchandise sales at retail locations is recognized at the point of sale, revenue from services are recognized when the services are rendered. Revenue from e-commerce merchandise sales is recognized either at the time of pick-up at one of our locations or at the time of shipment depending on the customer’s order designation. Revenue is recorded net of related discounts and sales tax. Payment from retail customers is generally at the point of sale and payment terms for professional pool operators are based on our credit requirements and generally have terms of less than 60 days . When we receive payment from a consumer before the consumer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue or as a customer deposit until the sale or service is complete. Shipping and h andling are treated as costs to fulfill the contract and not a separate performance obligation. We estimate a liability for sales returns based on current sales levels and historical return trends. At each financial reporting date, we assess our estimates of expected returns, and a corresponding adjustment to cost of sales for our right to recover the goods returned by the customer, net of any expected recovery cost. Adjustments related to changes in return estimates were immaterial in all periods presented. During the last quarter of fiscal 2021, we completed the implementation of our new loyalty program (“Pool Perks”) to all locations which allows members to earn reward points based on their purchases. Once a loyalty member achieves a certain point level, the member earns an award that may be used on future purchases, which are valid for 12 months from issuance. Pool Perks represents a material right to the customer and points may be redeemed on future products and services. We defer revenue related to points earned that have not yet been redeemed. The amount of deferred revenue is based on the estimated standalone selling price of points earned by members and reduced by the percentage of points expected to be redeemed. The estimated redemption percentage is based on historical redemption trends and considers current information or trends. Revenue is recognized when the rewards are redeemed, expired or based on estimated breakage. Pool Perks increased the number of points earned on qualifying purchases, accelerates the timing of when points covert into rewards, extended the use of points to a 12 month period, and converted award certificates into digital format that may be used in locations, online or on our mobile app. Accordingly, we recorded an incremental $ 1.6 million liability related to the conversion of our prior loyalty program awards to Pool Perks awards during the last quarter of fiscal 2021. As of October 2, 2021, deferred revenue related to the loyalty program was $ 5.9 million and is included in accounts payable and accrued expenses in our consolidated balance sheets. |
Cost of Merchandise and Services Sold | Cost of Merchandise and Services Sold Cost of merchandise and services sold reflects the direct cost of purchased merchandise, costs to package certain chemical products, including direct materials and labor, costs to provide services, including labor and materials, as well as distribution and occupancy costs. Distribution costs include warehousing and transportation expenses, including costs associated with third-party fulfillment centers. Occupancy costs include the rent, common area maintenance, real estate taxes, and depreciation and amortization costs of all retail locations . |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Our SG&A includes selling and operating expenses at our retail locations and corporate level general and administrative expenses. Selling and operating expenses at retail locations include payroll, bonus and benefit costs for personnel, supplies, and credit and debit card processing costs. Corporate expenses include payroll, bonus, and benefit costs for our corporate and field support functions, equity-based compensation, marketing and advertising, insurance, utilities, occupancy costs related to our corporate office facilities, professional services, and depreciation and amortization for all assets, except those related to our retail locations and distribution operations, which are included in cost of merchandise and services sold. |
Advertising | Advertising We expense advertising costs as incurred. Advertising costs for fiscal 2021, 2020 and 2019 were approximately $ 25.4 million, $ 19.4 million and $ 18.0 million, respectively. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. Deferred tax assets, including the benefit of net operating loss and tax credit carryforwards, are evaluated based on the guidelines for realization and are reduced by a valuation allowance if it is deemed more likely than not that such assets will not be realized. We consider several factors in evaluating the realizability of our deferred tax assets, including the nature, frequency and severity of recent losses, the remaining years available for carryforwards, changes in tax laws, the future profitability of the operations in the jurisdiction, and tax planning strategies. Our judgments and estimates concerning realizability of deferred tax assets could change if any of the evaluation factors change, resulting in an increase or decrease to income tax expense in any period. The ultimate realization of deferred tax assets can be dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. On a quarterly basis, we evaluate whether it is more likely than not that our deferred tax assets will be realized in the future and conclude whether a valuation allowance must be established. We record a liability for uncertain tax positions to the extent a tax position taken or expected to be taken in a tax return does not meet certain recognition or measurement criteria. Considerable management judgment is necessary to assess the inherent uncertainties related to the interpretations of complex tax laws, regulations and taxing authority rulings. Our judgments and estimates may change as a result of the evaluation of new information, such as the outcome of tax audits or changes to or further interpretations of tax laws and regulations, resulting in an increase or decrease to income tax expense in any period. Interest and penalties accrued, if any, relating to uncertain tax positions will be recognized as a component of the income tax provision. We determined there were no material uncertain tax positions as of October 2, 2021 and October 3, 2020. |
Equity-Based Compensation | Equity-Based Compensation Stock-based compensation expense is measured at grant date, based on the fair value of the award, and is recognized on a straight-line basis over the requisite service period for awards expected to vest. See Note 16 - Equity-Based Compensation for further discussion. |
Self-Insurance Reserves | Self-Insurance Reserves We are self-insured for losses relating to workers’ compensation, general liability, and employee medical. Stop-loss coverage has been purchased to limit exposure to any material level of claims. Liabilities for self-insurance reserves are estimated based on independent actuarial estimates, which are based on historical information and assumptions about future events. We utilize various techniques, including analysis of historical trends and actuarial valuation methods, to estimate the cost to settle reported claims and claims incurred but not yet reported as of the balance sheet date. The actuarial valuation methods consider loss development factors, which include the development time frame and expected claim reporting and settlement patterns, and expected loss costs, which include the expected frequency and severity of claim activity. |
Earnings per Share | Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Dilutive earnings per share is computed giving effect to all potentially dilutive shares, unless their effect is antidilutive. We apply the treasury stock method for dilutive share-based awards. Performance-based share-based awards are included in diluted shares only if the related performance conditions have been considered satisfied as of the end of the reporting period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions related to intraperiod tax allocations, foreign subsidiaries and interim reporting that are present within existing GAAP rules. The ASU also provides updated guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items. In addition, ASU 2019-12 clarifies that the effect of a change in tax laws or rates should be reflected in the annual effective tax rate computation during the interim period that includes the enactment date. The ASU is effective for annual and interim periods beginning after December 15, 2020. We expect to early adopt ASU 2019-12 as of October 3, 2022. In anticipation of the adoption and based on management’s initial evaluation of the projected impact to our consolidated financial statements, we do not estimate there to be a material impact. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (“Topic 805”): Accounting for contract assets and contract liabilities from contracts with customers, which includes certain amendments to improve, simplify, and provide consistency for recognition and measurement of acquired contract assets and contract liabilities from revenue contracts in a business combination. The amendments require that an acquirer recognize and measure such contract assets and contract liabilities under Topic 606, Revenue from Contracts with Customers, as if it had originated the contracts. The amendments also allow for election of certain practical expedients, which are applied on an acquisition-by-acquisition basis. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including for any interim period, and if elected, the amendments are applied retrospectively for any acquisitions that occurred in the fiscal year of interim adoption. We expect to early adopt ASU 2021-08 as of October 3, 2022. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Useful Lives | Depreciation and amortization are computed using the straight-line method. These charges are based on the following range of useful lives: Building and improvements 5 - 39 years Vehicles, machinery and equipment 3 - 10 years Office furniture, computers and software 3 - 7 years Leasehold improvements 5 - 10 years , not to exceed the lease life |
Goodwill and Other Intangible_2
Goodwill and Other Intangibles, Net (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | The carrying amounts of goodwill are as follows (in thousands): October 2, 2021 October 3, 2020 Balance at beginning of the year $ 93,295 $ 89,739 Acquisitions 7,819 3,556 Balance at the end of the year $ 101,114 $ 93,295 |
Summary of Other Intangible Assets | Other intangible assets consisted of the following as of October 2, 2021 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 2.6 $ 5,940 $ ( 5,274 ) $ 666 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 7.5 8,633 ( 7,123 ) 1,510 Consumer relationships 6.4 19,000 ( 11,688 ) 7,312 Other intangibles 7.0 6,620 ( 5,952 ) 668 Total $ 57,943 $ ( 30,037 ) $ 27,906 Other intangible assets are as follows as of October 3, 2020 (in thousands, except weighted average remaining useful life): Weighted Gross Accumulated Net Trade name and trademarks (finite life) 3.6 $ 5,540 $ ( 5,139 ) $ 401 Trade name and trademarks (indefinite life) Indefinite 17,750 — 17,750 Non-compete agreements 8.3 8,633 ( 6,872 ) 1,761 Consumer relationships 6.1 17,200 ( 10,118 ) 7,082 Other intangibles 7.4 6,584 ( 5,687 ) 897 Total $ 55,707 $ ( 27,816 ) $ 27,891 |
Summary of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets | The following table summarizes the estimated future amortization expense related to finite-lived intangible assets on our balance sheet as of October 2, 2021 (in thousands): Amount 2022 $ 2,202 2023 1,969 2024 1,331 2025 1,234 2026 988 Thereafter 2,432 Total $ 10,156 |
Accounts and Other Receivable_2
Accounts and Other Receivables, Net (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Receivables [Abstract] | |
Schedule of Accounts and Other Receivables, Net | Accounts and other receivables, net consisted of the following (in thousands): October 2, 2021 October 3, 2020 Vendor and other rebates receivable $ 23,222 $ 18,044 Customer receivables 13,473 9,511 Other receivables 4,621 4,590 Allowance for doubtful accounts ( 2,456 ) ( 664 ) Total $ 38,860 $ 31,481 |
Inventories, Net (Tables)
Inventories, Net (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | Inventories, net consisted of the following (in thousands): October 2, 2021 October 3, 2020 Raw materials $ 4,244 $ 1,967 Finished goods 194,545 146,999 Inventories $ 198,789 $ 148,966 |
Schedule of Changes in Inventory Excess and Obsolescence Reserves | Changes in inventory excess and obsolescence reserves were as follows (in thousands): Additions Deductions Balance at Beginning of Period Charged to Costs and Expenses Sale or Disposal of Inventories Balance at 2021 $ 4,939 $ 1,993 $ ( 1,076 ) $ 5,856 2020 $ 3,622 $ 2,659 $ ( 1,342 ) $ 4,939 2019 $ 3,545 $ 1,345 $ ( 1,268 ) $ 3,622 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): October 2, 2021 October 3, 2020 Prepayment for inventory $ — $ 11,500 Prepaid occupancy costs 8,326 3,016 Prepaid other 4,488 4,089 Other current assets 7,750 4,056 Total $ 20,564 $ 22,661 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Property, Plant and Equipment [Abstract] | |
Summary of Components of Property and Equipment | Property and equipment consist of the following (in thousands): October 2, 2021 October 3, 2020 Land $ 5,813 $ 5,813 Buildings and improvements 10,017 16,148 Vehicles, machinery and equipment 38,738 34,639 Leasehold improvements 171,281 164,501 Office furniture, computers and software 155,511 154,570 Construction in process 10,911 9,960 $ 392,271 $ 385,631 Less: accumulated depreciation and amortization ( 321,936 ) ( 319,240 ) Total $ 70,335 $ 66,391 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Text Block [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following (in thousands): October 2, 2021 October 3, 2020 Accounts payable $ 100,960 $ 92,372 Accrued payroll and employee benefits 40,071 32,420 Customer deposits 21,420 13,286 Interest 4,898 9,377 Inventory related accruals 12,444 11,340 Loyalty and deferred revenue 6,685 2,532 Sales taxes 13,975 11,164 Self-insurance reserves 7,679 6,518 All other accrued liabilities 27,024 14,530 Total $ 235,156 $ 193,539 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Debt Obligations | Our debt obligations consisted of the following (in thousands, except interest rates): Effective (1) October 2, 2021 October 3, 2020 Term Loan—due on March 9, 2028 3.25 % (2) $ 805,950 $ 811,178 ABL Credit Facility 1.25 % (3) — — Senior Unsecured Notes — 390,000 Total long-term debt 805,950 1,201,178 Less: current portion of long-term debt ( 8,100 ) ( 8,341 ) Less: unamortized discount ( 3,285 ) ( 9,348 ) Less: deferred financing charges ( 8,440 ) ( 3,939 ) Long-term debt, net $ 786,125 $ 1,179,550 (1) Effective interest rates as of October 2, 2021. (2) Carries interest at a specified margin over LIBOR between 2.50 % and 2.75 % with a minimum LIBOR of 0.50 %. (3) Carries interest at a specific margin between 0.25 % and 0.75 % with respect to Base Rate loans and between 1.25 % and 1.75 % with respect to Eurodollar Rate loans. |
Schedule of Debt Maturities and Principal Repayments of Indebtedness | The following table summarizes the debt maturities and scheduled principal repayments of our indebtedness as of October 2, 2021 (in thousands): Amount 2022 $ 8,100 2023 8,100 2024 6,075 2025 10,125 2026 8,100 Thereafter 765,450 Total $ 805,950 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The following table summarizes the components of lease expense (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Operating lease expense $ 68,130 $ 66,642 $ 63,640 Variable lease expense 1,129 819 517 Total net lease expense $ 69,259 $ 67,461 $ 64,157 |
Schedule of Weighted-Average Remaining Lease Term and Discount Rate for Operating Leases | The following table presents the weighted-average remaining lease term and discount rate for operating leases: October 2, 2021 October 3, 2020 Weighted-average remaining lease term 4.3 years 4.2 years Weighted-average discount rate 5.1 % 5.9 % |
Schedule of Future Annual Minimum Lease Payments | The following table summarizes the future annual minimum lease payments as of October 2, 2021 (in thousands): Amount 2022 $ 75,997 2023 55,028 2024 47,619 2025 32,832 2026 22,178 Thereafter 11,376 Total $ 245,030 Less: amount of lease payments representing imputed interest 23,922 Present value of future minimum lease payments 221,108 Less: current operating lease liabilities 61,071 Operating lease liabilities, noncurrent $ 160,037 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Income Tax Disclosure [Abstract] | |
Summary of Provision for Income Taxes | The provision for income taxes consists of the following (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Current: Federal $ 25,914 $ 8,188 $ 14,072 State 7,733 2,262 1,537 Total Current 33,647 10,450 15,609 Deferred: Federal 2,633 ( 5,844 ) ( 418 ) State 215 ( 1,979 ) ( 336 ) Total Deferred 2,848 ( 7,823 ) ( 754 ) Total income tax provision $ 36,495 $ 2,627 $ 14,855 |
Summary of Provision for Income Taxes to Amount Computed at Federal Statutory Rate | A reconciliation of the provision for income taxes to the amount computed at the federal statutory rate is as follows (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Federal income tax at statutory rate $ 34,257 $ 12,851 $ 3,198 Equity-based compensation ( 2,360 ) 375 447 Section 162(m) limitation 2,826 — — Permanent differences 564 89 100 Change in valuation allowance ( 5,425 ) ( 11,373 ) 11,060 State taxes, net of federal benefit 7,072 2,503 54 Other ( 439 ) ( 1,818 ) ( 4 ) Total income tax provision $ 36,495 $ 2,627 $ 14,855 |
Summary of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are summarized below (in thousands): October 2, 2021 October 3, 2020 Deferred tax assets: Compensation accruals $ 5,674 $ 5,433 Inventory — 1,053 Interest limitation — 6,919 Lease liabilities 54,489 46,644 Equity-based compensation 1,646 — Reserves and other accruals 1,138 354 Total deferred tax assets 62,947 60,403 Deferred tax liabilities: Property, plant, and equipment ( 1,392 ) ( 611 ) Intangibles ( 3,849 ) ( 3,258 ) Lease assets ( 52,264 ) ( 44,014 ) Deferred financing cost ( 399 ) ( 512 ) Other ( 1,309 ) — Total deferred tax liabilities ( 59,213 ) ( 48,395 ) Valuation allowance ( 5,425 ) Deferred tax assets (liabilities), net $ 3,734 $ 6,583 |
Summary of Valuation Allowance | Valuation Allowance consists of the following (in thousands): Balance at Additions Deductions Balance at End 2021 $ 5,425 $ — $ ( 5,425 ) $ — 2020 $ 16,798 $ — $ ( 11,373 ) $ 5,425 |
Commitments & Contingencies (Ta
Commitments & Contingencies (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Purchase Commitments | The following table summarizes the future minimum purchase commitments as of October 2, 2021 (in thousands): Amount 2022 $ 32,478 2023 32,482 2024 32,479 2025 32,477 2026 8,119 Thereafter — Total $ 138,035 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Weighted Average Assumptions Used for Incentive Awards/ Stock Options | The following table summarizes the weighted average assumptions used for Stock Options for the fiscal year ended: October 2, 2021 Expected volatility 28.9 % Risk-free interest rate 0.7 % Dividend yield 0.0 % Expected term (in years) 6.3 |
Summary of Incentive Awards/ Stock Options Activity | The following tables summarizes our Stock Option activity under the Plan for the fiscal year ended (in thousands, except per share amounts): October 2, 2021 Number of Options Weighted Average Exercise Price Outstanding, Beginning — $ — Granted 5,372 18.43 Exercised — — Cancelled/forfeited ( 495 ) 17.26 Balance, Ending 4,877 $ 18.22 As of October 2, 2021 Aggregate intrinsic value of options outstanding $ 14,698 Unamortized value of unvested stock options $ 16,022 Weighted average period (years) that expense is expected to be recognized 2.5 Weighted average remaining contractual life (years) for options outstanding 9.7 |
Summary of RSU Activity under Plan | The following table summarizes our RSU activity under the Plan for the fiscal year ended (in thousands, except per share amounts): October 2, 2021 Number of RSUs Weighted Average Outstanding, Beginning — $ — Converted from Incentive Awards (1) 6,038 17.00 Granted 725 25.95 Vested ( 3,321 ) 17.00 Cancelled/forfeited ( 307 ) 18.19 Balance, Ending 3,135 $ 18.87 (1) Represents approximately 4.8 millio n Service and Performance Incentive Awards converted to RSUs in connection with the IPO and adoption of t he Plan during fiscal 2021. As of October 2, 2021 Unamortized value of unvested RSUs $ 18,819 Weighted average period (years) expense is expected to be recognized 3.4 |
Incentive Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of Weighted Average Assumptions Used for Incentive Awards/ Stock Options | The following table summarizes the assumptions and fair value used for Incentive Awards in each of the fiscal years ended: October 3, 2020 September 28, 2019 Expected volatility 23.5 % 22.9 % Risk-free interest rate 1.4 % 2.5 % Dividend yield 0.0 % 0.0 % Expected term (in years) 4.0 4.0 |
Summary of Incentive Awards/ Stock Options Activity | The following tables summarizes our Incentive Awards activity (in thousands, except per share amounts): October 2, 2021 October 3, 2020 September 28, 2019 Number of Awards Weighted Average Exercise Price Number of Awards Weighted Average Exercise Price Number of Awards Weighted Average Exercise Price Outstanding, Beginning 13,267 10,263 7,946 Cancelled upon IPO ( 8,450 ) — — Converted to RSUs ( 4,817 ) — — Granted — 5,980 $ 1.87 3,402 $ 1.69 Exercised — — — Cancelled/forfeited — ( 2,976 ) ( 1,085 ) Balance, Ending — 13,267 10,263 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Oct. 02, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Reconciliation of Basic Weighted Average Common Shares Outstanding to Diluted Weighted Average Common Shares Outstanding | The following is a reconciliation of basic weighted average common shares outstanding to diluted weighted average common shares outstanding (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Numerator: Net income $ 126,634 $ 58,561 $ 702 Denominator: Weighted average shares outstanding - basic 185,412 156,500 156,500 Effect of dilutive securities: Stock options 567 — — RSUs 4,030 — — Weighted average shares outstanding - diluted 190,009 156,500 156,500 Basic earnings per share $ 0.68 $ 0.37 $ 0.00 Diluted earnings per share $ 0.67 $ 0.37 $ 0.00 |
Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Income Per Share | The following number of weighted-average potentially dilutive shares were excluded from the calculation of diluted net income per share because the effect of including such shares would have been antidilutive (in thousands): Year Ended October 2, 2021 October 3, 2020 September 28, 2019 Stock options 321 — — RSUs 2 — — 323 — — |
Business and Operations - Addit
Business and Operations - Additional Information (Details) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 12 Months Ended |
Nov. 30, 2020USD ($)$ / sharesshares | Oct. 02, 2021USD ($)LocationState | |
Subsidiary, Sale of Stock [Line Items] | ||
Number of company-operated locations | Location | 952 | |
Number of states in which entity operates | State | 38 | |
Net proceeds from initial public offering | $ 458,587 | |
Senior Unsecured Notes | ||
Subsidiary, Sale of Stock [Line Items] | ||
Repayment of senior notes | $ 390,000 | |
Initial Public Offering | ||
Subsidiary, Sale of Stock [Line Items] | ||
Number of common stock shares issued | shares | 30 | |
Offering price | $ / shares | $ 17 | |
Net proceeds from initial public offering | $ 458,600 | |
Underwriting discounts and commissions | 45,000 | |
Offering costs | $ 6,300 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |||
Oct. 02, 2021USD ($)Segment | Oct. 03, 2020USD ($) | Sep. 28, 2019USD ($) | Sep. 29, 2019 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Number of reportable segment | Segment | 1 | |||
Stock split | 156,500-for-1 | |||
Vendor Rebate Receivables | $ 20,200,000 | $ 15,900,000 | ||
Impairment charges related to goodwill or other indefinite lived intangible assets | 0 | 0 | $ 0 | |
Impairment of long-lived assets | $ 0 | |||
Leases initial term | 5 years | |||
Incremental liability related to conversion of prior loyalty program awards. | $ 1,600,000 | |||
Advertising Expense | 25,400,000 | 19,400,000 | 18,000,000 | |
Fair value, assets, level 1 to level 2 transfers, amount | 0 | 0 | 0 | |
Fair value, assets, level 2 to level 1 transfers, amount | 0 | 0 | 0 | |
Fair value, liabilities, level 1 to level 2 transfers, amount | 0 | 0 | 0 | |
Fair value, liabilities, level 2 to level 1 transfers, amount | $ 0 | 0 | $ 0 | |
Lease existence of option to extend [true false] | true | |||
Lease existence of option to terminate [true false] | true | |||
Lease option to extend | one additional five-year | |||
Leases option to terminate | Some of our leases may include the option to terminate in less than five years. | |||
Credit payment terms for commercial customers | 60 days | |||
Deferred revenue related to loyalty program | $ 5,900,000 | |||
Timing extended for increase in number of points earned on qualifying purchases | 12 months | |||
ASU 2016-02 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Change in accounting principle, accounting standards update, adopted [true false] | true | |||
Change in accounting principle, accounting standards update, adoption date | Sep. 29, 2019 | |||
Interest Rate Cap Agreement | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Debt instrument, maturity date | 2021-03 | |||
Cloud Computing Arrangements | Prepaid Expenses and Other Current Assets [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Capitalized expenditures on cloud computing arrangement | $ 5,200,000 | |||
Cloud Computing Arrangements | Other Assets [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Capitalized expenditures on cloud computing arrangement | 23,100,000 | |||
Level 2 | Term Loan due in 2028 | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Fair value of term loan | 802,900,000 | 796,500,000 | ||
Senior Unsecured Notes | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Fair value of notes | $ 0 | $ 390,000,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Useful Lives (Details) | 12 Months Ended |
Oct. 02, 2021 | |
Building and Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 39 years |
Building and Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 5 years |
Vehicles, Machinery and Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 10 years |
Vehicles, Machinery and Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 3 years |
Office Furniture, Computers and Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 7 years |
Office Furniture, Computers and Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 3 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 5-10 years, not to exceed the lease life |
Leasehold Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 10 years |
Leasehold Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful lives | 5 years |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - Location | 12 Months Ended | |
Oct. 02, 2021 | Oct. 03, 2020 | |
Denver, Colorado, Medford, Oregon and Washington, DC | ||
Business Acquisition [Line Items] | ||
Number of locations in which assets acquired | 8 | |
Pacific Northwest | ||
Business Acquisition [Line Items] | ||
Number of locations in which assets acquired | 9 | |
Portland, Oregon | ||
Business Acquisition [Line Items] | ||
Number of locations in which assets acquired | 6 |
Goodwill and Other Intangible_3
Goodwill and Other Intangibles, Net - Summary of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 02, 2021 | Oct. 03, 2020 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 93,295 | $ 89,739 |
Acquisitions | 7,819 | 3,556 |
Ending Balance | $ 101,114 | $ 93,295 |
Goodwill and Other Intangible_4
Goodwill and Other Intangibles, Net - Summary of Other Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 02, 2021 | Oct. 03, 2020 | |
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Net Carrying Amount, Finite Life | $ 10,156 | |
Gross Carrying Value | 57,943 | $ 55,707 |
Accumulated Amortization | (30,037) | (27,816) |
Net Carrying Amount | $ 27,906 | $ 27,891 |
Trade Name and Trademarks | ||
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life, Finite Life | 2 years 7 months 6 days | 3 years 7 months 6 days |
Gross Carrying Value, Finite Life | $ 5,940 | $ 5,540 |
Accumulated Amortization, Finite Life | (5,274) | (5,139) |
Net Carrying Amount, Finite Life | $ 666 | $ 401 |
Non-compete Agreements | ||
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life, Finite Life | 7 years 6 months | 8 years 3 months 18 days |
Gross Carrying Value, Finite Life | $ 8,633 | $ 8,633 |
Accumulated Amortization, Finite Life | (7,123) | (6,872) |
Net Carrying Amount, Finite Life | $ 1,510 | $ 1,761 |
Consumer Relationships | ||
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life, Finite Life | 6 years 4 months 24 days | 6 years 1 month 6 days |
Gross Carrying Value, Finite Life | $ 19,000 | $ 17,200 |
Accumulated Amortization, Finite Life | (11,688) | (10,118) |
Net Carrying Amount, Finite Life | $ 7,312 | $ 7,082 |
Other Intangibles | ||
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life, Finite Life | 7 years | 7 years 4 months 24 days |
Gross Carrying Value, Finite Life | $ 6,620 | $ 6,584 |
Accumulated Amortization, Finite Life | (5,952) | (5,687) |
Net Carrying Amount, Finite Life | $ 668 | $ 897 |
Trade Name and Trademarks | ||
Finite and Indefinite Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life, Indefinite Life | Indefinite | Indefinite |
Net Carrying Amount, Indefinite Life | $ 17,750 | $ 17,750 |
Goodwill and Other Intangible_5
Goodwill and Other Intangibles, Net - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 2,200,000 | $ 2,600,000 | $ 2,500,000 |
Impairment of goodwill or other intangible assets | $ 0 | $ 0 | $ 0 |
Goodwill and Other Intangible_6
Goodwill and Other Intangibles, Net - Summary of Estimated Future Amortization Expense Related to Finite-Lived Intangible Assets (Detail) $ in Thousands | Oct. 02, 2021USD ($) |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | |
2022 | $ 2,202 |
2023 | 1,969 |
2024 | 1,331 |
2025 | 1,234 |
2026 | 988 |
Thereafter | 2,432 |
Net Carrying Amount, Finite Life | $ 10,156 |
Accounts and Other Receivable_3
Accounts and Other Receivables, Net - Schedule of Accounts and Other Receivables, Net - (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Receivables [Abstract] | ||
Vendor and other rebates receivable | $ 23,222 | $ 18,044 |
Customer receivables | 13,473 | 9,511 |
Other receivables | 4,621 | 4,590 |
Allowance for doubtful accounts | (2,456) | (664) |
Total | $ 38,860 | $ 31,481 |
Inventories, Net - Schedule of
Inventories, Net - Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,244 | $ 1,967 |
Finished goods | 194,545 | 146,999 |
Inventories | $ 198,789 | $ 148,966 |
Inventories, Net - Changes in I
Inventories, Net - Changes in Inventory Excess and Obsolescence Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Inventory Adjustments [Abstract] | |||
Balance at Beginning of Period | $ 4,939 | $ 3,622 | $ 3,545 |
Charged to Costs and Expenses | 1,993 | 2,659 | 1,345 |
Sale or Disposal of Inventories | (1,076) | (1,342) | (1,268) |
Balance at End of Period | $ 5,856 | $ 4,939 | $ 3,622 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepayment for inventory | $ 11,500 | |
Prepaid occupancy costs | $ 8,326 | 3,016 |
Prepaid other | 4,488 | 4,089 |
Other current assets | 7,750 | 4,056 |
Total | $ 20,564 | $ 22,661 |
Property and Equipment - Summar
Property and Equipment - Summary of Components of Property and Equipment (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 392,271 | $ 385,631 |
Less: accumulated depreciation and amortization | (321,936) | (319,240) |
Total | 70,335 | 66,391 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,813 | 5,813 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 10,017 | 16,148 |
Vehicles, Machinery and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 38,738 | 34,639 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 171,281 | 164,501 |
Office Furniture, Computers and Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 155,511 | 154,570 |
Construction in Process | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 10,911 | $ 9,960 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 26.6 | $ 28.9 | $ 27.9 |
Capitalized software additions | 2.8 | 3 | $ 4 |
Capitalized software accumulated amortization | 15 | 11.1 | |
Capitalized software and development costs remaining to be amortized | $ 6.9 | $ 7 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 100,960 | $ 92,372 |
Accrued payroll and employee benefits | 40,071 | 32,420 |
Customer deposits | 21,420 | 13,286 |
Interest | 4,898 | 9,377 |
Inventory related accruals | 12,444 | 11,340 |
Loyalty and deferred revenue | 6,685 | 2,532 |
Sales taxes | 13,975 | 11,164 |
Self-insurance reserves | 7,679 | 6,518 |
All other accrued liabilities | 27,024 | 14,530 |
Total | $ 235,156 | $ 193,539 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses (Additional Information) (Details) - USD ($) | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Payables And Accruals [Abstract] | |||
Capital expenditures included in other accrued liabilities | $ 1,500,000 | $ 1,100,000 | $ 0 |
Long-Term Debt - Summary of Deb
Long-Term Debt - Summary of Debt Obligations (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 805,950 | $ 1,201,178 |
Less: current portion of long-term debt | (8,100) | (8,341) |
Less: unamortized discount | (3,285) | (9,348) |
Less: deferred financing charges | (8,440) | (3,939) |
Long-term debt, net | $ 786,125 | 1,179,550 |
ABL Credit Facility | ||
Debt Instrument [Line Items] | ||
Effective Interest Rate | 1.25% | |
Term Loan Due on March 9, 2028 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 805,950 | 811,178 |
Effective Interest Rate | 3.25% | |
Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 390,000 |
Long-Term Debt - Summary of D_2
Long-Term Debt - Summary of Debt Obligations (Parenthetical) (Details) | Apr. 12, 2021 | Apr. 11, 2021 | Oct. 02, 2021 |
LIBOR | Term Loan Due on March 9, 2028 | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate range | 2.75% | ||
LIBOR | Term Loan Due on March 9, 2028 | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.50% | ||
Interest rate range | 2.50% | ||
ABL Credit Facility | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.75% | ||
ABL Credit Facility | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.00% | ||
ABL Credit Facility | Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.75% | 1.00% | 0.75% |
ABL Credit Facility | Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.25% | 0.75% | 0.25% |
ABL Credit Facility | Eurodollar | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.75% | 2.00% | 1.75% |
ABL Credit Facility | Eurodollar | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.25% | 1.75% | 1.25% |
Long Term Debt - Term Loan - Ad
Long Term Debt - Term Loan - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Oct. 02, 2021 | Oct. 03, 2020 | |
Debt Instrument [Line Items] | |||
Secured term loan facility | $ 805,950 | $ 1,201,178 | |
Loss on early debt extinguishment | $ 9,169 | ||
Term Loan | |||
Debt Instrument [Line Items] | |||
Secured term loan facility | $ 810,000 | ||
Decreased pricing of basis points | 75 | ||
Debt instrument, maturity date | Mar. 9, 2028 | ||
Term Loan | Minimum | First Lien Leverage Ratio Greater Than 2.75 to 100 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.75% | ||
Term Loan | Minimum | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.00% | ||
Term Loan | Maximum | First Lien Leverage Ratio Greater Than 2.75 to 100 | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.00% | ||
Term Loan | Maximum | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.75% | ||
Term Loan | LIBOR | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.75% | ||
Term Loan | LIBOR | First Lien Leverage Ratio Greater Than 2.75 to 100 | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.75% | ||
Term Loan | LIBOR | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 2.50% | ||
Term Loan | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate | 0.50% | ||
Term Loan | ABR | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.75% | ||
Term Loan | ABR | First Lien Leverage Ratio Greater Than 2.75 to 100 | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.75% | ||
Term Loan | ABR | First Lien Leverage Ratio Less Than or Equal to 2.75 to 1.00 | Applicable Rate | |||
Debt Instrument [Line Items] | |||
Interest rate | 1.50% | ||
Term Loan | Amendment of Term Loan | |||
Debt Instrument [Line Items] | |||
Loss on early debt extinguishment | $ 1,900 |
Long Term Debt - ABL Credit Fac
Long Term Debt - ABL Credit Facility - Additional Information (Details) - ABL Credit Facility - USD ($) | Apr. 12, 2021 | Apr. 11, 2021 | Oct. 02, 2021 | Oct. 03, 2020 |
Debt Instrument [Line Items] | ||||
Debt instrument, maturity date | Aug. 13, 2025 | |||
Credit facility, current borrowing capacity | $ 0 | $ 0 | ||
Credit facility, maximum borrowing capacity | $ 200,000,000 | |||
Standby Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Amount of Letters of credit on credit facility | $ 9,200,000 | $ 11,600,000 | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Credit facility, commitment fee percentage | 0.25% | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Credit facility, commitment fee percentage | 0.375% | |||
Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.25% | 0.75% | 0.25% | |
Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.75% | 1.00% | 0.75% | |
Eurodollar | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 1.25% | 1.75% | 1.25% | |
Eurodollar | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 1.75% | 2.00% | 1.75% | |
LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.00% | |||
LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 0.75% |
Long Term Debt - Senior Unsecur
Long Term Debt - Senior Unsecured Notes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Oct. 02, 2021 | Nov. 03, 2020 | |
Debt Instrument [Line Items] | ||
Loss on debt extinguishment | $ 9,169,000 | |
Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Debt instrument, principal amount | $ 390,000,000 | |
Loss on debt extinguishment | $ 7,300,000 | |
Minimum | Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Debt instrument, floor interest rate | 1.00% | |
LIBOR | Senior Unsecured Notes | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.50% |
Long Term Debt - Interest Rate
Long Term Debt - Interest Rate Cap Agreements - Additional Information (Details) - Interest Rate Cap Agreement - USD ($) | 12 Months Ended | |||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||||
Aggregate notional amount | $ 750,000,000 | |||
Debt instrument, description of variable rate basis | LIBOR | |||
Fair value of interest rate cap agreements | $ 0 | $ 0 | $ 0 | |
Gain (loss) of interest rate cap agreements | $ 0 | $ 0 | ||
Other Expenses | ||||
Debt Instrument [Line Items] | ||||
Gain (loss) of interest rate cap agreements | $ (4,300,000) | |||
LIBOR | ||||
Debt Instrument [Line Items] | ||||
Cap interest rate | 3.00% |
Long Term Debt - Schedule of De
Long Term Debt - Schedule of Debt Maturities and Principal Repayments of Indebtedness (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Long Term Debt By Maturity [Abstract] | ||
2022 | $ 8,100 | |
2023 | 8,100 | |
2024 | 6,075 | |
2025 | 10,125 | |
2026 | 8,100 | |
Thereafter | 765,450 | |
Total long-term debt | $ 805,950 | $ 1,201,178 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 02, 2021 | Oct. 03, 2020 | |
Lessee Lease Description [Line Items] | ||
Lease expiration date | 2031-12 | |
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ 9.7 | $ 4.7 |
Minimum | ||
Lessee Lease Description [Line Items] | ||
Operating lease renewal period | 5 years |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Leases [Abstract] | |||
Operating lease expense | $ 68,130 | $ 66,642 | $ 63,640 |
Variable lease expense | 1,129 | 819 | 517 |
Total net lease expense | $ 69,259 | $ 67,461 | $ 64,157 |
Leases - Schedule of Weighted-A
Leases - Schedule of Weighted-Average Remaining Lease Term and Discount Rate for Operating Leases (Details) | Oct. 02, 2021 | Oct. 03, 2020 |
Leases [Abstract] | ||
Weighted-average remaining lease term | 4 years 3 months 18 days | 4 years 2 months 12 days |
Weighted-average discount rate | 5.10% | 5.90% |
Leases - Schedule of Future Ann
Leases - Schedule of Future Annual Minimum Lease Payments (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 03, 2020 |
Operating Lease Liabilities Payments Due [Abstract] | ||
2022 | $ 75,997 | |
2023 | 55,028 | |
2024 | 47,619 | |
2025 | 32,832 | |
2026 | 22,178 | |
Thereafter | 11,376 | |
Total | 245,030 | |
Less: amount of lease payments representing imputed interest | 23,922 | |
Present value of future minimum lease payments | 221,108 | |
Less: current operating lease liabilities | 61,071 | $ 54,459 |
Operating lease liabilities, noncurrent | $ 160,037 | $ 130,234 |
Income Taxes - Summary of Provi
Income Taxes - Summary of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Current: | |||
Federal | $ 25,914 | $ 8,188 | $ 14,072 |
State | 7,733 | 2,262 | 1,537 |
Total Current | 33,647 | 10,450 | 15,609 |
Deferred: | |||
Federal | 2,633 | (5,844) | (418) |
State | 215 | (1,979) | (336) |
Total Deferred | 2,848 | (7,823) | (754) |
Total income tax provision | $ 36,495 | $ 2,627 | $ 14,855 |
Income Taxes - Summary of Pro_2
Income Taxes - Summary of Provision for Income Taxes to Amount Computed at Federal Statutory Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | |||
Federal income tax at statutory rate | $ 34,257 | $ 12,851 | $ 3,198 |
Equity-based compensation | (2,360) | 375 | 447 |
Section 162(m) limitation | 2,826 | ||
Permanent differences | 564 | 89 | 100 |
Change in valuation allowance | (5,425) | (11,373) | 11,060 |
State taxes, net of federal benefit | 7,072 | 2,503 | 54 |
Other | (439) | (1,818) | (4) |
Total income tax provision | $ 36,495 | $ 2,627 | $ 14,855 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 02, 2021 | Oct. 03, 2020 | Jan. 02, 2021 | Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 22.40% | 4.30% | ||
Valuation allowance | $ 5,425 | $ 5,400 | $ 16,798 |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Jan. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 |
Deferred tax assets: | ||||
Compensation accruals | $ 5,674 | $ 5,433 | ||
Inventory | 1,053 | |||
Interest limitation | 6,919 | |||
Lease liabilities | 54,489 | 46,644 | ||
Equity-based compensation | 1,646 | |||
Reserves and other accruals | 1,138 | 354 | ||
Total deferred tax assets | 62,947 | 60,403 | ||
Deferred tax liabilities: | ||||
Property, plant, and equipment | (1,392) | (611) | ||
Intangibles | (3,849) | (3,258) | ||
Lease assets | (52,264) | (44,014) | ||
Deferred financing cost | (399) | (512) | ||
Other | (1,309) | |||
Total deferred tax liabilities | (59,213) | (48,395) | ||
Valuation allowance | $ (5,400) | (5,425) | $ (16,798) | |
Deferred tax assets (liabilities), net | $ 3,734 | $ 6,583 |
Income Taxes - Summary of Valua
Income Taxes - Summary of Valuation Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 02, 2021 | Oct. 03, 2020 | |
Income Tax Disclosure [Abstract] | ||
Balance at Beginning of Period | $ 5,425 | $ 16,798 |
Deductions | $ (5,425) | (11,373) |
Balance at End of Period | $ 5,425 |
Commitments & Contingencies - A
Commitments & Contingencies - Additional Information (Details) - USD ($) | Oct. 02, 2021 | Oct. 03, 2020 |
Workers' Compensation Insurance Program | Maximum | ||
Loss Contingencies [Line Items] | ||
Self insurance retention amount | $ 400,000 | $ 400,000 |
Workers' Compensation Insurance Program | Standby Letter of Credit | ||
Loss Contingencies [Line Items] | ||
Credit facility, remaining borrowing capacity | 9,200,000 | 11,600,000 |
General Liability Insurance Program | Maximum | ||
Loss Contingencies [Line Items] | ||
Self insurance retention amount | 400,000 | 400,000 |
Employee Group Medical Plan | Maximum | ||
Loss Contingencies [Line Items] | ||
Self insurance retention amount | $ 400,000 | $ 400,000 |
Commitments & Contingencies - S
Commitments & Contingencies - Summary of Future Minimum Purchase Commitments (Details) $ in Thousands | Oct. 02, 2021USD ($) |
Purchase Obligation Fiscal Year Maturity [Abstract] | |
2022 | $ 32,478 |
2023 | 32,482 |
2024 | 32,479 |
2025 | 32,477 |
2026 | 8,119 |
Total | $ 138,035 |
401(K) Plan - Additional Inform
401(K) Plan - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Defined Contribution Plan, Tax Status [Extensible Enumeration] | us-gaap:QualifiedPlanMember | ||
Defined compensation plan matching contribution by employer | 50.00% | ||
Defined compensation plan by employee | 4.00% | ||
Defined contribution retirement plan expenses | $ 0.8 | $ 1.1 | $ 1 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Oct. 03, 2020 | Sep. 28, 2019 | |
Related Party Transactions [Abstract] | ||
Paid or accrued management fees | $ 4.9 | $ 4.5 |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | Oct. 02, 2021 | Oct. 31, 2020 | Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Aggregate unamortized value of outstanding equity-based compensation awards | $ 34,800 | $ 34,800 | |||
Unamortized equity-based compensation costs, expected to be recognized, weighted average period | 3 years | ||||
Dividend yield | 0.00% | ||||
Options exercisable | 0 | 0 | |||
Selling, General and Administrative Expenses | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation expense | $ 25,600 | $ 1,800 | $ 2,100 | ||
Common Stock | 2020 Omnibus Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares available for grant | 7,300,000 | 7,300,000 | |||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Aggregate unamortized value of outstanding equity-based compensation awards | $ 16,022 | $ 16,022 | |||
Unamortized equity-based compensation costs, expected to be recognized, weighted average period | 2 years 6 months | ||||
Dividend yield | 0.00% | ||||
Stock Options | 2020 Omnibus Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Option expiration period | 10 years | ||||
Service Incentive Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period | 4 years | ||||
Service Incentive Awards | Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 25.00% | ||||
Service Incentive Awards | Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 25.00% | ||||
Service Incentive Awards | Tranche Three | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 25.00% | ||||
Service Incentive Awards | Tranche Four | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting percentage | 25.00% | ||||
Incentive Awards | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity-based compensation, acceleration cost | $ 10,700 | ||||
Dividend yield | 0.00% | 0.00% | |||
Performance RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of trading days | 20 days |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Weighted Average Assumptions Used for Incentive Awards/ Stock Options (Details) | Oct. 02, 2021 | Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividend yield | 0.00% | |||
Incentive Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatality | 23.50% | 22.90% | ||
Risk-free interest rate | 1.40% | 2.50% | ||
Dividend yield | 0.00% | 0.00% | ||
Expected term (in years) | 4 years | 4 years | ||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatality | 28.90% | |||
Risk-free interest rate | 0.70% | |||
Dividend yield | 0.00% | |||
Expected term (in years) | 6 years 3 months 18 days |
Equity-Based Compensation - S_2
Equity-Based Compensation - Summary of Incentive Awards Activity (Details) - Incentive Awards - $ / shares | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding, Beginning Balance | 13,267,000 | 10,263,000 | 7,946,000 |
Cancelled upon IPO | (8,450,000) | ||
Converted to RSUs | (4,817,000) | ||
Granted | 5,980,000 | 3,402,000 | |
Cancelled/forfeited | (2,976,000) | (1,085,000) | |
Ending Balance | 13,267,000 | 10,263,000 | |
Weighted Average Exercise Price, Granted | $ 1.87 | $ 1.69 |
Equity-Based Compensation - S_3
Equity-Based Compensation - Summary of Stock Options Activity Additional Information (Details) $ in Thousands | 12 Months Ended |
Oct. 02, 2021USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unamortized value of unvested stock options | $ 34,800 |
Weighted average period (years) that expense is expected to be recognized | 3 years |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Aggregate intrinsic value of options outstanding | $ 14,698 |
Unamortized value of unvested stock options | $ 16,022 |
Weighted average period (years) that expense is expected to be recognized | 2 years 6 months |
Weighted average remaining contractual life (years) for options outstanding | 9 years 8 months 12 days |
Equity-Based Compensation - S_4
Equity-Based Compensation - Summary of Stock Options Activity (Details) - Stock Options shares in Thousands | 12 Months Ended |
Oct. 02, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options, Granted | shares | 5,372 |
Number of Options, Cancelled/forfeited | shares | (495) |
Number of Options, Ending Balance | shares | 4,877 |
Weighted Average Exercise Price, Granted | $ / shares | $ 18.43 |
Weighted Average Exercise Price, Cancelled/forfeited | $ / shares | 17.26 |
Weighted Average Exercise Price, Balance, Ending | $ / shares | $ 18.22 |
Equity-Based Compensation - S_5
Equity-Based Compensation - Summary of RSU Activity under Plan (Details) - Restricted Stock Units shares in Thousands | 12 Months Ended | |
Oct. 02, 2021$ / sharesshares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Converted from Incentive Awards | shares | 6,038 | [1] |
Granted | shares | 725 | |
Vested | shares | (3,321) | |
Cancelled/forfeited | shares | (307) | |
Ending Balance | shares | 3,135 | |
Weighted Average Grant Date Fair Value, Converted from Incentive Awards | $ / shares | $ 17 | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 25.95 | |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 17 | |
Weighted Average Grant Date Fair Value, Cancelled/forfeited | $ / shares | 18.19 | |
Weighted Average Grant Date Fair Value, Ending Balance | $ / shares | $ 18.87 | |
[1] | Represents approximately 4.8 millio n Service and Performance Incentive Awards converted to RSUs in connection with the IPO and adoption of t he Plan during fiscal 2021. |
Equity-Based Compensation - S_6
Equity-Based Compensation - Summary of RSU Activity under Plan (Parenthetical) (Details) shares in Millions | 12 Months Ended |
Oct. 02, 2021shares | |
Service and Performance Incentive Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards converted to RSUs | 4.8 |
Equity-Based Compensation - S_7
Equity-Based Compensation - Summary of RSU Activity under Plan Additional Information (Details) $ in Thousands | 12 Months Ended |
Oct. 02, 2021USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Weighted average period (years) that expense is expected to be recognized | 3 years |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unamortized value of unvested RSUs | $ 18,819 |
Weighted average period (years) that expense is expected to be recognized | 3 years 4 months 24 days |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Reconciliation of Basic Weighted Average Common Shares Outstanding to Diluted Weighted Average Common Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 02, 2021 | Oct. 03, 2020 | Sep. 28, 2019 | |
Numerator: | |||
Net income | $ 126,634 | $ 58,561 | $ 702 |
Denominator: | |||
Basic | 185,412 | 156,500 | 156,500 |
Effect of dilutive securities: | |||
Stock options | 567 | ||
RSUs | 4,030 | ||
Weighted average shares outstanding - diluted | 190,009 | 156,500 | 156,500 |
Basic earnings per share | $ 0.68 | $ 0.37 | $ 0 |
Diluted earnings per share | $ 0.67 | $ 0.37 | $ 0 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Antidilutive Securities Excluded from Calculation of Diluted Net Income Per Share (Details) shares in Thousands | 12 Months Ended |
Oct. 02, 2021shares | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from calculation of diluted net income per share | 323 |
Stock Options | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from calculation of diluted net income per share | 321 |
RSUs | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from calculation of diluted net income per share | 2 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) shares in Thousands | 12 Months Ended |
Oct. 02, 2021shares | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Dilutive weighted-average shares outstanding excluded from the calculation of diluted net income per share | 323 |
Stock Options with Performance Conditions | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Dilutive weighted-average shares outstanding excluded from the calculation of diluted net income per share | 600 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - Subsequent Event - Common Stock | Dec. 03, 2021USD ($) |
Subsequent Event [Line Items] | |
Authorized amount under share repurchase program | $ 300,000,000 |
Period during which shares can be repurchased under share repurchase program | 3 years |