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LL Lumber Liquidators

Participants
Stephen Calk Alpha IR Group LLC
Dennis R. Knowles Lumber Liquidators Holdings, Inc.
Martin D. Agard Lumber Liquidators Holdings, Inc.
David Bellinger Oppenheimer & Co., Inc.
Laura Champine Loop Capital Markets LLC
Simeon Ari Gutman Morgan Stanley & Co. LLC
Dillard Watt Stifel, Nicolaus & Co., Inc.
Peter Jacob Keith Piper Jaffray & Co.
Seth M. Basham Wedbush Securities, Inc.
Gregory Scott Melich MoffettNathanson LLC
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to Lumber Liquidators' First Quarter 2018 Earnings Conference Call. With us today from Lumber Liquidators is Mr. Dennis Knowles, Chief Executive Officer; and Marty Agard, Chief Financial Officer.

As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in full or in part without permission from the company. I would now like to turn the conference over to Steve Calk. sir. ahead, go Please

Stephen Calk

Good and operator. joining you us. morning, you, thank everyone, for Thank

the of of contain Harbor laws me operating risks Safe Let reference the including provisions are to statements. future conference and uncertainties, that financial for This the Liquidators. call statements may performance forward-looking and subject significant Lumber forward-looking securities U.S.

statements assurance are statements and results Lumber Lumber in statements will any this Investors at could of date reasonable, it are Liquidators forward-looking included The discussed. its information statements any correct. time, be believes filings Although, is to materially will the cause SEC. or a not give in prove later of that those the information this that that assume no to Important remain in its the that forward-looking in should expectations contained obligation the update in discussed reflected operative forward-looking these Lumber to expectations accurate Liquidators' reflected Liquidators factors with call only from no undertakes call. as such can risk differ actual

Now, I'm Mr. pleased of Knowles, Dennis? to Lumber Liquidators. CEO introduce Dennis

Dennis R. Knowles

morning, you, Thank good Steve, everyone. and

I'm our Agard, As by Chief Officer. Financial joined always, Marty

thank start, take minute we you the a Before around to to me associates say our let country.

is work off. hard paying Your

Over better enthusiasm. tremendous the strong assortment a support, past a you've year, responded with we foundation to and from have established and enhance training

of all, great quick done great taken you and have you've have studies, most of us You our brought care customers. ideas,

work. So, keep up the good

of to prior-year net X.X%, we sales the quarter. the quarter, a consistent on shared store we highlights In compared sales reported few net the increase $XXX.X an with to of first Comparable increased expectations for quarter. the last period. million, Now, X.X%

see pace both and improvement both We on XXXX continue we margins, operating to continue our and with open goal. stores margin longer-term and gross to in

results. post business our to strong addition, In installation continues

leverage growing that nationwide, services expertise. more we and those we installation market effectively our Now offer can

test quarter the of results to excited accurately are to we're now we Our that the to of grow advertising can opportunities in Pro company the activities. we producing ahead and areas seeing us evaluate we see confidence next pricing, strategies able about last we're able average in business are business to This enhancements levers. and continuing to where continues effects we In different that quarters. mentioned has we're assertive are promotional and our the be particular, given I how our few in more more feel offering.

means at strategy, time. and and functionality products make we customer with And the points. at in store touch to the This our so our enhance continue tools. we right various our that store also stocking progress integrating in-store how online management other project brand have our greater We interacts the to environments, and right envisioning customer with continue the giving

utilize to approach continues to and sophisticated advertising goal a more deep discounting. as Our oppose heavy relying on

so many heard have touch confirmed to from on a morale by What from to gratified country. enhanced the frontline a has me to before that Marty. our on our as of to impact positive around recently handing me associates culture are clear improve, belief also improvements. enthusiasm that attended helped the customers. stories our the I on vendors. the our customers our retention attraction our it and as the talent, to hear we're and Let our and continues that the the positive on service held Sales our from was things Annual is We organization track, responding and has It the of product Meeting many that managers few was we of more well our over and

add On suppliers relationships around we to world, formats. the with exclusive continue improve develop and and the we side, product styles continue to and

you'll wood-look decors waterproof which entire as our had course, great haven't particularly in our added and made you our updated that advertising XxXX Metro additional see on-trend well the the continue assortment, any we tile the fashion-forward XxXX, like sure results of For we to sizes example, as our Concrete the see and catalog. porcelain we next if in which lately, and stores. category, seen on And cover of Southern Coastal of our in Oak,

reality. positions are also to to organization and On to and add we're the capabilities. make plan some and that enhancing merchandising have leadership future building customer-focused front, on resources more us some time, been the make we ready more while now, invest in agenda customer-centric, a we these marketing These be additions to for our to

with Lastly, funding material and no the on is the DOJ to have than to other that the under legal the committed SEC cooperating government the with likely fully that the have MDL of and updates announced, quarter. investigation, MOU front, on the fall progressing say fourth terms in previously we we to

the the customers of positioned hand to shape, in over Marty numbers. the about they and but taking is our what excited XXXX, see our The they and our when encouraged. stores. to track, we're minute let are in talk I'll me the data analytics rest back offerings walk for on So, about good infrastructure do I providing are good and operational at decisions, install all, to year, a when I'm it Marty? of how come assortment are Pro enhanced driving strong, look is most our

Martin D. Agard

Thank you, Dennis, good and everyone. morning,

the by line me Let covering again highlights. top start

nominally ticket expansion sales last growth affected comp were $XXX.X stores by over sales declines of and of comparable average of an first consisted million, net X.X% quarter, XX%. the For up X.X%. installation X.X% comps was increase up overall This traffic X.X% and X.X%. of net year, The with sales merchandise up

April, grew last and XX% divisions little set than quarter's sales both our more X% softness of mid-single-digits. three division, call, XX to represented of quarter. mid-single-digits, XX% particular and our more down As while have markets in stores traffic the and on Installation sales track our out in XX in for than We and grew more up in in remain were the it's this comp other the stores called five in reflect offered new comps where new we metrics been comp to our were North opened XX Installation in opened year. a sales in months. open four store all quarter

Moving million the Both SG&A excluding $XX.X for a manufactured agreement. gross of an $X.X items, healthier periods' allowances, million lower primarily expansion primarily on settlement margin mix expense $XXX.X promotional to points driven XX.X% at quarter margin, the quarter the an basis margin expense first tabled from in the out last SG&A million was for QX adjusted the and from quarter included from of in costs, improvement SG&A and in $XX.X year-ago XXX the which are Comparing to XX-Q. MDL year's The costs. this offset items year transportation fourth the for recent release improved was was carry sequentially quarter, by the of of products, quarter primarily incremental by came quarter legal legal When in points costs gross included press these due ago. million the in margin. while to mix. in up first seasonally XX improved margins, was gross XXXX. the basis related vendor higher million, quarter, $XX.X slightly million, of increase compared to XX.X% $X.X XXXX, to

to points last P&L spread XX.X% year. was The spend in several and sales, move adjusted of down leverage operating from driving depreciation, XXX same IT, the I'll of basis, year. On the areas flat increase occupancy over while last advertising SG&A including was cost basis was to profit.

XXXX loss useful of the For $X in these million and we these we of $X.X compared recorded quarter, operating adjusted to XXXX. million items an it's $XX.X items in think QX operating our aside, If to release, exclude loss unusual of we that set at of impacted our had QX an with million profit an to and the last as shown year's in loss. XX-Q $X.X adjusted operating look results million press we operating results of compared

at liquidity cash Now and flow. let's look

credit quarter. we which of under As liquidity $XXX facility compares at we of and the the million, borrowings $XX to million XX, total March of million, borrowings our had in had revolving beginning of $XX

million inventory from million of of $XXX beginning from quarter Our year. up the last the million, $XXX end QX ended quarter, down at but slightly the at the $XXX at

to installation initiatives get store was plan compared to call, for $X a in and of annual the expect increase On feedback late division few with with spring, continue around of a in stronger balance between confidence we on respect set million that and we've year the capital to for spend to and million, X% to now guidance our quarters in comes the spending quarters the an posted from several emergence This last Our customers $XXX,XXX $XX our from factors: our consistent confident North continue was the a of million last the guidance, mid-single-digits experience, and we as Pro, year. we we target comp their next ago. remain three comp X% and from we straight year. our to growth $XX program to the improve planned marketing With year have the the of we year have great in on range.

from basis is last terms we to call, for certainly XXX easiest points our maintain basis. profit which and QX was comparison operating guidance year's X% of for points from on the adjusted In us improvement the margin XXX year, expansion, the last an basis

terms liquidity, to in of modestly In we quarter the of $XXX and second remain a $XXX to million. rise range expect over million inventory

$XX.X now payment the usual of in million that is to expect million MDL fourth outside our this of dependencies also fall in control. and of the cash to total subject $XX but the year, uncertainties We settlement the contemplated quarter

the tax $XX to balance open as to investing expect in Thanks, to payments over cover, the refunds no spend That's got we and again, Dennis. year. so it in capital I and or during have XXXX the XX mentioned We all million side, earlier, everyone. to on XX over hand the stores I've to year, $XX I'll back material million of

Dennis R. Knowles

Marty. you, Thank

XXXX, plans in February. what turn with we rest to the shared of consistent As with our are you we've

I my which flooring On for mission make keep From is our February is: installation, call, comments passion our to our all. easy and the beautiful referenced rollout possible I'll inspiration statement, updated So, closing of brief. to

customers: customer, our serve We the key continue components mission drive that the the associates do-it-yourself reminding the this we three installer. customer, and professional the to do-it-for-me organization, statement of throughout

our we knowledge to needs organization, their those This meet breadth means an Liquidators our and of store the continue I talked strategy Earlier, for speak more emphasize the and identify than of we're to else. anyone of informs Lumber mature better in and we our the into That assortment, terms integrated convenience services. can needs to rest about and exclusive have how installation year. quickly a the our the items these evolution of value to associates, specific how the have bring organization. customers As of also we evolving

excellence, call of I focusing. to where terms area operational really out one we're In want improving just

getting customers some good are buy customer from We who from which us. really from includes not ultimately do feedback data surveys our

customers that get there, clear, and drives We so feedback, in visit We deep compels we and reactive. to not what store this their understand purchase to to are decisions be them digging we're what know being on our better. they want the much once

improve we our approaches We discussing lot right their building This with this the will point in truly differentiator that time get This associates we of Liquidators we a upselling model it key driver coming can means primary sales needs. longer-term a journey is meet and responds When adjacencies. we during the be and their price growth customers for are how are where to our of on a spend the sale. quality and and for customer interaction, us years. that Lumber we improve a

growth. offer meet their an customers, Our one we very can retailer, This second a Liquidators to is experience, to replacing drives an integrating the focus, trend of our as of be additional customers customer store have shape. come their people projects. but what enhancing take continues our more functionality, they doing drive is to are traffic This here. responsive the for to even for evolving. excited and also shelves. it discrete endless seen online our with and new about quarter, number how not In experience. look expanding because become we style-conscious, increasingly the customer Once our there, of particular, team want because means more are Lumber available in-store We've it environments I'm is products meaning they've they're that to along that last habits customer as will shopping and the exciting This in such specialty that And their if often colors, seamless specifications. achieve. means on featured is more aisle to that styles, that I textures the never product mentioned gets expertise to a of exact a differentiator a way another expect, our that floor, that

third Our expanding plan. on strategy, our business, continues

many referenced offering. now in starting to leverage we're from instillation the of our seeing we ads You're see national expected national the and

Now, cylinders, the year customers have overall store line. new offer a which on the first footprint. when all two stores we to our helping on to store, that firing we reeducate is relative down their open we're have They best experience our we outperform to don't or visit and get means

them mouth experiences customer our as of service stores. a the level of industry-leading of brings our to word we keep Pro, repeat new a tend assortment, terms In we're seeing to pattern. and a Pros and Once similar Pro

While like we're our associates will I continue the of over just started. on growth build standard new progress the Pro our assortment excellent customer particularly rollout. our believe Pro units with last feel getting several expands, our made and training we've years, itself, as continuity to the and for really I year, the business outperform next

remain Finally, a in track gross expand through our on level profitability, on to next years X margin points X the SG&A. few of by at initiatives margins operating we improving in and combination to the

expect us, consider We evolutionary, expect that not both sales. move as years, will put low-hanging dollars picked milestones we had these be on revolutionary, plenty and at behind do with of percent we few steadily place. And our over some IT next these direction. before, continued now on In we've what basic modest that store where profit corporate right quarters excited in few achieve I we As annual in we are dollars as investments, call, into believe to we said still but more the results, be us improvement comp SG&A advertising franchise. through while some we mid-single-digits, basic I'm operating in to in the very adjusted I front as operating can execute we our do there can next in we going. that of growth we is to a our still leverage our total the as us the and be annual infrastructure in have have sales still growth sales our but mentioned in the plans the the and we assertive last the But will adding in matters of strategy the believe SG&A, we're work upper-single-digits. closing, to improve mid- will and including about we upper-single-digits, legacy accomplished fruit,

questions. like to We business are to the and forward With the call about thriving in very ahead excited coming are year looking years. operator, that, we'd open a the to

Operator

At time, you. Thank Thank question-and-answer conducting this be you. session. we'll a

with your question. Please of today Oppenheimer. comes the proceed Our Brian Nagel line question first from with

David Bellinger

morning. Hey, Good This is... guys.

Dennis R. Knowles

Brian. morning, Good

David Bellinger

...David Brian. Bellinger for

on So, question my is first traffic.

and think pricing, near-term how promo the the with should drive store. that in advertising number go about on activities to initiatives, where more can traffic get year? those the as mentioned could and levers you aggressive of over and the balance customers the you How So, impact we

Dennis R. Knowles

take something I'll may have it if add. a and Well, to shot at Marty

numbers traffic of from to quite there in beginning QX of the QX. think the was bit noise the a of I end

that because I was the on traffic to think so, And there North. some in impacts what going of just were

customer. plan got our rolled what to to leveraging what that we're offer what accretive that it's to for draft how can opposed remainder just now more of forward is We service planning really I is into to expect sure make haven't that on throughout not also we we out, year. that the as and that line product promotion the traffic. accretive looking the focused, what be that focused, plans to but we're advertising is, services our be that, installers does to we the network focus that lean installation top can – in of to drive to and we've on the However, to understand the traffic

I similar that to We've been so could installation, complete offering more customers maybe would the year see on I that's you less, calculated. and focused point that last with have nationwide So, in we we making that a X in that with share then you, have Marty, that offer on we've of have don't the to really traffic QX number nothing the wouldn't anything? really sure would a segmentation we in what but a but we know, saw sit and down advertising. expect if Pro, I for our focusing

Martin D. Agard

Yeah.

I ticket that to X% both X% business running strong. contributed low-single-digit, we're average we X% comp, to X% overall X%, ticket, and near to It and as that continuing. X% been that continue think the we zero, in growth. Pro were see that to install see the do we running has attachment, The

get the think the relative it's hard So, traffic in to we on traffic the just if we're and about were expect effect to running. that for quarter. into that's (XX:XX), clearly first and looking we're to X% payment We in that. we get little we saw says where that and to the We going mid-single-digits mid-single-digits rebound into to can North (XX:XX) read that X% to that in be comps, a weather from range,

think some promotional get should plans were it there quarters passed, then getting the as us weather ambitious the us don't well. help just of super the plans, should get of stronger I couple those help in So, and next again, and there,

David Bellinger

can follow-up, QX? in different there tracked terms over or few you And helpful. of conversion, in Yeah. past about just you're and here new a the what Appreciate talk anything that's quarters seeing was my That's bit how as really that.

Dennis R. Knowles

– Yeah. seen I increase nice in can we've conversion. a

at think job the experienced things year regional managers are been the the of Some Mark here. higher lowest what still and The I have we to and been I focusing I've QX call experiencing may the since training. driving done relative rate now. that, last and turnover you And divisional that significantly turnover VPs in on what is really at great remember, had would stores it's we're a

Mark conversion It's experience have QX for rate. so by And store so, spent invoices. we've the believe store. conversion in of team and on converting more teams we of that samples both, of the don't then, Mike some commercial higher we business, now conversion – driving the focused over XX lot and Pro driving has And offset But QX time into to saw months metrics still us look Charles, at I different of really in in a we rest a in that's many shared on bit ever to conversion. help our that we that and at with the progress course that of us, working at rate. look have the been a a conversion, the traffic because Mark last and the we with work the installation conversion we that have look offset sample focused

trained traction. into a in first believe kind I increase what be the turnover that call ratio now seen would see to that we associates. we're just we've that and This go quarter nice healthy with a starting of So, really will both,

together the training. Sales for time an had remarks, we on time As just where vendors spend the of our in first stores two focusing Meeting to prepared our years, and with in opportunity my had we I Annual all mentioned had

install continue at it us be to conversion. all at three So, looking providers just those that. what and we and at web as we I to are project conversion, metrics: to we at conversion; install look performs pay our and conversion; we're a looking we're goes They that that's out going call for a relates payoff assessment. sample when look But for things think

the know have that we're just a the our getting conversion it's us we yet, happy last works, generally arms is really in as so, with over that making. they're up really how the well for been two around project quarters, them. started and really but And because and we all with measure Don't of pleased progress high serious

David Bellinger

guys, and Thanks, it. Got good luck.

Dennis R. Knowles

bet. You Thank you.

Operator

Please with your The comes next the Capital. question. Loop line with from Laura of Champine proceed question

Laura Champine

you in out Good noted stepping this your flat. comments, us. if to mentioned Dennis, Q that sales. was your strip your year? spend sale the to you'll the Sale in behind that count in April morning. for I year-on-year weather the ad transaction try The that in up was increase you comments impact, big ad probably expense be What And is drive

Dennis R. Knowles

spend we had north was last slightly Sale. almost the really of sale year, for a Ad flat, good just April but

really As April you Sale last remember, strong year. we had a

our sale, cause was year order this thing year. I but the than promotions we've typically better forward of growth of a encouraging Sale last some sales, And too. strong relatively – that, following April pull Our seen somewhat or was new the think of

encouraging. been that's So,

Laura Champine

Got Thank you. it.

Dennis R. Knowles

you. Thank

Operator

The next Morgan Please Stanley. questions. question comes from your the with line of proceed Simeon Gutman with

Simeon Ari Gutman

Did right. – think if Good morning. that being I you say about comps heard share... non-weather you you Thanks. I markets, Can mid-single-digit, talked

Dennis R. Knowles

Yes.

Simeon Ari Gutman

...what merchandise those was markets? comp in the

Martin D. Agard

didn't – No. no. We that, but run

Dennis R. Knowles

say aggregate. shared would it but be data have of I we just by had division not We – category, that. at they I not merch pulled Simeon, north look have X%. in that by to

think... I

Martin D. Agard

install. been North with the We've in

going you're where and big the get was a it distortion not that's down. So, to one

But in we it's not, the closer I thesis North, and clearly bit So, lesser went in where to little a into degree, California year, that would take think North so, West a in went to don't a of – the to away our we into been target was late than were so... last Florida. South and mid-single-digit the that basic have tailwind other going the where the that comps range,

Simeon Ari Gutman

trying the mid-single-digit what comps from the weather premise comps within where talking from or separate the year? range is land mid-single-digit that rate to of should relative expecting that about, of you're you're that Right. run rest merch merch the I to guess we're the for

Martin D. Agard

it around fourth boost to By start continue the for maybe bit, year. to so that from X% think We install will expansion will most a Yeah. quarter, X.X little where the gap, or point. it's compress of a X%

So, X% merch in range. you got think to the X% to comps

Simeon Ari Gutman

Got it.

gains then takes – separate the And the you and called you guys? bad from the gross puts the other good guys the out (XX:XX) some mix on if then margin margin out some and on Okay. I merch items, assume margin, whether line. of can can quantify you or

Dennis R. Knowles

mix Gross margin products, whereas bit I we mix-driven. quarter The these be not little year Yeah. promotions period something seasonally so go in more like there by manufactured is April XX-basis-point out seasonal It's and year good costs come is standpoint. heavily us in super current into that. – transportation quarter year-over-year move it's more a with impact the some from haul quarter, promotional, fuel Sale is work kind to XX-basis-point that margins to a sort of that But cost tends of some number there. a really of driver specific against the alluded and a kind over to to, be tends first – as of second variability. started terms – to And Mix the big of longer promotional. to the

more if I range just we but there. you know So, a to the sense give don't want of get specific,

Simeon Ari Gutman

you. Thank

Operator

the of Dillard question. Stifel. The Watt line next with question with Please your comes from proceed

Dillard Watt

certain beat that? pretty a rebuild it any stuff, behind hurricane-related or think tailwind I you regions got you wanted more we the hard. Thanks. not weather much in there that any into from to a little are amount to too that Is drive demand bit maybe

Dennis R. Knowles

steady in market never of there bit still saw see Texas, quite the much South that Houston a gone from tailwind diminishing. pickups really there. We we slow They're Maybe little We the strength but in in Florida. tailwind saw one. not a a yet, in from were are be there'll that still Texas. The

Dillard Watt

And great. then... Okay,

Dennis R. Knowles

out in I'd materialize. third second, it's Although, quickly, the much don't running quarters say expect really to we more

Dillard Watt

Okay. Thanks.

the to this then you terms You more a little bit traffic guidance of or transaction from in couple a bit taken the if and points increases the material assumptions little count. guess passing side, of counteract more from into to you is think less any there in points the talked year, raw a or help Is going on a the couple comp for I be increases? from ticket ticket terms price you're install. in anything mix that have year about

Martin D. Agard

that what deep I say how steady. taken not has many been price We we'd we We've and items on we how put flat-out call increases. go, generally manage promotion, would

yeah, let's in of We are bit a bigger the have per lower – these foot, generally good to little the mix speaking, they a manufactured bit products average size, jobs. and ticket price with terms be but tend see, little margins square

stuff standard and it, the better job, and job it. doesn't merchandise attachments, a up up got is after And the So, the – getting an the then on showing is all in labor end really on be fair you've install the than – we're that install not the is stick transaction gold mix impact more we've The to and you looking doesn't big it mix amount is of size. really where the ticket average then bigger that seem and and got and Pro there, the whole bigger DIY because trim ticket merchandise only a a merchandise on if an average Pro ticket. then, you get

So, that multiples one as I've just literally past, in straight is, ticket. said the of DIY a merchandise-only

Dillard Watt

Okay, great.

Martin D. Agard

segmentation so of format, out not split. it's is that call much as mix So, it (XX:XX) channel a that kind

Dillard Watt

Thanks it. for taking question. my Got

Dennis R. Knowles

you. Thank

Operator

The next line with question Piper Please question. Jaffray. with the Keith comes proceed Peter your of from

Peter Jacob Keith

guys. Good Hey. morning,

Dennis R. Knowles

Peter. Good morning,

Peter Jacob Keith

how curious about thinking Marketing roles and The recent I two your who Marco, Head those of forward. in going was of Merchandising, was you're departure

looking And them as splitting or have of type role you We them maybe are combined those you're of characteristics them, are if back I positions? a you for split each guess again? now to looking two what for,

Dennis R. Knowles

great around and up. those roles had midyear potentially a Marco question. back talked about It's splitting I sometime

and a us like getting really and of some through of in I single know, not crisis But the but just in both as we feel you Merchandising times. need the tough for of us Marketing. did duties a midst and the great As assumed sourcing, in job grows selection, Marco assortment complexity Head

that So, well that start about to organization, would of as oversee of kind plan, a somebody that. customer-centric is potentially my as all thinking

I So, the search merchant well to yes, question, the team. in answer a currently merchandising and and your good for splitting marketing, as marketing will I'm be in to someone head up as

Peter Jacob Keith

then looking as any the change you're you're philosophy And of that or characteristics, looking in in the background candidates? Okay. interview – at for any sort

Dennis R. Knowles

broad Absolutely. as merchandising. for I'm it to relates global looking a with somebody experience,

that's I that's the as assortment, as had that complexity well think as on design. mentioned, global skillset, trend global experience, focused and someone somebody with again, require I that – the its somebody in differences some sourcing

traditionally, while might in look got line it experience, experience that's some involvement they've just decor, you got trends that had that's just like relates – that to as have somebody really straight so, then a design in sourcing, customer and the for someone someone global to would So I some but the – experience. merchant has

somebody home more maybe line as decor. a maybe that's So, P&L in well just as of it like as had that's somebody a trend being and as got than experience somebody experience got as have some design, relates some kind that's responsibilities, buyer. background to and little I'd sourcing well to

Peter Jacob Keith

Thank helpful. And... you. very Okay,

Dennis R. Knowles

the us. evolution stronger and to necessarily marketing, in Peter, retailers over market you And where years, a is much how five become I'd you we're I see the that's tell know that is marketplace place just has like and big as then marketing, there last – of would not a digital piece taken

on more side background. that that's somebody digital I'm And a looking got so, for little

Peter Jacob Keith

Very good.

Could beginning to for regard one notes my about does margin financial that costs It us of it like headwind your continued I've just going some impacting transportation XX-basis-point in how might forward? you Marty, the margin. talking give now thought to Marty. in with transportation. that's to increasing any companies be thought year, trends you XX-basis-point question a are at the Okay. on about gross seem gross

Martin D. Agard

costs. international probably to the much transportation call, what – hope some see but domestic-based inbound transportation improvements we we quarter, for costs, Well, the like I it of time the in said, impact kind quarter. first to we that that the in we get year-over-year in in similar to warehouse hope have We'd second third expect By don't range quarter. saw the improvement store, our in

that little a In could actually fact, worse. get

guess continuing, through sort kind we say year. I guess, I for of So, headwind of the of now, I'd think that

Peter Jacob Keith

a Okay, luck. lot, and good very helpful. Thanks guys,

Dennis R. Knowles

Thanks Peter.

Operator

line Wedbush proceed Securities. question question. your with Basham the from comes Please Next of Seth with

Seth M. Basham

and lot morning. a Thanks good

Dennis R. Knowles

Seth. morning, Good

Seth M. Basham

You changes referenced in your some programs. promotional

color year? you little us forward. planning You're bit for the give what strong promotional programs more balance of to the as going you're expecting a Could

Dennis R. Knowles

trying Seth, I'm We understand amount too. we've sure time know my effectiveness work that that inordinate guess I track plan over competition the eight brand spend, we're our and five our is to about – attract the customers. would study, and in a year I really goal that of feed of footprints beginning we is will we talked expect some call and start the to the to that can like to – traditional plan our that bit had And of our it last the have marketing to stores. of to new is the scope little years. to new spent a relates into as plans tell to I over last an last you

We stores. of and have our base see traffic our we is service our repeat customer we loyal us to existing But dependent the know new a in future very and ultimately, customer that on drive following being company sales. able in

And would much marketing without you focus the is giving so up I this of additional that effort, detail. too tell

Seth M. Basham

enough. Fair

spend dollars, expect both or looking those of to as of buckets be advertising promotional do are forward you for? how year you're the drive those we So, you to the planning that going for the and up look traffic at

Martin D. Agard

bit, up I mean, little I would a yes. Yeah. say,

Seth M. Basham

Okay.

Dennis R. Knowles

might dollars I the move around think you buckets. see the

to increase – a I increase – mean, percent to to is but You'll of it's my necessarily not got dollars, see work. plan

will – leverage as we to the And ratio this we dollars. we'll increase flat our to will expect a capabilities, it SG&A and as some we but be want as advertising amount spend. drive so, keep still total possible, want we we our of don't test to leaning but just year relates And digital to fair into

Seth M. Basham

it. Got

comps? us Could Sale. you give color the range the terms more within is Okay. strong how And you tracking the last the for some year quarter? mid-single-digit question, to Are well as April date in a as referenced as you of quarter to

Dennis R. Knowles

earlier, just mean, the I had Sale. like April early. said I it's We Yeah.

was year. last April the Sale said, I better than As

and we we're think were particularly New orders on track. strong

that have We really are stores are and sunshine to excited loaded and temperatures, to warmer go. and locked see ready and

us. execution our now. really about It's us got out for So, for work we've cut

Seth M. Basham

Thank you.

Dennis R. Knowles

Thank you.

Operator

with your next from Melich Greg question with proceed you. Thank line The questions. of is the MoffettNathanson. Please

Gregory Scott Melich

had I guess one I and numbers, then (XX:XX) Thanks. Hi. follow-up the on comp more question. a strategic

me of bps got that's us year, that support rolled out – out of XXX remind the but we last remind the how played rest got when when from when rolled mentioned sales about the know that out. actually think the year, install On you I

Dennis R. Knowles

out, of rolled year. completely to relates complete end the as it at the network were We Greg, last

occurs. So, there's it's period bit of incubation still – a that an and

training, As process, train install store train occurs a Charles sides, of with associates. in-house we fair the a have cumbersome sales and it's and amount the training, get regional of managers do on the (XX:XX) a it and product. stores providers service have but lot do to our comfortable kind still of to and we the both we Well,

to that in more more seeing a day take kind catch time up should every see in does start of we QX, on. bit everybody work it a we make a Although amount that's those but And the fair is of to the it that and performance else. of we little QX before brought to penetration progress continue in stores increase just it work of seamless,

Gregory Scott Melich

Okay.

a...? have but terms number by if last look year, was in that basically through we been stores so the equally the quarters. And Is it would it, that got of of pretty end it distributed it of cadence at the of that –

Dennis R. Knowles

so. would I Yeah. think

stores the half. had left into I back think we going XXX

the So, last in think had about it And XX was quarter. I stores half. we about then

pretty So, fair. I'd say that's

Gregory Scott Melich

Yeah.

Okay, great.

question it's when is relaunching So, your Liquidators When in (XX:XX) upon evolving, Lumber it's mind, think sort a to of it, important with brand, thinking of sort for (XX:XX)? direction, is of move a the interviewing the size head, question more the a about little brand you're and for thinking traffic to the of how about and you what to are how how marketing looking strategic. really sort and answer. them person know to then we how it drive we important it new have new in keep But a it that you're as second I and is

Dennis R. Knowles

us Because or I core group is of that Yeah. million-dollar-question breadth Greg, Well, competitors us want very experience, that what is to is product. them, that loyal kind us that's that has of don't is to want and very differentiates – my belief here the from billion-dollar-question. the but been fear, we really of our a strong in-store customers abandon our have we

maybe And analysis really segmentation in amount to DIFM me, this biggest not so, we're ever is we growth I that mean, and installation, my Pro we're brand got see would to customer services what to fair we've with a still new having segments that installation I do. to and part is I this the one the drive That I seeing understand understanding. our of work through in spend, own of nuances I mean split but than of career. brand, own different is marketing the the see. done our in to demographics, expect for we're as relates have, better up research and here, customers how our in to did deeper traffic on going understand call we the and surprises and we managed how learning. dive

along fair lean into study, will and how use really that. where a understand learning, learning our still amount, we with to opportunities brand we we're our segmentation but So, are that

going So, draft Pro want network, same those be customers. being of don't to believe at our we lever our expertise like – it's differentiation, to want everybody bit our to able in and else, install our a to leverage time, the same I I little and sales attributes are

Gregory Scott Melich

good lot right. All Thanks it. and Got luck. a

Dennis R. Knowles

Greg. Thanks,

Martin D. Agard

Thanks, Greg.

Operator

the Our Goldman line question from proceed Fassler your of with with Matt Please is question. Sachs. next

Unknown Speaker

(XX:XX) for Matt. is on This Hi.

talk Just topic of this implications a about business of or it carrying you would it business? or more bit attach what just function a installs the bigger color, rates? be more jobs sales, function with about for kind then, on the the drivers of And of will more a Is the of key little could talk be you just more the install give margin this year? more could

Dennis R. Knowles

about customer ticket color let or nice is talk Marty some growth see typically the a – and we Yeah. margin. the driver give the greater than is it's equal as labor The you install product. I'll on our

our control the one, goes not something when it customer don't makes but tied important to we of the more a for be – our entire in hands and reputation We for so experience, that's us. seamless Number reasons. experience that. And for our control it that's and stores. what somebody wrong, We to several

us we a gives leg And strategically so, that believe up.

statistically. attach – a more just an Pro like has with that our know attach ticket. we install more we we higher-margin and Secondly, goods know higher typically customer average that we It's that

margin, don't to relates I shared ever the it's But our you've... margin healthy that – below the margin, margin. think still it a As if we've don't Marty, is know I slightly but

Martin D. Agard

have labor. the as some on installs merchandize and higher. the aftercare, stuff warranty it below, sell The We've No. are we of same frankly called slightly margin we of at kind kind the little

mix not into positive little going the it's So, diluted, offset the and mix than products merchandize And diluted bit growing of got conversation. is the of impact but much. of of to that installs more on kind average by the back manufacturing earlier some

business standpoint. So, with we're the a profitability from pleased

Although, big modest contributed it's on a margin like headwind as well a said, very really percentage basis, a it's I good and experience. tickets some

Unknown Speaker

Okay. was That Thank you. helpful.

much more to on merch out or a what little of driven it up from think quarter. follow-up, quick Just how the that of X.X% this up you able picked last terms the was break ticket by a look in was which and Are color bit give ticket, average installs I average quarter like?

Martin D. Agard

the The but that the the, that to install got by say on rate. so as DIY, but about half Pro of given – then up – and so was kind about ticket so was you up year-over-year, the as a around only The let's well the mix meaningfully, of install. of ticket flat. I We've and bit color merch the well non-Pro, was that ticket little say, ticket would standard of its

so even we're on ticket much growth as than color it. in – wanted a and install probably is that growth give, more big to we that seeing we're DIY So, with but job then ticket the both – the meaning

Unknown Speaker

Okay. Perfect. Thank you.

Dennis R. Knowles

you. Thank

Operator

to turn floor remarks. I'll the closing back this At Dennis Knowles you. for Thank time,

Dennis R. Knowles

Thank you, operator.

for our Let customers our We to you next and me updating our Liquidators' forward to the say again shareholders continued vendors, look team, support. your thanks Lumber quarter.

Operator

Thank you, teleconference. everyone. concludes This today's

You your for at may this Thank your time. you disconnect lines participation.