LL Lumber Liquidators

Paul Taaffe Investor Relations
Nancy Taylor Chairperson, Board of Directors
Charles Tyson Interim President and Chief Customer Experience Officer
Nancy Walsh Chief Financial Officer
Michael Kessler Morgan Stanley
Brian Nagel Oppenheimer
Seth Basham Wedbush Securities
Laura Champine Loop Capital Markets
Peter Keith Piper Sandler
Jon Winick Clark Street Capital
Call transcript
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Good morning, ladies and gentlemen and welcome to the Lumber Liquidators Fourth Quarter and Full Year 2019 Earnings Conference Call.

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 Paul Taaffe. Please go ahead, sir.

Paul Taaffe

Thank you, operator and good morning everyone and thank you for joining us. our by Tyson, Chairperson Chief our Officer; Nancy joined of the Customer am and Charles Officer. Directors; Interim Walsh, I Nancy of Taylor, Board Experience Today, Financial Chief President and

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

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

Ms. introduce Lumber to pleased Taylor, of am Directors. I Chairperson of the Nancy Board Now, Liquidators’ Nancy?

Nancy Taylor

and Paul good you, morning everyone. Thank

I Taylor, Paul of Chairperson Nancy am As Directors. said, of the Board

during tireless from as the I to as President steady the of position commitment CEO. well. and efforts behalf Board, over X wish Knowles and his for the tenure to challenges would face him like and As last resigned We announced express Dennis in his company many February on On of our hand his the X, years Dennis’ CEO. appreciation

agreed Executive search the named company Tyson as doing create candidates his to a search appreciates on Principal enhanced on towards have laid The Officer a was guide organization President willingness confident role and the best on the He Until the CFO, initiatives path our Experience and the to to and named, Walsh, new Interim of is Chief leadership has external The ability responsibilities Board Nancy Board senior responsibilities additional shareholder to the team’s during and strategy been are additional the candidate take in to we these transformation and CEO lead in and company. Charles addition out Customer Charles continue to internal and committed take by and identify the progress Nancy’s period. Officer. value. key to thorough

enhance by shareholder encouraged are We the value. we ahead to see opportunities

I are that will After able remain the regarding on am to the case call remarks the are completed, there change in prepared follow-up answer. questions I leadership

process. you there add sure can understand in would behalf this Board, is the Charles? over given I at I much Charles. early that On in stages am will I Lumber of that you the Liquidators not of turn call I the to to like this interest thank are your will we now As time for and

Charles Tyson

dedication privilege Nancy. see interim would transformation shareholder I to for like leverage our and position Dennis us us about the value. take also foundation, thank this you, for honor his to solid execute I and I role. my opportunities to to deliver and our for excited It’s Thank the work company his to am on success. plan

our drive the to marketplace. hard act brand improved in leader flooring a growth urgency surface both establish with will We and value as profitability and

laminate, demand. many a positive weakness and housing we and vinyl were continued the resonates relative fostered experienced metrics with with and line results, year to more value We our recent with environment as products in Now, QX of strength trends. industry in than turned in consumers the first macro supportive overall our the bamboo guidance saw in half proposition sales as mirroring

selection vinyl in our category. broadened with merchants product our fast competitive quality a this and quarter during continuum and provides result, adding compelling growing the a consumers price that As

leveraged are launched marketing a stores I that want our of which stores. are two solid trend-right of serve value to we on set well-positioned just actions capitalize market a attract the to efforts year. aesthetics hardwood addition, a are and events the In of to floor. this of customers new customers consumer yard offers preferences positions hardwood had recently examples those fresh, who am taking us our broader styles with and well We how ensure October our largest sale, one of to a our These event we evolving trends. to pleased and couple the is

our as our benefited addition, our to efforts stronger by sales we In Pros. Pro with develop relationships sales from strong retail team remained

We focused on XXXX completers refine These our XXXX remain continuing a were needs to in project so assortment, the meet are also areas to and beyond. will in on of Pro. specifically they and focus

an as assessment mentioned the go-forward Looking installed of flooring offering, we project. rolled we to sales, our of our tools in our quarter, continue surface at as view first our last proposition value To important our the broaden consideration scheduling to among out installation we brand as consumers. installation work our component automating services enhance an we step online

online this our this results easier and make to Following customers the as we employees. launch with for continue through have and encouraging October, in installers saw service channel process we customers, the engage seen

product. front, on through negotiations objectives and margin XXXX, lead the year margin tariffs significant clear improve country we our of On with alternative a faced lower the sourcing would challenging vendor to costs. the We of percentage started that in to impact

place in margins. in enhance a efficiency had to deliver to also our chain We initiative supply specific

lower to to countries. moving the meaningful throughout vendors to tariffed sourcing lower working collaboratively the year tariffs with teams cost, mitigate in made progress addition Our

tariff efforts of more recent exclusions, benefits QX The base As negative efforts in allowed be results. a the the have nearly margin result, we from to our have all apparent diverse our of further however, enhancing our were options the offset supplier of XXXX, more a most and gained diversify. Through impact by tariffs. more to

addition, and to scale efforts cost-out more continue support as alternative identify we margin will growth. aim traditional our further in XXXX leverage to In country opportunities for our sourcing

outlook anticipates XXX and continuation XXXX. vinyls Section Our as of products as on end tariffs continuation the of the through well of the engineered-click current the current exclusion the

to changes marketplace. remain proved However, as impacts in must XXXX competitive react well tariffs nimble the to we as their on

Through in XXXX, could accessible prices, value As if not trend-right changes market with the during we for ensuring through delivered and these the dynamic assortment. Chinese we competitive change of received others applied solid imports. all our year. on remain along focused the we exclusion outlook, just embedded expertise And the one example, on industry have exclusions in the while additional further in

and message only and selection but emphasizes on evolving quality, no Our marketing value-driven is and our longer stores service in online. focuses price,

positive evolution. plans context receiving within new for on are to brand of ad We and marketing will campaign overall continue the we build on our feedback our in XXXX momentum our

Finally, we shopping continue also digital us tools the and the deliver to competition. that develop enhance differentiate experience from and

and installation our informed recent customer engaged together, project, early Following these tool in And simplify ability a of With product online project simplifies digital their journey, help them visualizer an tool decision, in want. Finder allows with selection when decision tools use who the can This Used selections flooring how associates own engage their store Floor sale. consumers can and to Picture product engage purchase their keep and digitally the journey. customers the of our home. It! view, an refine launch path assessment the can to process. the once make customers see the to the flooring throughout the schedule their or choose they narrowed, informed selection complete flooring

on increasing and our and customer and reflect profitability, with driving areas traffic we transformational transactions, I enhancing As degrees progress the focus: made success XXXX, in of had of key three experience. our plan varying

First, to diligently these our with I on profit the became work more tariff lower and apparent costs teams vendor sourcing have with efforts and as product partners the exclusions. our front, merchants described,

work also future. to streamlined We our SG&A XXXX. with rationalize our corporate align structure We of to vision and organizations the throughout work

through of trends drive year. remained negative transactions as Second, our short efforts have transaction to fell we traffic what and the planned

our of years. management team the against coming focus While for metric, key our still installed a were growth sales This be disappointed work the over the results. web this with and we will

enhanced broaden the to I engage improve in to described digital our early tools experience our our of as customer the customers to work work we well reach through the their Third, brand. journey as

product have do. more through but of We in also breadth increase with improved end, availability XXXX, clearly progress we store-specific investments to the the inventory to we work In product. made take

such, initiatives changing As our not in XXXX. are

in gross effectiveness and management online. will profit, bottom remain drive as driving customer of as But transactions profit well in on our to we effectiveness and Specifically, continued experience improving improving from come improvement focused expenses. enhanced and our stores and operational traffic operational diligent margins line

capital our to are deliver We ensuring also investments solid to returns committed shareholders.

to coming customer our the Core great effort the broad and trend-right year, value. is accelerating in delivering that selection Second, brand. that we including our continued to quality improve a our revitalization assortment of efforts offers are experience,

our focused to project and both digital right giving through access awareness the partnership are in on we by and tools. consumers creating and addition, In every guidance stores through knowledge expertise of and

priority through at have step going and marketplace. their providing we our That journey engaging consumers come stores. remains transactions value the and driving in in every a key into existing said, As of XXXX flooring traffic successfully exceptional in will

by sales moderately on outlook experienced Turning transformational XXXX. XXXX, a executing by supportive plan expect grow in a environment to more to for macroeconomic aided than we our we

penetrating also with bringing XXXX. margin customers yield along improvement in further on and managing will solid stores new expenses, sales focus to a existing open operating work new to in flooring to XX margin in markets Expected expand markets. We gross value growth, intend and our XXXX in

to adjusted between from is will and Our operating X.X% in margin expectation which in is up XXXX. XXXX, grow X.X% that X.X%

call over wanted viewpoint I coronavirus. to the briefly our handing Before on the share to Nancy,

have being sourced by life. our go those our thoughts that personally out in from Thankfully been our others, employees the Shanghai. this from daily is is of meaningful none of most many representative employees and including obtained We but China. disruption to outbreak, of outbreak Asia to office First, like nearly merchandise our causing infected, impacted half

As near-term to the the people restrictions which including actions the on coronavirus taken travel and The our includes the quarantines of we disruption to spread such, chain. of potential closely extended virus goods. are situation, monitoring is risk supply and authorities compact the by

and unable in XXXX. potential affected will should to We Merchandise impact on or hand the currently of avoid these manner material what quarter of a allow predict reaction disruptions, first consumers. full route the impact to in the how are and in competitors us already be of

could such and impact the quarter However, impact could and as beginning the second for depending of as or a see material we continue length months. severity on situation, the weeks early

respond to take on a potential monitoring to and evaluating are what to We basis disruptions. daily actions

the ensuring We are that we executing responsive I transformational preferences look while to are on profitability. to market the includes plan our of committed customer to our next sharing forward progress year. driving through focusing and steps trends

will over to I turn now the to details share the of Walsh financial the quarter. Nancy? call Nancy

Nancy Walsh

$XXX In by were and over of Charles a sales the you, and quarter, comparable million, good in overall X.X% Thank year sales X.X% merchandise sales year an driven in net and The store increase service fourth ago. increased was versus X.X% morning growth everyone. sales. sales last net increase the increase X.X%

value the in result was count. offset transaction increase X.X% transaction in average increase comp decrease by X.X% of a our Our a

and by quarter countervailing Gross profit approximately classification XXXX. related harmonized schedule. million XXXX the increased the profit XXXX of to fourth fourth quarter QX impacted changes impacted these million. items, $XX compared increased $XX for to was XXXX was duty tariff positively rate Without by gross adjustments the negatively QX adjusted of

XXXX. same million period. by the increase relevant adjusted quarter associated for margin We fourth sold XXXX announced gross $XX the gross in with the Adjusted of gross ago. related primarily XX% quarter tariff compared exclusion driven in profit was November through recoveries products to to in The a XX.X% quarter of was approximately the in XXXX. from recognized margin prior November XX.X% year XX.X% grew Gross to margin the year in

relevant reduced products also efforts to was adjusted reduced increases gross cost discounting of stores, earlier products, December manufactured cost merchandising approximately as began related benefiting are as We by in profit inventories favorably sale out XXXX. also mix held larger sold. retail which by $XX in impacted price of a for products in of December and the QX those X the carrying million higher margin

the settlements in and SG&A year. being press related $XX in for Items the recorded credits costs lawsuits, to quarter the $XX certain fourth for adjusted compared other legal the in million legal non-GAAP incremental expense periods quarters both investigations substantial section million the of was legal well million fourth most release. included in as $XXX with as reconciliation SG&A last quarter both other accruals related to in to QX matters and of XXXX. are

in we new on stores corporate synergies across finding remain both net for fourth year increase year-over-year When sales, everything percent additional of and expense adjusted expense headquarters $XX year excluding occurred the fourth X dollars of to business in incentive higher the earlier. advertising, $X.X opportunities the a focused to SG&A an to and XX.X% The costs same XXXX. sales was that SG&A We equity up periods, on items was quarter relocation increase a to and efficiency versus ago, quarter and compared do. by or higher basis compensation points million the the from a these costs the due million related adjusted savings XXX quarter primarily in of related quarter accruals basis identifying driving to

the enhance as $X.X quarter, For by an quarter, driven million income We gross from in fourth as $XX tariff compared taxable recorded year. XXXX. increase adjusting recorded tax of $X.X of driven retroactive in million earnings $XX to up million significantly an depletion by fourth the the increase million leading to we for exclusion expense was for NOLs. the well partially SG&A. previously, federal of complete compared to efforts additional income After the QX in noted increase was in last adjusted profit loss XXXX million year-over-year the The operating of operating adjusted income operating an quarter by the to company’s of items offset $XX

year adjusted were last basis, quarter. per per diluted versus earnings diluted earnings the a share ago quarter this $X.XX share QX to year. $X.XX share Finally, $X.XX compared the for year $X.XX loss per On were of in

and SG&A grew per X%, results, million, gross $XX.X earnings share year sales with XXXX. grew full as sales, increased profit comp adjusted $X.X in $X.XX XX million of approximately of adjusted $X.XX sales grew at basis points a to XX.X% of to million adjusted up briefly XX% to Adjusted sales $XX.X of Looking operating a percent was X.X% profit total decline XXXX. sales, versus

quarter-over-quarter $XXX.X the inventory driven million, million year-over-year and the improve balance from of inventory the $XX.X our to which improvement reductions agreement, fourth on million down ongoing Q. end credit operational end at efficiency in the the The tariff Turning the well down the inventory We sheet, XXXX. to from of carrying to and were impact $XX.X $X.X by inventory and outstanding drive million cost was QX was the under as $XX million efforts quarter of ended of as compared turnover. our down exclusions quarter with

to quarter, related fourth the $X During the Gold million we settlement. funded

million Gold expect by forward, the $X.XX to related $XX timing in Looking be XXXX. as exact Kramer while driven currently remaining the we of the Court, to million the will as fund settlement well settlement

from XXXX. tariff the exclusion Those customs million of $XX half we throughout approximately related U.S. anticipate be are first expected refunds. to funds total received of a In addition, receiving to

remains operations liquidity our solid continue Our position core as generate to flow. cash strong

further under improving As also of we million December agreement strategic operations of in cash generated while million. $XXX make credit and reducing net liquidity the had $XXX to XX, $X items consisting debt of us time. our million unusual business of allows liquidity investments and over Cash of of availability by

mid percentage to sales to XXXX and expect we the in single-digits. Turning low to total store sales our single-digit outlook, year low comparable last compared growth in growth

XX basis XX full QX year, by impact includes of Our sales points will comp by points. year leap growth to benefit growth to total and approximately an basis and positive XXX the sales outlook estimated which XX the

the of that sales growth addition, in incident in security QX benefit should occurred network In cycling XXXX QX XXXX.

to As we QX of expect and to a sales QX higher result currently relative and XXXX these percentage two our factors, growth in QX. and comp QX be

gross we of months margins, expect revenue to cost. margin the lower delivered We XX as XX work product the of higher last team to operating to adjusted X.X% of to X.X% over reflecting the deliver

SG&A growth. adjusted expect leverage to margin operating support we addition, In sales to

XXX in at engineered-click all on effect tariffed XXXX. of XXXX of continuation Our outlook tariffs in XX% the while vinyl exclusions for on currently assuming Chinese imports, assumes and granted tariff remain also Section product

investing XXXX. stores the new On we XX open approximately in to plan side,

income We approximately of XXXX expect completely to We invest $XX anticipate and we We and expect in continue NOLs currently our taxes stores a in million taxable new capital opened federal to cash in in grow. we depleted an XXXX. tax million and and spending $XX $XX of XX% and cash XXXX profit-driving in as approximate that effective million initiatives. to rate back federal taxpayer to as revenue expect XXXX transitioned

we addition, in you expect for $X.X the to morning. $X this Thank for cash million In interest be time range. to paid your million all

the to With back it questions. the that, moderator will call to hand I open to


Instructions] from Simeon [Operator with Gutman comes Morgan Stanley. proceed with the you. Thank Please Your question. first your question line of

Michael Kessler

Hey, This for actually taking your is for Thanks Michael Simeon. questions. on Kessler guys.

outlook, wanted the year, is, that kind if it it if of that as million? you right – receivables EBIT $XX thinking to included you covering on to outlook? $XX of are I considering exclude through or there as First, that we booking margin the million work? fair we in going as in be are the that And to if ask we is kind do, go-forward are far should for underlying anything are next else would that be your we is And XXXX now that about

Nancy Walsh

arrive of to we expect year. the million flow you a is we of on the half into look taking are and at use as receivable planning So, this the cash that $XX are XXXX, that factored first that should we

Michael Kessler


year, that you you in the confirm results? are planning EBIT margin is for next contemplating to then, outlook receive it year’s that next that just So

Nancy Walsh

sheet the the balance that and exemption a We impact was that XXXX. our identified into forecast. that in to contemplated November It’s flow-through item tariff is of factored

receiving that have margin are that is provided impact we guidance built So from that the we today. into the

Michael Kessler

Okay. I your so benefited accelerate as guess, what XXXX, as how negative then you that? to follow-up in from guys. factors line, us Alright, let tariffs? key got drive know top Thanks higher gives to comp that confidence have And the helpful. XXXX retails on single-digit it. the just slightly And what you from guide as a ask, you the quantified That’s would if wanted comp low to of a as you can Thanks. comps reminder, expect are a result much far

Charles Tyson

Charles. it’s have drivers Thanks months. Michael, on management our areas. of working strategic Hey, line And a as last a team the top of question. we for executing been come our the so number we the the and is on focused Yes, strategy, see in number XX current they pillars diligently for on specific

year. work We as a experience of our customers their to is business, XX% teams work customer both bringing that have well ensuring as journey guided our a start on improve of the seeing that success growth talked good into last And digital our customers re-platforming doing digital and both up the about experience lot digital XX% lot marketing And are brand. our capabilities. work our experience are brand enhance in of a we online. our

growth that are is install driver us continues an driving as we important see which that will for to as digital strategy we work business being year. through well our our next part grow remain of longer and term today so growth as And

move with how in stores have business around talked were about a continue happy to our and fourth emphasis on penetration to quarter We we build continue growth initiatives relationships our our the stores. and build lot and Pro our in more and Pro Obviously, we to our relevant we that year. Pros with to this flow new comp year. and stores be XX allow as that next we We ‘XX will will our benefit through opened brand through continue start to

real from into staying that and both we and also our around focus think event year have deliver comp thing I us focus is benefit. getting We also a organization aligned anniversary focused extremely our would year the plan you that at performance the and and corporate perspective the day end have help with on initiatives that our office of the we the of works have the in from the X perspective But on is I extra August are built with last field. systems this urgency accountability that and to which to

answers that that your question. Michael, of hopefully, So part

what continue actually a we of position terms see pricing react a competitive we saw rational fourth ASP drive we see in marketplace. to pricing, in our In value changes moderate to see the in from will wherever our perspective the in Obviously, we in we increase marketplace. and to the quarter

for thanks Okay, your question.

Michael Kessler

you. Thank


the comes with Your next Oppenheimer. Please from Nagel proceed your with of question. line Brian question

Brian Nagel

morning. good Hi,

guess do through what is you their some new I So pushing from previously? will first, with – say of words, against sort them should picture wait on have leadership? quickly. a how looking had is I questions. you own a balance senior securing initiatives continue few ahead planned or are you pursue you to In for expect I through holding the this stamp go But other saying everything put perspective, are on we to – balance leadership of to you initiatives bigger I to there you how these new am any back

Charles Tyson

to and delivering going is spend And gas in a field our spend the going our to perspective investment the capital our board and OpEx will moving we We take for I investments our to XXXX not on time are corporate the forward question. We both great a off aligned leadership and prioritizing a foot lot spent investment perspective. it’s tell of going where group. from and be a initiatives that planning you be. a is as and aligned with initiatives. the process are the that discussing senior Brian, team our

given XXXX to here. that a deliver that not with heads to urgency you This button is down be pause plan driving the And in so against our is have there should an we outcome you. feel going guidance confident for

Brian Nagel

helpful. it. Got very That’s

release prepared commentary make of the little as both I it’s the wondering have you color are chain more within in the maybe disruptions, and was activity at fluid your obviously re-ramping a just question, regarding you coronavirus made comments seeing your But or what appreciate you a if supply supply as partners very far activity situation. China? and said better can the I in in terms you Second

Charles Tyson


a the happening. working all is are New your have it’s got to with we and and on suppliers basis There that environment very and been in what obviously ground a we shipments have of To pleased by still our a a I daily provinces of on we shipments So, fluid. them in have on most visibility clearly, and the have for point, confirm really Chinese changing reporting. obviously time on extremely China. pre-Christmas all across same industries that received team as us It’s day. they our limit Asia is the been given can Year, transportation personally are left post reacting dedicated difficult they with how insights holiday

a of fairly regulations different across has density is of China. heavily set Our on broadly factories Shanghai, around concentrated which more and shipment

to we watching availability to drivers make port. containers able the of are So, for be delivery

and you actually track our can of factory online year, up to operational, are workers workers difference and but has available, of waiting this full you Second this for Most been as old year. publicly between and see migration the factories last year completed not the factory return. can it’s

supply are their going future like daily executed. orders And are is working of a suppliers chain looks obviously sub-suppliers their industry our I are think to in supply net their on be meeting is we to for with to understand broad of basis unknown the understand third chains. this what delivery every terms to that components ensure and

order, origination remarks, and are is impact on whole any prepared across the pre-Chinese on my and Asia reliant impact visibility we everyone Asia. in portfolio based are will solely Hopefully, said how insight, current little to Year on understand QX of else will is not that the see a I As hands, managing material are the that have gives we we not as New did inventory Brian. react in what a from we of to potential that. what Across on and products be you broad

Brian Nagel

question warmest has And quick on having it’s I know won past has record of talk in lot the of Lumber. impacted be but I last winters will one, No, helpful. and about sales there here this the then trends a very been the have, United weather weather at States. a

how this what has weather so are and sales we in seeing commentary far any affected QX QX? So

Charles Tyson


a business, going Brian, we have X But tight intra-quarter days what’s the are days on area very in going From our inside, with sales as a you building X just this policy are to keep regional So, or forward, anymore not perspective to impact. may happening yes, of working comment on in projects, Pros, snow who winter. teams like Minnesota. their focused particularly delivering our projects, restoration through my

to So no material impact weather. attributable in was the fourth quarter that plus or minus

Brian Nagel

Okay, very helpful. Thanks.

Charles Tyson

Brian. Thanks,


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

Seth Basham

lot if and the bit color a gross walk improvements margin, morning. major be XXXX more your the can puts to gave to margin gross XXXX takes around your a helpful? expectation XXXX? you you is margin through first little in around guidance color little give that of question a In good for Thanks My us could material you from other words, and improvement there would bit

Nancy Walsh


For a the perspective on supported exclusion, the cost-outs was quarters obviously XX% an also quarter, driven we as increase talked XX% that to we about, about of the by The was majority but by from year-over-year. saw for from discounting then the doing good work reduced in been of well the the have stores. margin sourcing all as products and some we the mix as tariff higher

of a more as that heavily tariffs weighted some towards same full that was we mix than year, anything primarily For the the saw hit. other QX

Seth Basham


to us gross the through look however, get puts to walk we you and margin your takes XXXX, to expectations? Nancy, As implied can

Nancy Walsh

we from a that from not margin provide a think that’s something it’s I guidance perspective. generally perspective –

that a for representative are beginning going the at you work good for to in XXXX. year, the that reduction months look in be at now we we what cost the tariffs XX because was have take XX I the margin of of impact think can put that assumptions that showing, looking that just if the is full we

Seth Basham

Okay. you related those the to additional with in your exclusions, have you are XXXX guidance? persist pricing follow-up your capturing you And as seen expecting and a strong question are margin and tariff cost to reductions specific product margins still through products those associated costs, on

Charles Tyson

Yes, I that. will take

Sorry, catch name. we didn’t your

this So Seth. know isn’t I

coming out we for the street, company. the the also into competitive tariffs the So has put nothing is cost country cost at to some best to that And a we on alternative did outstanding work our the are a doing to position. as of continue And working as that merchant Obviously, an teams but another the vendors perspective with has strategically driving do and continue with with been that in really have what moved job do started our environment. work that of set of long-term all from at XXXX. of looking work we suppliers sourcing with teams our sourcing months customers. others of there ago move will have to value pricing initiative as long-term view clearly a This continue XX the an to looking profitability said, our we up urgency like pricing strategically proposition terms an and back our tariffs. been we product around and And had will improve

Seth Basham

it. Got

limited the expectations inventory the are how for you exclusion? reduction with And position that line positioned end fourth the are second tariff the the now, your As quarter, with associated of does you in it think quarter leave potential about you relates we as excluding supply? for right in the given that to the

Charles Tyson


did way team for initiative improve plan So we chain our the continue we months inventory we we with chain plan our progress inventory the been job an made. before management inventory as our and six to under our on ensuring we have our our future and to good against across last I and are supply it stores as projects going that we previous of and are not discuss a of for productivity on initiative inventory our teams that that ending work inventory teams the XXXX that about in to has talked pleased and continued came manage rationalization what supply said relates detail the to inventory our slightly that are is we quarters on turns going to positions, as calls

Seth Basham

take picture you just value Last interim of it. to trying you role proposition to means and how from as where what bigger to Got go? Liquidators the over ultimately time a want on is get you Charles sense this I mean question all you Lumber

Charles Tyson

question for and that’s so great Yes, thank I it. a you

in customer I around reviews out and see as stores send value look the and that a and morning off a just build I a absolutely to that excited us their we and our we insight experience products if and and of team the even comments I expertise look I little delighted this the decided and the join you the at of in me build look customer level the are before think bit against build capabilities and and to around the a the and everyday I do with marketing we field that thing energy flooring side can level both company you I thing so digital give the with as DIY energy reviews was pro I field level engage am re-branding plan where when in capabilities when I have pro-side core and customers on drive the come stores when that started ago experts into going as the our the that is company in a to programs are one So a spent the they I selling company at that join customers you that first our installation are in to excites the has around we members expertise we XX a about and the passion with so months when on time have company out on enhance today that joined management execute pros so hope leadership lot stickiness team relationships really our about you as the messaging to

Seth Basham

and luck. lot Thanks a Excellent. good

Charles Tyson

Thank you.


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

Laura Champine

plank luxury to at morning. question vinyl production how my this risk look luxury business, tile, at we taking vinyl your for which that disruption? part Thanks is has of the If of much

Charles Tyson

alternatives majority in how our The majority to we of is China we business. the China, the is today. some but there outside of vinyl have manage China. Obviously, portfolio production are And that is in approach a product

hardwood doing business. of legacy lot company been a have around This We work hardwood. our had a of

said share last have we as quarter. and years share taken last market declining wood previous for seen we on the have X over the calls in We

that of shows, customers looking of So, to into, we perspective. as XX-K China manufactured portion product our us find a from is a that as lean vinyl at destination but are from a our product, categories XX%

didn’t do China. importation a ask where significant have laminate, of about laminate You from others

All laminate North our either from America of is from products Europe. or

are that our from protected laminate on So business perspective. we

Laura Champine

as question skill background then a are are considers the for? on candidates what Got it. the basis, And factors, what key that and CEO, what for elements looking sets bigger the picture Board are is key the permanent – board the

Nancy Taylor

would Taylor, – supportive we that want again, transformation will the to Nancy into embrace I that Board who I are this is leader Board. strategy. the the I the of criteria, what but specific say and strategy is a of looking accelerate Chair and don’t that What get can for is

Laura Champine

Understood. Thank you.

Charles Tyson

Laura. Thanks,


proceed line Piper Your of Please Keith your with next question. from question comes the with Peter Sandler.

Peter Keith

to going have in first changing QX, a Charles, marketing of to the see content I the in I about we wanted mix. talking was the throughout ask everyone. stages morning good you change it then was been shift the XXXX media on with believe strategy, I Hi the and

comp QX is one you line prior in and about point kind as you at So seeing you to transaction XXXX, stand like do be that still of should here now think marketing down reevaluating quarters, we feel in strategy? X.X% your traffic with today, some benefit maybe

Charles Tyson


of couple things. Peter, So,

insights. is about value it talk really was to really improve of what need segments All customers research brand. credit We have to invest that that data we Customers consultative that those deeply our never And work really clearly identify high shows well. and of those broader the To customer experienced to high a seated in experienced story. for customer the when gives customers a this tell that that that us selling. have the Lumber start towards does able that have the attitude brand different The be brand that our the resonance to have touch brand. Liquidators

So attitudinally time. takes moving a brand

of it’s really the about and And driven, about also is messaging about new primarily this talking so And assortment look it’s service. quality, it’s talking what on is been price. you talking where breadth has focusing historically marketing if brand around

customers organization efforts and along start tell continue story, remix pricing, positive perspective. that those a with field so brand particularly to from we we And the feedback, they And to in reacting are are coming will seeing from work are getting our as online doing the competitive on with we build our we our to along on digital that marketing.

So time, our traffic see, really online often how both in drive defines that to in targeted and because over the marketing stores. you and attack very it’s don’t our

about strategy. how strategy the So we that longer hopefully are gives you the of term about that execution an thinking outcomes both and insight

Peter Keith

reconsideration as calls Yes, couple liquidators least and over breadth where And quality, know screams I of company, the and name service some say last just at the there of re-branding around been Lumber helpful. company name of brand value given years, almost and the pricing? these itself discussion has there the on is that any you of today the on is sort the Liquidators focus the

Charles Tyson


So that’s question. great

as just said and we done about the the but research around I name. brand the includes of it’s name, significant before, which obviously have not So amount work

advertising have is you company see you which been make if looking flooring we we sure sell. our you flooring Liquidators have have to there what If Lumber added and relevance at will between logos that been and looking brand at is our

look our domain you as using will company. drive and a to online television advertising If a see us us flooring as in attention you to

as evolution about we that of come we look and we the into our work, future. are We are more are as under to I we discussions you the approach into doing at future drive have our want how And will continuing quarters and brand to about discussions evolve with talked to our brand. we creative just

Peter Keith

amount million that you. of Nancy, if thank understand what’s wanted the as portion I we $XX of quarter $XX going $XX benefit there tariff to recoveries from fourth we financial us And into was carrying million recognized can of there ask exclusion, in to was flow-through question for from reduced cost, help a was what million back then just Okay, understand a you so to going XXXX? and maybe understand the

Nancy Walsh

Well, combination what statement cost, reduction million from our in $XX as answer that’s Does the income inventory your on saw the those the $XX well that you as on million just what year-over-year was question? which costs and a reduced reflected Charles was talked inventory. of a based about reduction, the

Peter Keith

inventory, December was that’s why a QX. only started was in that I benefit sales product on thinking, the said so in partial it reduced You

it full $XX benefit it is reflected partial was a or So million in QX?

Nancy Walsh

related itself. XX% Well, went the XX% actual QX approximately went received into was as the periods, it historical of we September to benefit XXXX, of to back in quarter roughly

Peter Keith

what’s to QX guess should sort of And some been has I down EBIT this I lapping consideration that then with be drive one-time it would QX what large, think your in this because to the of any you year, but call certainly there this over plan Is Okay. Street how or we questions of there in margins QX lastly hurdle think coming for XXXX? get benefit. on be the better than going expected, in it’s that, challenge margin around I

Nancy Walsh

to those for but about the by And at in the and the the tariffs reductions there fluctuation maybe us. talking look of that full really quarter run-rate. have throughout that we gone tariffs reductions are we have negotiated when are I represents that consider are but am what talk of the break we tried because hitting year just months that seeing we supply we about XX if efforts on on work previous a out cost information good again, our real some quarter, make year excluded, the some a and the kind basis masked not that, you to the believe putting been that Well, that again, into going to were you efficient all for chain that really we run-rate time done, based we now ‘XX, and about had XX the it the really cost

Peter Keith

much that’s and Thank good very team. you Okay, helpful. for luck the

Charles Tyson

Peter. Thanks,


[Operator with proceed the your of Jon Instructions] question Street line from Please question. next Winick Clark Your Capital. comes with

Jon Winick

Thank you. turnaround. Great

process on, into had if to just you on insight that little could you on bit departure? the can give us any get a more delve a CEO, if a hiring Dennis’ want of timing Just quick more so and little new question, and a

Nancy Taylor

again. Taylor Nancy is This

we – we early said I in So are in are my remarks, as the process.

he and of as we heavy mentioned the lifting Again, leadership. It’s will appreciative search to the Dennis feel a all retained new was good a Certainly, there CEO have did firm. long as process regarding really a the while And number point to be months. of We it’s that – of lot take. departure. not is we for to say difficult at it quite will that the transition are time me here add how like to Dennis this very we

Jon Winick

I are to it’s most thinking candidate an know external be going likely? you

Nancy Taylor

No, as a we doing external thorough and we internal search are are considering as well candidates.

Jon Winick

Including Mr. Tyson?

Nancy Taylor

on specifically comment not to candidates. I going am

Jon Winick

Okay, thank you much. very


like Ladies end Mr. would the session. of Tyson for and reached to call closing gentlemen, we Charles turn remarks. back And I question-and-answer the have to the

Charles Tyson

my quarter. updating all next thank goals interest our and XXXX their our you, take Liquidators operator. partners to we forward and on role and Again, am organization in our strong for like and interim you you hard continued to a honored great during their Thank heights against into Lumber to and delivering I’d XXXX. progress our for look day. our your new Have privileged lead of again vendor Thank on for fantastic associates for I work support.


conference. today’s concludes This

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