LL Lumber Liquidators

Paul Taaffe IR
Nancy Taylor Chairperson
Charles Tyson President and CEO
Nancy Walsh CFO
Michael Tessler Morgan Stanley
Laura Champine Loop Capital Markets
Nathan Friedman Wedbush Securities
Call transcript
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Good morning, ladies and gentlemen, and welcome to Lumber Liquidators Second Quarter 2020 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 of the Company. I would like to turn the conference over to Paul Taaffe. Please go ahead.

Paul Taaffe

Thank you, operator. thank joining and everyone, morning, you us. for Good Tyson, and our Chief I’m Financial joined Officer; President Charles by Walsh Today Executive our and Officer. Chief Nancy

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

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

to Charles? Charles and President Now, CEO, pleased I’m introduce Tyson.

Charles Tyson

begin this for you, I like to pandemic. by to the would Thank commitment, our thanking our service Paul. associates flexibility outstanding morning to their providing dedication and customers during

service delivering these quality corporate remained during and agile great to our DIY have they DCs centers teams and our are and times. stores, Our creative, continuing pros difficult ensure customers to and

dedicated a made. And be thankful the been [Ph] without have of QX team. part strong contribution all to have in associates am wouldn’t and plus results of such Our I for

the results quarter. the in to turning Now

adjusted to a making our down And in years’ in margin allowed SG&A so us While versus gross year-over-year. second last $XX QX, plan $X.X XX% as operating quarter. increased deliver on progress we declined improvement and our multiple year. basis XXX adjusted million over last income strides fronts This comp points with continued evidence of adjusted transformation million sales was QX

pillars driving against the profitability. execute customer online online improve in transactions to to experience, and improving our of in our experience customer efforts leveraged during continued to we our investments and the We improve Reporting strategic our the second digital experience, our stores improving and traffic quarter.

described open model. we to versus significant reacted COVID we last on towards QX online showrooms. to our government adaptions limited Web As and offering local to approximately grew mandates call, and shift sales of XXX% due customers store last experienced availability operating drove concerns, our our as a year

approximately picked As online of sales at increased a the those stores. our COVID-XX, sales The to up of result sales of majority were in XX% quarter. one of vast total

improve documentation. project. is customer the as Picture Finder QX for The The investments first home. continued the shop experience contractors, independent tools Our of from in using our virtual in as customer a easiest In consultation providing project ability our installation also customers we for strong with our on through for quarter Portal partner deliver a experience technology our digitalization driven continued of launched and customers. to enhance installation focus of we transactions. in important decline to the response is contractors customers to element supporting It! saw a automating on previously website, customers invoicing request this a continue. the our a online, continued customers speeding which more to to as sales of installation to and complete of scheduling, show our and and our proposition allows to Floor convenient more functionality to virtually to showrooms value walk launch successfully utilization our to the installation we fourth experiences, We're assessment And enhancing video our XXXX, portal chat step or expanded increased installation technology options. of manual We stores customers experience jobs use an installation Further, accept and and up a process continuing stores. an desire times

second new transactions our our we to strategic Turning driving program pillar, to optimize media effectively greater digital in stores reach and our of marketing and to and continued traffic online, and with utilization efficiently attract customers.

of our quarter, with into transactions. we pleased we marketing from as were traffic our particularly generated as digital During the conversion user increased that well efforts the traffic

and further our made product a offerings also full customer our ensure enhancements continuum provide DIY to we both to pro We needs. meet to

drive expanded we continue quarter, to growing vinyl category. assortment second fast the During this our

In addition, investments performance in quarter. the in aquaseal category laminate assortment drove higher

retroactive strategic a digit operating a second the result income is X.X% of continued impact following sales, of delivered our on quarter, negative improving increases comp of China. from November third driving adjusted gross vinyl In was diversify year-over-year despite driven in or million the triple In the we gross we XXXX. Finally, for COVID-XX adjusted $X.X engineered of products quarter quarter, margin consecutive margin negative pillar the develop purchases sourcing alternative third the country points XXX of The of certain we profitability. the in as making basis exclusion quarter. XX% click and of to tariffs improvement, rate, strategy by

on expense reacted negotiated pulled rent demand, back on management showed our organization. areas to and spend, strong and quarter, controls in we cost based the the the of as other drove across COVID-XX. marketing abatements We We also deferrals

only, in we as compiled warehouse and safely environment. our efforts flooring models across we we COVID-XX in evolved and we to state customers Now, how operating work to serve only, and transitioning to reported chain. measures the as serve customers. with models QX, variety operating local implemented safety May, of In serve our and a normal orders, adjusted appointment customers, we utilizing And

store pick utilizing approximately our And higher for buy operational, personal in protocols of safety levels. customers. of XX% June up equipment were remained stores XX, and of pre-COVID associates protective than As fully and our utilization enhanced online,

fully today, operational. of are As of stores approximately XX% now us

members, soft previously reaction XXX to as As approximately in announced team in it and to we April, demand followed store associates. relates

of and back June, to as returned to demand invited quarter, As employees had associates, late the for work. furloughed recall we began all we

the We very March, to experienced pleased in our on differentiate we into driver have and trends the with But our COVID our challenging the exceptional retention QX. we bringing and sales level year. service. primary saw sales clearly continued sales in in back of both experts, with flooring our spend, we the in back our cancelling May. Cautious, continue and including quarter. impacted event aware encouraged decision knowledgeable we've Despite decline been the by in through as sale, our and the traffic seen to April of were softened of chose as largest comps business we advertising April April, scale were operating environment, This consumers

XX.X sales on members resulted have reported reluctance than quarter-to-date performance negative in showed comps while a weakness installation sales We May full anyone pro relatively the friends relative of to improving to a DIY a our for were XX, homes. the quarter. week quarter, ending weaker. in trends, As down family were other into and Digging in and little their sales close general consumers attribute June in QX, the second strength that relative XX% approximately through comp the deeper

our installation assessments. progressed, we as As of improve, in offerings sales saw a evidenced interest increasing quarter installation by

attributable the which quarter, our cautious soft consumers demand their we a also in COVID pro through visitors uncomfortable we customers, at to was home. Looking believe saw aware having

New from York Now phenomenon, evidence watch said, second improvement trends and confidence. in and and broadly, demand we in many from of there stronger including home we an sales, areas the lesser continue south to consumer projects New a weaker consumers mortgage saw the More perspective, factors in generally COVID. a creates a influencing California, Mid impact for with is industry. and of opportunity home regional Jersey, COVID initial and that rates, quarter, the demand with greater exhibiting Atlantic, renewed on [Indiscernible] in focus category, That existing that aligning

models, to we We maximize should the see, change. to risen ensuring to react COVID-XX we extremely teams the have at have presented quickly challenges kept how will pleased opportunity conditions with market remain I'm They safety have our by flexible while opportunities to hard everything liquidity, the support driven Flooring on a to value LL compelling, forefront managing keeping agilely tight projects. of continuing customers surface shop do, our flooring for their operating our a to expenses we provide reason and hold while

term the plan So effort navigating to while we long impact success. at we our position COVID, for the making to pillars and remain successfully transformation same time, of on our strategic dedicated have significant on us executing progress focused

teams. hard appointment became the that strategic our reviewed to as in a six clear my to and support position as we provider, CEO, our me as following surface May needed our in months, more invest flooring as Interim Over past I pillars it to specialty, President,

a a a agenda, a pillar strategic related defining As framework people specialty result, culture as component introduced our strategy key that be I’ve a will high to and retailer of fourth model. a of the accelerate previous our our and A growth. is people’s diverse our that to a touch values differences commitment creating to workplace strategy leverages service company's inclusive first individual and cornerstone to

Inclusion at our diverse influence. phased approach, and has objectives taskforce a and to attracting, outlining for Diversity Our developed developing of initiatives set a Also talent supporting span current, company's broadening retaining their We goal aimed while and performance first values the building with people of survey collaboration QX strategic and is at culture, began articulating understanding focuses high the aspirational future cultural perceptions of the culture. and customer. strategy creating a the on aimed associate our in core

are next the these greater roles a company's have to spans leverage team, business. and we consistently diverse narrowing a steps achieve that in effectively Building goals, working pro and control leaders in to bringing our journey. company's and of establish to ensure the inclusive will right on we focus We to right learnings that

acquiring, in surface committed the best hot the talent industry. Additionally, we are to and flooring training retaining

vendors, our made to on included website, gained customer with Our our our and development, e-commerce The tools commitment and national launch the about providing experience. interaction our of completed people of give forward of capabilities. quarterly improving QX. on site. was us users in training insights new that updates development. This the omni-channel year to mobile will is better our look the days plan when store quarters. our on culture team our customer of pro improve excited to rollout in platform leadership focused planned relationship additional members coming for in I foundational in especially training we're we leverage our support platform old clear with early After and agenda user from July, to the selling, first building digital experience significantly Shifting a

enthusiastic received driving In expect brand important customer the Flooring, approximately that note planning continues. expenses coming XX associates. plus online, Liquidators is Lumber these and Flooring rebrand We from LL And adds of months, XXXX. our the as launched traffic feedback limited objective response. a are April of for now we to and our no in brand stores interim transactions to on of that It's our shed will and we the QX in online. our to pilot we've purpose to call, stores, stores Turning our of of evolution determining and our we capital related rebranding material or operating LL in learning

to to continues driving on important strong with drive building of is retention just customers. earn sales executed and in The focus these customers. with Our objective business well as wide in step pro effort foundational one pro our training relationships we company scale with July a

profitability. about thinking drive our to Finally, improve

success, That includes further, a firmly occupancy costs. portfolio. the review defer real and with leveraging overall of our rent more working We comprehensive landlords payments abatement conducting midst to in of are recent to lower estate our our our

QX. real digital We spend, to will provide our continue advertising we social to Also, this more to has review channels, portfolio recent encouraged the estate work details dividends. spend return our further in advertising including we're And as by and search optimize on migration our continues. paid

our execute We our second we traffic what driving additional four I'm improving specific developing on the continued a year, the position pillar in advance transactions for culture, our of of on confident leveraging our expect goal in to benefit people tests from now term profitability stores, us our improving channels collaborative will customer and focus is strong that learnings and online, and help long half experience, strategy us which well centric, will as success. overtime. SG&A

ensure confirms us. and he has business the a common, regular his additional retailers. buys chance appreciation his moldings in business communication gain on had personalized with all to closely business. appreciate came not in execution our will with we Albany, opportunities engagement product to proposition him attributes manager needs. He store the strategic a goals to earned well flooring and stocking to these flooring, other came back at share needs, While did to understand established our relationship, our like as a our to work vendors, will dedication our Improvement the us. the earned in recently be business as now our work clear specific not And customer, result basis. and over to we a of customer the expressed fully Nancy? example customers and earn give Albany available and Danny our hard will ingenuity pro the experience. service are my during Through become for first experiences serving Like financial customer project with value a to a and pro I that we Again, current customer show we positioned to the more employees the the value had strategy, of California, more to like the to loyal went this these we store while Nancy opportunity continue front the to be to feedback team shopper, transformation just customers, the worked surface with share Albany store partners reiterate I'm It to flexibility, even the deliver the from consistently Albany collaboration focus Danny one customer due fragmented in knowledge business, of thank and of felt have would to pro from had wants to team Danny and steps That’s has and confident [ph], them navigate Flooring. his how to the their industry. our times. this time. LL the meet exceptional provided, plan, and that through a his quarter. Home product pillars, and unique who service, for I'd our store landlords success customer I that details the thanks of one expect and environment. and our execution Recent initial just attention, accessories Danny's call the the unusual also fantastic customer his Walsh of turn will store to that related being taken will a is of customers Mirallas that

Nancy Walsh

sales our The decrease sales decline second Thanks, ago, larger Charles. year net in merchandise quarter, to decrease decline from COVID-XX. sales, and a the to sales, Good everyone. versus million, XX.X% as COVID. last to resulted were to morning, a related sales primarily XX.X% XX.X% $XXX In demand in the a decline consumers XX.X% overall of decreased year. Comparable due reduced versus net installation a as service a reacted experienced sales store

higher Weakness in decrease decrease in value, a average in in comp decline XX% softness counts. of decrease the our as transaction well as the drove result a in in our sales X.X% installation a ticket ticket pro quarter. and transaction Our was average sales,

in through through increased comps quarter decreased gross positively grew XX.X% in quarter, adjustments, Gross for positive second the in installation higher costs and delivery driven year-over-year as in year item in ago. second cost associated items adjusted $XX $XX charge margin the to became mix gross a Gross and $XXX XX.X% margin higher was chain million from delivery which the impacted without million. inventory, as compared primarily work margin sales. a was to offset were vinyl XXX efforts, of in our improved mix and to classification margins, with enhance period. the second profit June. larger sales exclusion, rate tariff out QX, to following customer points profit Adjusted $XX decreased efficiency for this turned by The approximately count quarter basis As quarter million smaller year million tariff supply the margin XX.X% of the to XXXX gross more quarter lower XXXX. by XXXX from a transaction by and These a the increase adjusted higher of promotions. labor XX.X% somewhat apparent margin prior a year-over-year obsolescence well

November engineered on on retroactive on and click tariff the XXXX, exclusion, the a from As a exclusion certain Representative U.S. granted products XX, China. reminder vinyl Trade imported

second in lower implementing with by staffing to temporary sales. lower personnel, pulled the the expense reaction for lower from a for to quarter of $XX in basis was but to SG&A recoveries quarter was in the adjusted $XX XX% SG&A of and exclusion as equated office future expiration advertising primarily expense impact we to also the XXXX. periods, XX.X% of as these but million we driven to the items sales We this on other reductions year-over-year, adjusted incremental certain of lower the $XXX release. product corporate related in of flow expense as impact compared in not salary versus there'll both year. other back for will section inventory. year gross and periods reduction costs are monitoring quarters primarily million cash be adjusted levels, August and both margin down quarter, and percent million The align slated and on well reconciliation currently as sales investigations transaction flow $XX last $XX related exclusion steps included XX, for basis. and the the of to payroll items sales points the second took our lawsuits, be million tariff purchases, When non-GAAP of second demand delayed legal based SG&A cadence was the costs the are pandemic, legal on expense be Both Should quarter extended, XXX promotional an while SG&A matters. to related the deleveraged in million press last excluding to benefits

supplies year. quarter In expenses and equity addition, T&E compensation, lower second versus were last

CARES by of Net XXXX million in million, increased Act million operating quarter, income After of income $X.X million of compared the $X.X primarily on $X.X tax compared We tax in year. second adjusting of net while we increase we've also compared of for million, the to $X.X done in an this loss million timing operating of reflects loss had to the XXXX income we our operating For quarterly $X The the quarter, recorded previously for diligently enhance for the increased work increase rate income the $X.X a million quarter driven deductions recorded items margin and last was year-over-year noted, gross our unusual QX XXXX. of of million an a adjusted operating $X.X variability The earnings. second of managing the to XXXX. quarter expense to quarter. of to income million of for $X.X $X.X expenses. the

adjusted the to a year-over-year second a measure quarter XXXX. While quarter second $X.X million, million for non-GAAP increase earnings, the of adjusted $X was of of earnings of $XXX,XXX for XXXX compared

net $X.X XXXX. was $XX And comparable For $XX increase an of a of of million a million $X.X increase XXXX. earnings were of versus million in XXXX in million, million the $XX the loss ended six-months million, period a loss June adjusted $XX XX, first adjusted versus income the half

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

from from management. from was vinyl products inventory sheet, second driven down as million, XXXX primarily The last $XX the support million from down in China, liquidity quarter was QX, as XXXX. tariff and million on imported year $XX QX by through efforts balance exclusion to the of inventory $XXX the QX, at to end our well the Turning inventory reduction diligent

demand We at in are primary and well of reductions are confident our stocked serve to stores inventory our current the level occurred DCs. our

have was to of with the align in out we at primarily we to increased to in amendment the from stock which some we closely agreement, and demand and as QX, balance $XXX credit equivalents inventory level, are expect XXXX our our levels ABL million at experience through increase unchanged from levels with million could management was when million our through million balance in also up less and under compared the QX. DC managed We incremental historical $XXX flow well process outstanding and we The maximizing we of quarter. higher replenishing April, debt April. Cash QX. inventory move inventory borrowing we of end amended the since expense While our ABL management the quarter supporting the capital the cash as increase announced on balance of ended goals we focus by $XXX to and but in $XX appropriately cash we well All-in-all, came in our feel as working while and customer cash liquidity, preserving demand. liquidity

We manage a through the have we as chosen maintain cash flexibility balance high to provide to uncertain environment. current

an liquidity for The cash was well the extending million including providers, deposits. vendors, increase working growth quarter, volumes as by capital inclusive at inventory net landlords year. over cash million million $XXX Looking adjusting activity, operating provided period payment $XXX increase other customer the with as second and strong service equivalent primarily $XX activities reflect and of and the the to was terms driven of buying prior of and lower and by flow, in year-to-date, management,

benefited including payroll year-to-date addition, while the In costs legal company salary expense cash and outflows and implemented reductions. legacy through lowering to reducing also year-over-year from related advertising flow lower, controls, temporary furloughs settlements, cash tight

year-to-date exclusion in related from and We refunds receipts That tariff approximately the retroactive $X.X and million XXXX total $X.X quick imported vinyl received associated million November $XX approximately the of anticipated. engineered the refunds brings QX with also products from the to Customs U.S. interest on million China. tariff to

the half balance received be XXXX. the second of to expect We refunds of in the

Also to call, the million funds year for currently XXXX. our CARES returns earlier the last we in expect received first to refund scheduled settlement September with $XX provisions of we million call. hearing Act on courts XX, remaining than tax no the $X the Gold and final approval related quarter filing related June, described certain in our mentioned Additionally, prior associated to

of As agreement. of in $XXX under availability $XXX June cash million of $XX million of and comprised million cash XX XXXX, the liquidity, equivalents credit the and Company had excess

on current several to navigate past position allowed environments. over the a focus has COVID-XX liquidity the Our to liquidity us months build strong

business trends demand improved, have as our is solid flow. generating Additionally, cash

Despite while such, Charles strong current position, on As and have normal continued operations. have environment to require on employees recalled who uncertainty corporate flexibility. term the inventory or effective salary X their July and to and described, near-to-medium office a remain in liquidity of projects. reducing as directors more received managing had distribution pay focus delay of April, our stopping board payments will we reinstated. our stores flow We return maximizing and reduced since And had members full furloughed employees defer and as continuing non-critical costs the focused centers

retention the of Act security at XXXX defer and payments, extend utilize repaid We and the the in ample We during cash. manage also and CARES second will deferred and and to end partners remainder from taxes XXXX. These of our deferred to will employee social the provisions the of flexibility equal continue vendor instalments provide closely landlords to portion of work terms credits for the employer be preserve benefited to taxes with quarter, XXXX.

near period for additional temporary of end as But orders and coverage reduction August. agreement state inventory evaluate no to our liquidity amendment our diligent financial borrowing any availability. at facility charge terms management if continue ratio of will remains April the the of additional opportunities. borrowings needed. under liquidity, On XX% term of That if the liquidity the amendment March through borrowing credit XXXX, and to XX, fixed limited charity expires for provide of the our enhanced contains amended The and we base minimal will of be We except credit capacity exceed covenants, but a calculation ABL. expanded

navigate including downside but through recovery the and through and what on model assumptions we Based liquidity continue to we contemplating conditions flows sufficient we believe from testing, Our we Should to remain have stress change, we to ensure with to we pandemic, position could liquidity further maintain multiple remains credit the liquidity steps about strong bolster position. environment. our of scenarios provides various agreement impact cash today our know financial July, trajectories. together ample under agile COVID-XX, that current liquidity operations, take liquidity the additional

extent our makes in of our its on financial QX the company, impact pandemic, described uncertainty and surrounding and it associates, we partners to forecast customers challenging performance. the including call, our uniquely duration business As future the accurately

network incident a providing are not we result, as as August for reminder sales. experienced third but year's a As we last quarter, negatively quarterly in QX and financial guidance, context unfolds, annual the security in that impacted

current In stores addition, open store in of to our one including dependent we expect a number opening new do in on QX and QX, small and plans demand trends considerations. on-going liquidity

monitoring also necessary maximizing opportunity. will continued Core but current steps on for be financial while take and of we our execution also to landscape the flexibility near liquidity, work to to focus the operational the preserving pillars, remains will current term our Our the and pandemic. weather continue strategic

environment. to as models evolve to we our call team this in momentum I'll building ingenuity collective you my like Thank morning. financial warrant. As the we time other open that, progress scenarios each your and week, and business moderator conditions the the for navigate confidence in to will who associates, reiterate builds ask Charles's future. thanks partners, question. With stakeholders I would Through we to are working efforts, of are collaboratively our this many with and the learn making adapt more and us our our business all to


Thank you.

proceed question Instructions] comes Please a Gutman from will the Our question-and-answer with first Morgan with session. Stanley. of We line [Operator be now conducting your Simeon question.

Michael Tessler

your Tessler Michael is this on guys, for question. Thanks for Hey Simeon.

digits are roughly to wanted about provide know there, on you down -- to I of trends into First, quarter can you single just June. sales looks it comps high date like and through ask the

how trended since things have the extent So then to that [Indiscernible].

Charles Tyson

Hey, This Charles, joining the call. thanks Yes Michael. is Michael. for Good morning.

until we for on just quarter the actual on we're slower as this produced, in. previous was through April. QX future for where country to the with you through really the around impacted we QX, parts Obviously, significant in progressed impact a were saw the everyone talk we pro on everybody. people April support in making very that's we're the installation go restricted through country obviously we And move is at are board saw to from we dramatically to we pleased June, trend we calls, weren't that generally And results of through our go us DIY where business in went the so were back not if volume. opening we encouraged as able we there are quarter. quarter, said, that to of appointments policy up the saw till up the our were got were go we our tough we and activity through the of But country So the important as for we've from appreciate point, when job to, of we see done, said pleased parts Obviously, at we more we setting going certain progress look those we customers getting probably were by to significant track And, look to again. a virus lockdown, an of into what return the really out, installation we work like. QX. good as move about process the as business, to we've quarter the back at that to customers today. the in how We're our going we business the or out might But us, where predictor said, home, look

Michael Tessler

at all. problem no Yes,

so just high compare. expectation tough made, roll to for solid following margin, does with kind is And think you QX, this we'll just I guess, you I would to have a it quarter of on -- up Even go-forward of expansion XX%, years. even term go-forward could the as expansion follow then kind which kind thinking interrupting a haven't see out out margin, continues gross another great be the on improved Thank in be my another guess, of And right just and through, bit another margin, QX. could then a going around QX gross long term longer and basis. this again, running is QX that is outlook roughly level about our there. you. XX% of about The gross forward, it, several the the mean this that you've then enhancements think run rate way to

Nancy Walsh

yet driver mentioned, as tariffs are that happen enhance really once of XX seeing visible So, work months you're and these became to going last that not that's you November August the the the on to year-over-year know in Remember, slated XX expired And do X, XXXX. what's our tariffs comparison. primary margins expire we over with a on to XXX those. to

that to point as offset those specific continue So we numbers work we're at but to potentially Charles to not time, might in any this from mentioned. impact occur get going

XXXX excuse that in that me, September You will as that in November extent tariff a expiration, goes component of exemption, retroactive a original of there QX XXXX. to was or remember the back part of tariff

you this wait But update to as point, to we see at you that to will in And need the with need you So keep accordingly. mind. what tariffs. mentioned, happens we

Charles Tyson

that. just Michael, on add me to let

areas back the line that transformation, we're you sure on driving making to we well, in we profit go delivering when three terms about As I'd hinge top as and into of think right, line. sort of that our

to driving Our and product market quickly, more in merchants more through done strategy. work lot new quickly, design, bringing of strategic around and product have and product sourcing innovation a development, a bringing

continue You confidence our sales to made gives sell those force know, just strides. have products. the unique And that teams tremendous and actions will

in with we've got that confidence program teams best have the the one Bellawood country. solid upgrades, wood solid wood I've our So of the work and programs the done

And proposition. so they're value selling against our selling against not We're price.

again, inside that So transformation. doing work the want I connect things our back to to we're

where our efficient continue to looking around leaning digital into profitability. we're work, marketing optimization and We at ways more especially drive

thinking in made the QX the see profitability a I little and bit. for profitability and that about are And you that we're QX, we think growth progress profit. both as how so the that there we company strong color made actions Hopefully underpinning in helps positioning progress

Michael Tessler

progress for of and Good so does. It the rest Yes far. great, year. luck great

Charles Tyson

Thanks, Michael.


you. Thank

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

Laura Champine

queue stayed why consumer and morning Can but this profit the is to sale question down, whether but half? The customer QX on as morning. My disclosed is about customer that a what trend did the count you dollars. my back relatively just be move of comment sort didn't count detail strong, average or taking numbers this you that the changing in for in congratulations is in sort into improvement. some Thanks the sustained and is decline behavior actually that reflects, question much, the little not going how and sale on think on we more of

Charles Tyson

Thanks. the question. Laura. Yes, Appreciate

transactions able excited perspective, the through installation labor Obviously, had to were fairly book a what as from in both dramatic business move we product about we obviously, we mix we of the happened account cost. shift quarter. customer the trend So actually our and are the a

installation has pretty as of impact dramatic mix the ticket. a to has Pro the average a on from DRY on obviously, about took quarter, how an so that ticket. the pretty And at And average dramatic we beginning impact decline think

that being versus with gives particularly see the of seeing sales our assessments looking country continue. that if and off, encouraged at none But questions, can we're happening what As we're and my And customer good what opening through up. And earlier digital on what pay back in what's color perspective. to us I country what was with again, predict on hopefully to the QX, into an were the Obviously, around from looking transformation on that now sensitive around we in predictor to we what inside been work as we've you as is us -- impacted virus. be transformation the with installation beginning we we're transactions. at quarter average some April a from obviously, that the for would a statement, very said, if move

Laura Champine

you. Got it. Thank

Charles Tyson

Laura. Thanks


Thank you.

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

Nathan Friedman

some are this persist my offsetting for seems Hi, gross somewhat will strategy implementing you one games with this for a going But regarding to you taking promotions margins, on question. Seth. of costs mentioned customer Nathan is guys delivery the Friedman Thanks delivery associated higher new, offset margins which how guys gross new of much this experienced, an [Indiscernible] forward? and and that new something that is first, you

Nancy Walsh

not provide Thank around the to you for We're specific going this. numbers question.

transition we beginning that model costs of to last there delivery us the customer obsolescence be continue serve both responding the That as delivery improve were we very a way charge to is As And factor the that made. end year trying was this as this The to and offering. the doing function total are in that a of really for obsolescence see our that factors a point, we adjustment we was was impact, a us did to COVID at the the on product operational margin. mentioned, at of slight really cost. the to well charge The something impacted in design We our can. number we year the the flexible that of best crisis. to in also

that continue to we'll half of the over So this year. second evaluate

Nathan Friedman

was initiatives given making I my then this the on, estate that portfolio question you're real some is you this going are you And of on the the appetite regarding second extended is progression enough. for format. your rollout And share guys your Can hear that surrounding the working initiative? forward, optimization? regarding didn't initiative that one fair Okay, store what

Charles Tyson

we We Yes, stores, end last the rolled complete of last year. Nathan, that question. that's store great out until five very didn't a

we know COVID the take inventory, result and view a at little net you to on the with really us As based bit turn the now longer it'll what is the virus, interruption look of of the of a geographical deep three our format type estate market term have team very spent store where and the months really doing around opportunities real are strategic, into last type. stores. Nancy potentially and those dive open longer how

look And asked that, from are very the strategically we this team profitability look does Nathan, the that to will portfolio were at obviously what is our an take formats, design that, pull all what types we I've part market center. that real got with really going as in of and So a learnings done, then of learnings perspective? that estate from some number like, We quarter. stores moved. what limiting of opening we've that We're back, what into at looking drive new element the good which store both may out expand should appropriate we're And, we're And the you'll on from as future. that the being the we stores. the and forward in that see

we the remote We selling, virtual put into taking we we ultimate learnings our that we're learnings and number customer about. from expanded some virtual stores talked a that that spring that took So technology a Florida. store around was in the those of stores of to perspective out and selling of

be market thing work play around our and strategy a from from that that one is the the type. take So will prototype have appropriate of in real kind the good this I dependent would estate And the strategic underway away role is on profitability. have you will outcome we growth what of

Nathan Friedman

the good and thanks in luck the half year. Okay, second

Charles Tyson

Nathan. Thanks,


floor appears comments. the Charles closing this Instructions] we One no turn repoll while for like [Operator further you. back time. I'd questions moment have It Thank to please we at your to questions. over

Charles Tyson

Thank operator. you

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This concludes today's teleconference.

for this Thank a at time. have you day. disconnect your your participation You and may lines wonderful