Q4 2024 La-Z-Boy Incorporated Earnings Call

Good morning, everyone and welcome to the Lazy Boy fiscal 'twenty 'twenty four fourth quarter conference call. At this time all participants are in a listen only mode and we will be opening for questions. Following the presentation. If anyone should require operator assistance. During this conference. Please.

Speaker Change: Star Zero on your phone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Mark Becks director of IR and corporate development of La Z Boy incorporated Mark over to you.

Mark Becks: Good morning, everyone, and thanks for joining us to discuss our fiscal 2024 fourth quarter and full fiscal year. With us today are Melinda Whittington, La-Z-Boy Incorporated's President and Chief Executive Officer, and Bob Lucian, La-Z-Boy's SVP and CFO.

Jenny: Thank you Jenny good morning, everyone and thanks for joining us to discuss our fiscal 2020 for fourth quarter and full fiscal year with us today are Melinda Whittington Lazy boys, ladies will incorporate its president and Chief Executive Officer, and Bob pollution, Ladies voice SVP and CFO.

Melinda D. Whittington: Melinda will open and close the call and Bob will speak to segment performance and the financials Midway through we will then open the call to questions.

Speaker Change: <unk> will accompany this presentation may view them through our webcast link which will be available for one year and a telephone replay of the call will be available for one week beginning this afternoon.

Melinda D. Whittington: Melinda will open and close the call, and Bob will speak to segment performance and the financials midway through. We will then open the call to questions. Slides will accompany this presentation, and you may view them through our webcast link, which will be available for one year. And a telephone replay of the call will be available for one week, beginning this afternoon. Before I begin the presentation, I would like to remind you that some statements made in today's call include forward-looking statements about La-Z-Boy's future performance and other matters.

Speaker Change: Before I begin the presentation I would like to remind you that some statements made in today's call include forward looking statements about lazy boys future performance and other matters. Although we believe these statements to be reasonable our actual results could differ materially the most significant risk factors that could affect our future results are.

Melinda D. Whittington: Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors, as well as other key information detailed in our SEC filing. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website, and it includes reconciliations of certain non-GATT measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda Whittington, La-Z-Boy Inc.'s President and Chief Executive Officer. Melinda

Speaker Change: Described in our annual report on Form 10-K.

Speaker Change: We encourage you to review those risk factors as well as other key information detailed in our SEC filings.

Speaker Change: So our earnings release is available under the news and events tab on the Investor Relations page of our website and it includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck.

Speaker Change: With that I will now turn the call over to Melinda Whittington Lazy Boy incorporated as President and Chief Executive Officer Melinda.

Melinda D. Whittington: Thanks, Mark, and good morning, everyone. Yesterday, following the close of the market, we reported results for our April-ended fourth quarter and fiscal year. I am pleased to share that we delivered solid results despite ongoing economic and furniture and home furnishings industry headwinds. Highlights for the quarter included consolidated delivered sales of $554 million, up 22% versus our most recent pre-pandemic fourth quarter and down 1% versus the prior year, which benefited from delivering the above normal pandemic backlog. Non-GAAP Operating Margin of 9.4%, and non-GAAP EPS of $0.95.

Mark Becks: Thanks, Mark and good morning, everyone.

Melinda D. Whittington: Yesterday following the close of the market we reported results for our April ended fourth quarter and fiscal year.

Melinda D. Whittington: I am pleased to share that we delivered solid results, despite ongoing economic and furniture and home furnishings industry headwinds.

Melinda D. Whittington: Highlights for the quarter included consolidated delivered sales of $554 million up 22% versus our most recent pre pandemic fourth quarter and down 1% versus prior year, which benefited from delivering the above normal pandemic backlogs.

Melinda D. Whittington: non-GAAP operating margin of nine 4%.

Melinda D. Whittington: non-GAAP EPS of <unk> 95 cents.

Melinda D. Whittington: Strong operating cash flow of $53 million for the quarter, and continued progress against our Century Vision growth strategy, including completing the acquisition of a two-store independent furniture galleries network in Florida and signing an agreement to acquire another single-store independent dealer in the Midwest during the first quarter of Fiscal 25. Highlights for the year included consolidated delivered sales of just over $2 billion, roughly flat versus the prior year when adjusting for the fiscal 23 pandemic-related backlog deliveries, and gross margin expansion on both a gap and a non-gap basis across all segments.

Melinda D. Whittington: Strong operating cash flow of $53 million for the quarter.

Melinda D. Whittington: And continued progress against our century vision growth strategy, including completing the acquisition of a two store independent furniture galleries network in Florida, and signing an agreement to acquire another single store independent dealer in the Midwest in the first quarter of fiscal 'twenty five.

Speaker: Highlights for the year included consolidated delivered sales of just over $2 billion, roughly flat versus prior year when adjusting for the fiscal 23 pandemic-related backlog deliveries. Gross margin expansion on both a gap and a non-gap basis across all segments. Strong operating cash flow of $158 million, a healthy balance sheet with $341 million in cash and no external debt. And continued progress against our central vision growth strategy, including opening six company-owned stores and the acquisition of 11 independent La-Z-Boy Furniture Galleries stores. And 85 million returned to shareholders through share repurchases and dividends, including increasing our dividend by 10% for the third consecutive year.

Melinda D. Whittington: Highlights for the year included consolidated delivered sales of just over $2 billion roughly flat versus prior year when adjusting for the fiscal 'twenty three pandemic related backlog deliveries grew.

Melinda D. Whittington: Gross margin expansion on both a GAAP and a non-GAAP basis across all segments.

Melinda D. Whittington: Strong operating cash flow of $158 million, a healthy balance sheet with $341 million in cash and no external debt, and continued progress against our Century Vision growth strategy, including opening six company-owned stores and the acquisition of 11 independently-owned La-Z-Boy Furniture Gallery stores, and $85 million returned to shareholders through share repurchases and dividends, including increasing our dividend by 10% for the third consecutive year. We're proud of our strong finish to the fiscal year, as fourth quarter results exceeded expectations.

Melinda D. Whittington: Strong operating cash flow of $158 million.

Our healthy balance sheet with $341 million in cash and no external debt.

Melinda D. Whittington: And continued progress against our century vision growth strategy, including opening six company owned stores and the acquisition of 11 independently owned lazy boy furniture galleries stores.

Melinda D. Whittington: And $85 million returned to shareholders through share repurchases and dividends, including increasing our dividend by 10% for the third consecutive year.

Speaker: We're proud of our strong finish to the fiscal year, as fourth-quarter results exceeded expectations.

Melinda D. Whittington: We're proud of our strong finish to the fourth fiscal year as fourth quarter results exceeded expectations. These were particularly impressive results in the context of the overall furniture and home furnishings industry, which continues to grapple with higher for longer interest rates and housing turnover and near 30 year low.

Melinda D. Whittington: These were particularly impressive results in the context of the overall furniture and home furnishings industry, which continues to grapple with higher-for-longer interest rates and housing turnover near 30-year lows negatively impacting store traffic. La-Z-Boy continues to stand out as an iconic brand in the category for its unique ability to turn houses into homes with our broad assortment and offering personalization at scale.

Speaker: These were particularly impressive results in the context of the overall furniture and home furnishings industry, which continues to grapple with higher-for-longer interest rates and housing turnover near 30-year lows, negatively impacting store traffic. lazy-boy continues to stand out as an iconic brand in the category for our unique ability to turn houses into homes with our broad assortment and offering personalization at scale. Retail install execution is the strongest it has ever been, including conversion rates at all-time highs, and average ticket and design sales continuing to strengthen. Additionally, we have strengthened our supply chain by optimizing our North America manufacturing footprint to improve productivity while driving strong service levels.

Melinda D. Whittington: Was negatively impacting store traffic lays.

Melinda D. Whittington: Lazy boy continues to stand out as an iconic brand in the category for our unique ability to turn houses into homes with our broad assortment and offering personalization at scale.

Melinda D. Whittington: Retail in-store execution is the strongest it has ever been, including conversion rates at all-time highs and average ticket and design sales continuing to strengthen. Additionally, we have strengthened our supply chain by optimizing our North America manufacturing footprint to improve productivity while driving strong service levels. We will continue to play offense, despite the sluggish demand environment supported by our strong balance sheet, to favorably position us for accelerated growth when the underlying industry tailwind reemerges. Our first quarter is off to a good start, and we are encouraged by our solid Memorial Day results, as our assortment and best-in-class motion offerings are resonating with consumers in the marketplace.

Melinda D. Whittington: Retail in store execution is the strongest it has ever been including conversion rates at all time highs and average ticket and design sales continuing to strengthen.

Melinda D. Whittington: Additionally, we have strengthened our supply chain by optimizing our north American manufacturing footprint to improve productivity, while driving strong service levels.

Speaker: We will continue to play offense despite the sluggish demand environment, supported by our strong balance sheet to favorably position us for accelerated growth when an underlying industry tailwind reemerges. Our first quarter is off to a good start, and we are encouraged by our solid Memorial Day results, as our assortment and a best-in-motion, best-in-class motion offerings are resonating with consumers in the marketplace. Recapping our fourth quarter written sales trends, total written sales for our company-owned retail segment increased 1% versus last year's fourth quarter. Written same store sales for our company-owned retail segment in the fourth quarter declined 5% versus the prior year.

Melinda D. Whittington: We will continue to play offense, despite the sluggish demand environment supported by our strong balance sheet to favorably position us for accelerated growth when and underlying industry tailwind reemerge as.

Melinda D. Whittington: Our first quarter is off to a good start and we are encouraged by our solid memorial day results as our assortment and the best in motion best in class motion offerings are resonating with consumers in the marketplace.

Melinda D. Whittington: Recapping our fourth quarter written sales trends. Total written sales for our company-owned retail segment increased 1% versus last year's fourth quarter. However, written same store sales for our company-owned retail segment in the fourth quarter declined 5% versus the prior year. Same-store sales were strongest early in the quarter around key holiday events and recovery from January weather disruption, but they strengthened again in May when we began our new fiscal year. Despite ongoing challenging traffic trends, our stores continue to execute very well, with higher conversion, higher ticket, and design sales partially mitigating the traffic headwinds. Written same-store sales for the entire La-Z-Boy Furniture Galleries network of 355 stores declined 3% in the fourth quarter compared to the prior year.

Melinda D. Whittington: Recapping, our fourth quarter written sales trends total written sales for our company owned retail segment increased 1% versus last year's fourth quarter.

Melinda D. Whittington: Written same store sales for our company owned retail segment in the fourth quarter declined 5% versus the prior year same.

Speaker: Same store sales were strongest early in the quarter around key holiday events and recovery from January weather disruption, but strengthened again in May when we began our new fiscal year. Despite ongoing challenging traffic trends, our stores continue to execute very well with higher conversion, higher ticket, and design sales partially mitigating the traffic headwinds. We're in the same-store sales for the entire Lazy Boy Furniture Galleries network of 355 stores declined 3% in the fourth quarter versus the prior year. Against the backdrop of an 8% industry contraction during our fourth quarter, we are encouraged by our Lazy Boy Furniture Galleries network again outperforming by approximately 500 basis points.

Melinda D. Whittington: Same store sales were strongest early in the Korea around key holiday events and recovery from January weather disruption, but strengthened again in may when we began our new fiscal year.

Melinda D. Whittington: Despite ongoing challenging traffic trends, our stores continue to execute very well with higher conversion higher ticket and design sales, partially mitigating the traffic headwinds.

Speaker Change: Written same store sales for the entire lazy boy furniture galleries network of 355 stores declined 3% in the fourth quarter versus the prior year.

Melinda D. Whittington: Against a backdrop of an 8% industry contraction during our fourth quarter, we are encouraged by our La-Z-Boy Furniture Galleries Network again outperforming by approximately 500 basis points. For the full fiscal year, written same-store sales across our Furniture Galleries Network were down just 2%, while the industry was down 6%, as our significant outperformance versus the market persisted throughout the year. Consistent with our Century Vision strategy, our objective remains to drive disproportionate growth over the long term and to consistently gain share in the fragmented furniture and home furnishings industry. Turning to Joybird, written sales declined 1% in the quarter versus a year ago, and delivered sales were roughly flat, as sales trends have largely stabilized.

Speaker Change: Against the backdrop of an 8% industry contraction during our fourth quarter. We are encouraged by our lazy boy furniture galleries network again outperforming by approximately 500 basis points.

Speaker: Summarizing our full fiscal year, written same store sales across our furniture galleries network were down just 2%, while the industry was down 6% as our significant outperformance versus the market persisted throughout the year. Consistent with our century vision strategy, our objective remains to drive disproportionate growth over the long term, and to consistently gain, consistently gain share in the fragmented furniture and home furnishings industry.

Speaker Change: Summarizing our full fiscal year written same store sales across our furniture galleries network were down just 2%, while the industry was down 6% as our significant outperformance versus the market persisted throughout the year.

Speaker Change: Consistent with our century vision strategy, our objective remains to drive disproportionate growth over the long term.

Speaker Change: And two consistency gains consistently gained share in the fragmented furniture and home furnishings industry.

Speaker: Turning to Joyberg, written sales declined 1% in the quarter versus a year ago, and delivered sales were roughly flat as sales trends have largely stabilized. The brand is making steady progress, and execution is improving as we focus on balancing growth and profitability.

Speaker Change: Turning to Joy bird written sales declined 1% in the quarter versus a year ago and delivered sales were roughly flat as sales trends have largely stabilized the brand is making steady progress and execution is improving as we focus on balancing growth and profitability.

Melinda D. Whittington: The brand is making steady progress, and execution is improving as we focus on balancing growth and profitability. As we conclude the fiscal year and begin a new one, I'd like to reflect on the progress made in strengthening our enterprise for the long term and highlight some of our objectives for the year ahead. Recall, Century Vision is our strategic framework setting up La-Z-Boy Inc. for the next 100 years as we celebrate our first century in 2027.

Speaker Change: Yeah.

Speaker: As we conclude the fiscal year and begin a new one, I'd like to reflect on the progress made in strengthening our enterprise for the long term and highlight some of our objectives for the year ahead. Recall, Century Vision is our strategic framework setting up Lazy Boy Incorporated for the next 100 years as we celebrate our first century in 2027. This is measured by our intention to grow top line at a pace double the market and deliver a consistent double-digit operating margins over the long term. As an industry, underlying demand trends have been plagued by housing affordability, high mortgage rates, and low housing turnover.

Speaker Change: As we conclude the fiscal year and begin a new one I'd like to reflect on the progress made in strengthening our enterprise for the long term and highlight some of our objectives for the year ahead.

Speaker Change: Recall century vision is our strategic framework setting up lazy boy incorporated for the next 100 years as we celebrate our first century in 2027.

Melinda D. Whittington: This is measured by our intention to grow top-line at a pace double the market and deliver consistent double-digit operating margins over the long term. As an industry, underlying demand trends have been plagued by housing affordability, high mortgage rates, and low housing turnover. With mortgage rates hovering around 7% and existing home sales down 40% from peak levels, furniture and home furnishings demand remains under pressure.

Speaker Change: This is measured by our intention to grow top line at a pace double the market and deliver consistent double digit operating margins over the long term.

Speaker Change: Yeah.

As an industry underlying demand trends have been plagued by housing affordability high mortgage rates and low housing turnover.

Speaker: With mortgage rates hovering around 7%, and existing home sales down 40% from peak levels, furniture and home furnishing demand remains under pressure. However, we are not waiting for the macroeconomic environment to improve. Our team remains focused on servicing customers and consumers and delivering the Lazy Boy brand promise of comfortable custom furniture with quick delivery. The category is highly fragmented and is one of the largest players, but still with only roughly 5% market share, we are well positioned to continue to strategically grow our business. Lazy Boy's brand reach expanded significantly over the past year. Our total furniture galleries network ended the fiscal at 355 stores, up six from the prior year, and our company own store account increased to 187, including six new store openings and 11 acquisitions.

Speaker Change: With mortgage rates hovering around 7% and existing home sales down 40% from peak levels furniture and home furnishings demand remains under pressure. However, we are not waiting for the macroeconomic environment to improve our team remains focused on servicing customers and consumers and.

Melinda D. Whittington: However, we are not waiting for the macroeconomic environment to improve. Our team remains focused on servicing customers and consumers and delivering the La-Z-Boy brand promise of comfortable, custom furniture with quick delivery. The category is highly fragmented, and we are one of the largest players, but still with only roughly 5% market share. We are well positioned to continue to strategically grow our business. La-Z-Boy's brand reach expanded significantly over the past year. Our total Furniture Galleries Network ended the fiscal year at 355 stores, up six from the prior year, and our company-owned store count increased to 187, including six new store openings and 11 acquisitions.

Melinda D. Whittington: Further, in May, we signed an agreement to acquire an additional one-store market from an independent dealer in the Midwest scheduled to close in the first quarter of Fiscal 25. Company-owned stores now represent 53%, more than half of the total La-Z-Boy Furniture Galleries network for the first time in history. Growing our company-owned network is important, as it enables the brand to control the end-to-end consumer experience and leverage the strength of our vertically integrated model.

Speaker Change: Delivering the lazy boy brand promise of comfortable custom furniture with quick delivery.

Speaker Change: The category is highly fragmented and is one of the largest players, but still was only roughly 5% market share. We are well positioned to continue to strategically grow our business lazy boys brand reach expanded significantly over the past year.

Speaker Change: Our total furniture galleries network ended the fiscal at 355 stores up six from the prior year and our company owned store count increased to 187, including six new store openings and 11 acquisitions.

Speaker: Further, it may be found in agreement to acquire an additional one-store market from an independent dealer in the Midwest, scheduled to close in the first quarter of fiscal 25. Retail company own stores now represent 53% over half of the total Lazy Boy brand history galleries network for the first time in history. History. Growing our company on network is important, as it enables the brand to control the end-to-end consumer experience and leverage the strength of our vertically integrated model. We remain confident in our ability to grow the total La-Z-Boy furniture galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company own portion of the network through new store growth and acquisitions.

Speaker Change: Further in May we signed an agreement to acquire an additional one store market from an independent dealer in the Midwest scheduled to close in the first quarter of fiscal 'twenty five.

Speaker Change: Retail company owned stores now represent 53% over half of the total lazy boy furniture galleries network for the first time in history.

Speaker Change: Growing our company owned network is important as it enables the brand to control the end to end consumer experience and leverage the strength of our vertically integrated model, we remain confident in our ability to grow the total lazy boy furniture galleries network to approximately 400 stores over the next several years and see meaningful.

Melinda D. Whittington: We remain confident in our ability to grow the total La-Z-Boy Furniture Galleries network to approximately 400 stores over the next several years and see meaningful opportunity to expand the company-owned portion of the network through new store growth and acquisition. These store acquisitions are immediately accretive to our profitability, allowing the company to benefit from the integrated wholesale and retail margin.

Speaker Change: <unk> to expand the company owned portion of the network through new store growth and acquisitions.

Speaker: These store acquisitions are immediately agreed to our profitability, allowing the company to benefit from the integrated wholesale and retail margins. Bob will provide more specific details on our new store targets for the year ahead in a moment. We're also growing our business through our broader channel strategy, which enables us to grow share of voice for the La-Z-Boy brand and provide access to the brand to a broader range of consumers. Our strategic partnership with Rooms To Go is a great example of the strategy. We continue to look for new and innovative ways to reach a broader audience and bring products like the beloved Lazy Boy recliner into more homes.

Speaker Change: Store acquisitions are immediately accretive to our profitability, allowing the company to benefit from the integrated wholesale and retail margins.

Melinda D. Whittington: Bob will provide more specific details on our new store targets for the year ahead in a moment. We're also growing our business through our broader channel strategy, which enables us to grow share of voice for the La-Z-Boy brand and provide access to the brand to a broader range of consumers. Our strategic partnership with Rooms2Go is a great example of this strategy. We continue to look for new and innovative ways to reach a broader audience and bring products like the beloved La-Z-Boy Recliner into more homes.

Speaker Change: Bob will provide more specific details on our new store targets for the year ahead in a moment.

Speaker Change: We're also growing our business through our broader channel strategy, which enables us to grow share of voice for the lazy boy brand and provide access to the brand to a broader range of consumers.

Speaker Change: Our strategic partnership with rooms to go is a great example of this strategy.

Speaker Change: We continue to look for new and innovative ways to reach a broader audience and bring products like the beloved lazy boy recliner into more homes.

Speaker: Another core pillar of our century vision is to expand Lazy Boy's brand reach via our long-lived lazy campaign. We launched the campaign last August with the initial goal of enhancing brand awareness and keeping a top of mind. I'm happy to share, while less than a year in, that we have been successful in increasing awareness, consideration, and purchase intent among those who have seen long-lived lazy and connected to Lazy Boy. While difficult to quantify, given the extended purchase cycles in furniture and furnishings, we have seen promising performance in the early impacts of the campaign. We will continue to adapt and expand the campaign as underlying industry fundamentals improve to achieve our goal of connecting with an even broader audience.

Melinda D. Whittington: Another core pillar of our Century Vision is to expand La-Z-Boy's brand reach via our Long Live the Lazy campaign. We launched the campaign last August with the initial goal of enhancing brand awareness and keeping it top of mind.

Speaker Change: Another core pillar of our century vision is to expand lazy boys brand reach via our long lived the lazy campaign, we launched the campaign last August with the initial goal of enhancing brand awareness and keeping a top of mind I'm happy to share while less than a year in that we have been successful in increasing awareness.

Melinda D. Whittington: I'm happy to share that, while less than a year in, we have been successful in increasing awareness, consideration, and purchase intent among those who have seen Long Live the Lazy and connected to La-Z-Boy. While difficult to quantify, given the extended purchase cycles in furniture and furnishings, we have seen promising performance in the early impacts of the campaign. We will continue to adapt and expand the campaign as underlying industry fundamentals improve to achieve our goal of connecting with an even broader audience.

Speaker Change: Consideration and purchase intent among those who have seen long live the lazy and connected to lazy boy.

Speaker Change: While difficult to quantify given the extended purchase cycles in furniture and furnishings, we have seen promising performance in the early impacts of the campaign, we will continue to adapt and expand the campaign as underlying industry fundamentals improve to achieve our goal of connecting with an even broader audience.

Speaker: Another focus area for expanding La-Z-Boy brand reach is within our product development. We continue to shift organizational decision making to be more consumer centric, while also leveraging a data-driven approach. This is enabling us to develop more consumer relevant. I'm trying to post your furniture, particularly in the motion and reclining categories where we are a market leader.

Melinda D. Whittington: Another focus area for expanding the La-Z-Boy brand is in product development. We continue to shift organizational decision-making to be more consumer-centric while also leveraging a data-driven approach. This is enabling us to develop more consumer-relevant, on-trend upholstered furniture, particularly in the motion and reclining categories, where we are a market leader. Joybird is another core pillar of our Century Vision, and we are optimizing the brand to deliver a balance of sales growth and profitability.

Speaker Change: Another focus area for expanding lazy boy brand reach is within our product development. We continue to shift organizational decision, making to be more consumer centric. While also leveraging a data driven approach. This.

Speaker Change: This is enabling us to develop more consumer relevant on trend upholstered furniture, particularly in the motion and reclining categories, where we are a market leader.

Speaker: Joybird is another core pillar of our century vision, and we are optimizing the brand to deliver a balance of sales growth and profitability. Sales trends for the brand improve throughout the year, and with 12 stores open across major metro markets, the digitally native e-commerce brand is benefiting from the synergistic effect of a growing retail footprint. Joybird has considerable opportunity to expand market share, and we will continue to make prudent investments in the brand to position it for long-term success.

Speaker Change: Joy Bird is another core pillar of our century vision and we are optimizing the brand to deliver a balance of sales growth and profit profitability.

Melinda D. Whittington: Sales trends for the brand improved throughout the year. And with 12 stores open across major metro markets, the digitally native e-commerce brand is benefiting from the synergistic effect of a growing retail footprint. Joybird has a considerable opportunity to expand market share, and we will continue to make prudent investments in the brand to position it for long-term success. Strengthening our foundational capabilities, including building a more dynamic supply chain, is our final pillar in Century Vision.

Speaker Change: Sales trends for the brand improved throughout the year.

Speaker Change: And with 12 stores opened across major Metro markets. The digitally native E. Commerce brand is benefiting from the synergistic effects of a growing retail footprint.

Speaker Change: Joy bird has considerable opportunity to expand market share and we will continue to make prudent investments in the brand to position it for long term success.

Speaker: Strengthening our foundational capabilities, including building a more dynamic supply chain, is our final pillar in Century Vision. We again made steady progress, building a more agile business model, with the moves to better optimize our global supply chain operations throughout the year. Our North America footprint is a key differentiator in our ability to manufacture a comfortable custom furniture with quick speed to market. We spent 54 million dollars in capital expenditures for the years, primarily related to retail store openings and remodels, and upgrades that are manufacturing and distribution facilities. We also spent $39 million on acquisitions during the year.

Speaker Change: Strengthening our foundational capabilities, including building a more dynamic supply chain as our final pillar and century vision.

Melinda D. Whittington: We again made steady progress building a more agile business model with the moves to better optimize our global supply chain operations throughout the year. Our North America footprint is a key differentiator in our ability to manufacture comfortable, custom furniture with quick speed to market.

Speaker Change: We again made steady progress building, a more agile business model with the moves to better optimize our global supply chain operations throughout the year.

Speaker Change: Our North America footprint is a key differentiator in our ability to manufacture comfortable custom furniture with quick speed to market.

Melinda D. Whittington: It is also crucial in helping us manage volatility in consumer demand and ordering patterns. As we begin fiscal 25, we expect to continue a continued challenging macro environment for most of our new fiscal year. However, I'm optimistic about our ability to continue to outperform the market consistent with our performance in fiscal 24, and I expect to deliver modest growth even against these industry challenges. Furthermore, we are optimistic about the eventual rebound in category demand.

Speaker Change: It is also crucial in helping us manage volatility in consumer demand and ordering patterns.

Speaker Change: As we begin fiscal 'twenty five we expect to continue a continued challenging macro environment for most of our new fiscal year. However, I am optimistic about our ability to continue to outperform the market consistent with our performance in fiscal 'twenty four and I expect.

Speaker Change: To deliver modest growth even against these industry challenges.

Speaker Change: Further we are optimistic on the eventual rebound in category demand.

Melinda D. Whittington: And during fiscal 25, we will continue progress on our Century Vision pillars so that we are able to disproportionately benefit when the industry's tailwinds do return. We've delivered meaningful results to date, and the best is still to come. Now, I turn the call over to Bob to review the results in more detail.

Speaker Change: And during fiscal 'twenty five we will continue progress on our century vision pillars. So they were able to disproportionately benefit when the industry tailwind do return we have delivered meaningful results to date and the best is still to come.

Speaker Change: Now, let me turn the call over to Bob to review review the results in more details.

Speaker Change: Bob.

Robert Gerard Lucian: Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a gap and non-gap basis. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business. Non-GAAP results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2024 fourth-quarter sales decreased 1% to $554 million versus the prior year, which benefited from above-normal pandemic backlog delivery.

Robert Kenneth Griffin: Thank you Melinda and good morning, everyone.

Robert Kenneth Griffin: As a reminder, represent our results on both a GAAP and non-GAAP basis.

Robert Kenneth Griffin: We believe the non-GAAP presentation, better reflects underlying operating trends and performance of the business.

Robert Kenneth Griffin: non-GAAP results exclude items, which are detailed in our press release and in the tables in the appendix section of our conference call slides.

Robert Kenneth Griffin: On a consolidated basis fiscal 2024 fourth quarter sales decreased 1% to $554 million versus the prior year, which benefited from above normal pandemic backlog deliveries.

Robert Gerard Lucian: This sales result represents a 22% increase versus the most recent pre-pandemic fourth quarter in fiscal 2019. However, consolidated GAAP operating income decreased to $50 million, and non-GAAP operating income was $52 million, a decrease of 5% versus last year's fourth quarter. Consolidated GAAP operating margin was 9.1%, and non-GAAP operating margin was 9.4%, reflecting a 40 basis point decline versus last year, primarily driven by lower gross margin from segment mix, partially offset by lower SG&A.

Robert Kenneth Griffin: The sales result represents a 22% increase versus the most recent pre pandemic fourth quarter and fiscal 2019.

Robert Kenneth Griffin: Consolidated GAAP operating income decreased to $50 million and non-GAAP operating income was $52 million, a decrease of 5% versus last year's fourth quarter.

Robert Kenneth Griffin: Consolidated GAAP operating margin was nine 1%.

Robert Kenneth Griffin: non-GAAP operating margin was nine 4%, reflecting a 40 basis point decline versus last year, primarily driven by lower gross margin from segment mix, partially offset by lower SG&A.

Robert Gerard Lucian: Gap diluted EPS was $0.91 for the fourth quarter versus $0.79 in the prior year quarter. Non-gap diluted EPS was 95 cents in the current year quarter versus 99 cents last year. As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting unless specifically stated otherwise.

Robert Kenneth Griffin: GAAP diluted EPS was <unk> 91 for the fourth quarter versus 79 in the prior year quarter.

Robert Kenneth Griffin: non-GAAP diluted EPS was <unk> 95 in the current year quarter versus 99 last year.

Robert Kenneth Griffin: As I move to the segment discussion my comments from here, we will focus on our non-GAAP reported unless specifically stated otherwise.

Robert Gerard Lucian: Starting with the retail segment, for the quarter, delivered sales were $228 million, a 6% decrease over the prior year's fourth quarter, which benefited from higher deliveries of backlog. However, importantly, fourth quarter sales were 50% higher than our pre-pandemic fiscal 2019 fourth quarter. Retail non-GAAP operating margin decreased to 14.2% versus 15.5% in the prior year quarter. Gross margin increased due to a more favorable product mix, but it was more than offset by fixed cost de-leverage on lower delivered sales.

Robert Kenneth Griffin: Starting with the retail segment for the quarter delivered sales were $228 million a six.

Robert Kenneth Griffin: The decrease over the prior year's fourth quarter, which benefited from higher deliveries of backlog.

Robert Kenneth Griffin: Fortunately fourth quarter sales were 50% higher than our pre pandemic fiscal 2019 fourth quarter.

Robert Kenneth Griffin: Retail non-GAAP operating margin decreased to 14, 2% versus 15, 5% in the prior year quarter.

Robert Kenneth Griffin: Gross margin increased due to a more favorable product mix, but was more than offset by fixed cost deleverage on lower delivered sales.

Robert Gerard Lucian: For our wholesale segment, delivered sales for the quarter declined to $392 million, a 1% decrease versus the prior year period. Growth in external wholesale sales driven by our channel expansion strategy was offset by decreases in freight revenue in comparison to last year's fourth quarter, which included backlog deliveries primarily to our company-owned retail stores. Non-GAAP operating margin for the wholesale segment was 8.5% versus 8.7% in last year's fourth quarter, as unfavorable freight, product mix, and higher operating costs related to recovering lost third quarter production were mostly offset by lower material costs and sourcing savings.

Robert Kenneth Griffin: For our wholesale segment delivered sales for the quarter declined to $392 million.

Robert Kenneth Griffin: A 1% decrease versus the prior year period.

Growth in external wholesale sales driven by our channel expansion strategy were offset by decreases in freight revenue and comparisons to last year's fourth quarter, which included pandemic related backlog deliveries primarily to our company owned retail stores.

Robert Kenneth Griffin: non-GAAP operating margin for the wholesale segment was eight 5% versus eight 7% in last year's fourth quarter.

Robert Kenneth Griffin: As unfavorable free.

Robert Kenneth Griffin: Product mix and higher operating costs related to recovering lost third quarter production were mostly offset by lower material costs and sourcing savings.

Robert Gerard Lucian: Joybird, reported in Corporate and Other, delivered sales worth $37 million, roughly flat versus the prior year quarter, as sales trends have largely stabilized. Joybird again made meaningful progress on improving profitability in the quarter with lower freight and warranty expenses, improved product mix, and higher return on advertising spending.

Joy bird reporting and corporate and other delivery sales were $37 million.

Robert Kenneth Griffin: Roughly flat versus the prior year quarter sales trends have largely stabilized.

Bert: Hey, Bert again made meaningful progress on improving profitability in the quarter with lower freight and warranty expenses improved product mix and higher return on advertising spending.

Robert Gerard Lucian: Moving on to full-year results for fiscal 2024, Enterprise delivered sales roughly flat versus the prior year at $2.05 billion when excluding $300 million of pandemic-related backlog deliveries, which occurred in fiscal 23. On an unadjusted basis, delivered sales were down 13% versus the prior year, and trends improved sequentially as the year progressed. Consolidated GAAP operating income amounted to $151 million, and non-GAAP operating income was $159 million, a 29% decrease versus fiscal 23.

Bert: Moving on to full year results for fiscal 2024.

Bert: Enterprise delivered sales were roughly flat versus the prior year at 205 billion when excluding $300 million of pandemic related backlog deliveries, which occurred in fiscal 'twenty three.

Bert: On an unadjusted basis delivered sales were down 13% versus the prior year and trends improved sequentially as the year progressed.

Bert: Consolidated GAAP operating income amounted to $151 million non-GAAP operating income was $159 million.

Bert: 9% decrease versus fiscal 'twenty three.

Robert Gerard Lucian: Consolidated GAAP operating margin was 7.4%, and non-GAAP operating margin was 7.8%, down 170 basis points versus last year. Gap diluted EPS was $2.83 for fiscal 24 versus $3.48 last fiscal year. Non-GAAP diluted EPS was $2.98 for the fiscal versus a record $3.86 in fiscal 2015.

Bert: Consolidated GAAP operating margin was seven 4% and non-GAAP operating margin was seven 8% down 170 basis points versus last year.

Bert: GAAP diluted EPS was $2 83 for fiscal 'twenty four versus $3 48 last fiscal.

Bert: non-GAAP diluted EPS was $2 98.

Bert: For the fiscal versus a record $3 86 in fiscal 'twenty three.

Robert Gerard Lucian: Moving on to our consolidated non-GAAP gross margin and SG&A performance for fiscal 2024, fiscal year consolidated non-GAAP gross margin for the entire company increased by 210 basis points versus the prior year. Gross margin increased in all segments, driven by reduced commodity prices, improved sourcing, and a favorable shift in product mix. SG&A non-GAAP expense dollars decreased by 2% year over year. Non-GAAP SG&A as a percentage of sales for the year increased by 380 basis points compared with the same period last year, primarily due to lower delivered sales relative to fixed costs.

Bert: Moving on to our consolidated non-GAAP gross margin and SG&A performance for fiscal 2024.

Bert: Our consolidated non-GAAP gross margin for the entire company increased by 210 basis points versus the prior year.

Bert: Gross margin increased in all segments.

Bert: Even by reduced commodity prices improved sourcing and a favorable shift in product mix.

Bert: SG&A non-GAAP expense dollars decreased by 2% year over year.

Bert: non-GAAP SG&A as a percentage of sales for the year increased by 380 basis points compared with the same period last year, primarily due to lower delivered sales relative to fixed costs.

Robert Gerard Lucian: Our effective tax rate on a gap basis for the year was 24.8% for Fiscal 24 versus 26.2% for Fiscal 23. Fiscal 2024 was lower primarily due to non-taxable gains on company-owned life insurance investments and an increase in the R&D tax credit.

Bert: Our effective tax rate on a GAAP basis for the year was 24, 8% for fiscal 'twenty four versus 26, 2% for fiscal 'twenty three.

Bert: Fiscal 2024 was lower primarily due to non taxable gains on company owned life insurance investments and an increase in R&D tax credits.

Robert Gerard Lucian: Turning to liquidity, we ended the year with a robust balance sheet, including $341 million in cash and no externally funded debt. We generated $53 million in cash from operating activities in the quarter. Solid cash generation was primarily driven by profit performance and lower inventory levels.

Bert: Turning to liquidity, we ended the year with a robust balance sheet, including $341 million in cash and no external we funded debt.

Bert: Generated $53 million in cash from operating activities in the quarter.

Bert: Solid cash generation was primarily driven by profit performance and lower inventory levels.

Robert Gerard Lucian: For the full fiscal year, cash flow from operations was $158 million, down from last year due to lower sales after fulfilling our pandemic backlog, but still at very healthy levels. We spent $54 million in capital expenditures for the year, primarily related to retail store openings and remodels, and upgrades at our manufacturing and distribution facilities. We also spent $39 million on acquisitions during the year. During the fiscal year, we returned approximately $85 million to shareholders. This included 33 million paid in dividends and repurchasing 1.6 million shares during the year, which leaves 5.7 million shares available under our existing share repurchase authorization.

Bert: For the full fiscal year cash flow from operations was $158 million.

Down from last year due to lower sales after fulfilling our pin debit backlog, but still at very healthy levels.

Bert: We spent $54 million in capital expenditures for the years, primarily related to retail store openings and remodels and upgrades at our manufacturing and distribution facilities.

Bert: We also spent $39 million on acquisitions during the year.

Speaker: During the fiscal year, we returned approximately $85 million to shareholders. This included $33 million paid in dividends and repurchasing 1.6 million shares during the year, which leaves 5.7 million shares available under our existing shared repurchase authorization. We view shared repurchases and our dividend as an attractive use of our cash and a positive return to shareholders. Our capital allocation target is to reinvest approximately 50% of operating cash flow back into the business and return about 50% to shareholders, and share repurchases and dividends over the long term. In fiscal 24, our capital allocation was 52% reinvested into the business and 48% returned to shareholders.

Bert: During the fiscal year, we returned approximately $85 million to shareholders.

Bert: This included $33 million paid in dividends and repurchasing one 6 million shares during the year, which leaves $5 7 million shares available under our existing share repurchase authorization.

Robert Gerard Lucian: We view share repurchases and our dividend as an attractive use of our cash and a positive return to shareholders. Our capital allocation target is to reinvest approximately 50% of operating cash flow back into the business and return about 50% to shareholders through share repurchases and dividends over the long term. In fiscal 24, our capital allocation was 52% reinvested into the business, and 48% returned to shareholders. Now, before turning the call back to Melinda... Let me highlight several important items for fiscal 25 and our first quarter.

Bert: We view share repurchases and our dividend is an attractive use of our cash and positive return to shareholders.

Bert: Our capital allocation target is to reinvest approximately 50% of operating cash flow back into the business and return about 50% to shareholders and share repurchases and dividends over the long term.

Bert: Fiscal 'twenty four our capital allocation was 52% reinvested into the business and 48% return to shareholders.

Speaker: Now, before turning to call back to Melinda, let me highlight several important items for fiscal 25 and our first quarter. Consistent with our central division strategy, we continue to target sales growth, double the industry growth rate, and double-digit operating margins over the long term, with the benefit of more normalized industry growth rates. Looking forward, we expect the industry to continue to be challenged, down by as much as 5% during our fiscal 25. With any improved trends, weight is late in our fiscal year towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity.

Speaker Change: Now before I turn the call back to Melinda.

Speaker Change: Let me highlight several important items for fiscal 'twenty, five and our first quarter.

Robert Gerard Lucian: Consistent with our Century Vision strategy, we continue to target sales growth, double the industry growth rate, and double-digit operating margins over the long term with the benefit of more normalized industry growth rates. Looking forward, we expect the industry to continue to be challenged, down by as much as 5% during our fiscal 2025, with any improved trends weighted late in our fiscal year, towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity.

Speaker Change: Consistent with our century vision strategy, we continue to target sales growth double the industry growth rate and double digit operating margins over the long term with the benefit of more normalized industry growth rates.

Speaker Change: Looking forward, we expect the industry to continue to be challenged down by as much as 5% during our fiscal 2025 with any improved trends weighted late in our fiscal year towards calendar 2025, when expected interest rate cuts filter through the economy and begin to positively impact housing activity.

Speaker: We expect to continue to outperform the market, consistent with our performance in fiscal 24, which will result in modest sales growth year over year for fiscal 2025. We expect to open 12 to 15 new La-Z-Boy Furniture Gallery stores skewed towards the second half of the year. For the first quarter, we expect delivered sales to be in the range of 475 to $495 million, and non-GAAP operating margins to be in the range of 67%. Also, as a reminder, our first quarter is generally the lowest sales and margin quarter in the fiscal year due to seasonally lower industry sales and our annual week-long manufacturing plant shutdown in July.

Robert Gerard Lucian: We expect to continue to outperform the market, consistent with our performance in fiscal 24, which will result in modest sales growth year-over-year for fiscal 2025. Additionally, we expect to open 12 to 15 new La-Z-Boy furniture gallery stores skewered towards the second half of the year. For the first quarter, we expect delivered sales to be in the range of $475 to $495 million, and a non-GAAP operating margin to be in the range of six to seven percent. Also, as a reminder, our first quarter is generally the lowest sales and margin quarter in the fiscal year due to seasonally lower industry sales and our annual week-long manufacturing plant shutdown in July.

Speaker Change: We expect to continue to outperform the market consistent with our performance in fiscal 'twenty, four which will result in modest sales growth year over year for fiscal 2025.

Speaker Change: We expect to open 12 to 15, new lazy boy furniture galleries stores skewed towards the second half of the year.

Speaker Change: Now for the first quarter, we expect delivered sales to be in the range of $475 million to $495 million.

Speaker Change: non-GAAP operating margin to be in the range of 6% to 7%.

Speaker Change: Also as a reminder, our first quarter is generally the lowest sales and margin quarter and the fiscal year due to seasonally lower industry sales.

Speaker Change: And our annual week long manufacturing plant shutdown in July.

Speaker: We expect our tax rate for the full fiscal year to be in the range of 25.5 to 26.5%. We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in the range of 1 to 3 cents per share. We expect capital expenditures to be in the range of 70 to 80 million dollars for fiscal 25, as we invest to strengthen the company for the future, consistent with our Century Vision strategy. This includes land and building investments and stores to maintain the growth rate of our retail network. And finally, presenting no significant worsening in macroeconomic trends, we expect to continue share purchases at dollar levels consistent with pre-coated levels.

Melinda D. Whittington: We expect our tax rate for the full fiscal year to be in the range of 25.5% to 26.5%. We anticipate non-gap adjustments for purchase accounting charges for the year to be in the range of one to three cents per share. We expect capital expenditures to be in the range of $70 to $80 million for fiscal 25, as we invest to strengthen the company for the future, consistent with our Century Vision strategy.

Speaker Change: We expect our tax rate for the full fiscal year to be in the range of $25 five to 26, 5%.

Speaker Change: We anticipate non-GAAP adjustments for purchase accounting charges for the year to be in a range of $1 <unk> per share.

Speaker Change: We expect capital expenditures to be in the range of $70 million to $80 million for fiscal 'twenty five as we invest to strengthen the company for the future consistent consistent with our century vision strategy.

Melinda D. Whittington: This includes land and building investments and stores to maintain the growth rate of our retail network. And finally, presuming no significant worsening in macroeconomic trends, we expect to continue share repurchases at dollar levels consistent with pre-COVID levels. Now, I will turn the call back to Melinda.

Speaker Change: This includes land and building investments in stores to maintain the growth rate of our retail network.

Speaker Change: And finally presuming no significant worsening macroeconomic trends, we expect to continue share repurchases of one dollar levels consistent with pre COVID-19 levels.

Melinda Whittington: And now, I will turn the call back to Melinda.

Speaker Change: And now I will turn the call back to Melinda.

Melinda Whittington: Thanks, Bob.

Melinda D. Whittington: Thanks, Bob.

Melinda D. Whittington: The momentum in our business is accelerating, and we continue to make progress towards achieving our Century Vision goals. Our focus on execution will remain paramount as we continue the expansion of retail through new and acquired stores, improve agility across our supply chain, and drive efficiency and margin expansion throughout our business as the underlying demand environment improves. We will also continue to expand our brand reach with new and existing consumers through our award-winning and innovative brand campaign and our on-trend, high-quality, comfortable products.

Melinda Whittington: The momentum in our business is accelerating, and we continue to make progress towards achieving our century vision goals. Marginner proving for the overall company that we talked about last year is just coming a little bit wayer than we had expected. Very helpful.

Melinda D. Whittington: The momentum in our business is accelerating and we continue to make progress towards achieving our century vision goals.

Melinda D. Whittington: Our focus on execution will remain Paramount as we continue the expansion of retail through new and acquired stores improve agility across our supply chain and drive efficiency and margin expansion throughout our business as the underlying demand environment improves we.

Melinda D. Whittington: We will also continue to expand our brand reach with new and existing consumers through our award winning and innovative brand campaign and our on trend high quality comfortable products.

Melinda D. Whittington: Before I conclude the call, I want to thank the entire La-Z-Boy Inc. team for their hard work and continued progress towards our goals throughout the year, even in the challenging environment. I look forward to the year ahead and getting back to growth. And we thank you all for your time this morning, and I'll turn the call back to Mark.

Speaker Change: Sure I conclude the call I want to thank the entire lazy boy incorporated team for their hard work and continued progress towards our goals throughout the year, even in the challenging environment I look forward to the year ahead and getting back to growth.

And we thank you all for your time this morning, and I will turn the call back to Mark.

Mark Becks: Thank you, Melinda. We will begin the question and answer period now. Jenny, please review the instructions for getting into the queue to ask questions. No problem.

Mark Becks: Thank you Melinda we will begin the question and answer period now.

Speaker Change: Jenny Please review the instructions for getting into the queue to ask questions.

Operator: No problem. We will now be conducting our question and answer session. So, if you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press star 2.

Jenny: No problem, we will now be conducting a question and answer session. So if you would like to ask a question. Please press star one on your phone keypad now.

Speaker Change: Information time will indicate that your line is and the key you May press Star two if you would like to remove your question from the queue for anyone using speaker equipment, it might be necessary to pick up your handset before pressing the keys. Please wait a moment, whilst we poll for questions.

Operator: Please wait a moment while we poll for questions. Thank you. Your first question is coming from Bobby Griffin of Raymond James. Bobby, your line is live.

Speaker Change: Thank you. Your first question is coming from Bobby Griffin of Raymond James Bobby Your line is live.

Robert Kenneth Griffin: Hey everybody, good morning. Thanks for taking the questions. Are you more ready?

Robert Kenneth Griffin: Hey, everybody good morning, thanks for taking the questions.

Morning.

Robert Gerard Lucian: So I guess first for me, I just wanted to maybe dive into the margin performance in the quarter. It came in nicely above expectations. Was that just a function of the volume side of the business being a little bit better than what you laid out when we started the quarter? Or was it some of these manufacturing efficiencies that we've talked about in the past starting to come to fruition and getting more efficient inside the facilities and kind of back to what I would say the normal La-Z-Boy wholesale performance is?

Robert Kenneth Griffin: So I guess first for me I just wanted to maybe dive into the margin performance in the quarter came in nicely above expectations was that just a function of the volume side of the business being a little bit better than what you laid out when we start the quarter or was it some of these manufacturing efficiencies that we've talked about in the past.

Speaker Change: I'm going to come to fruition and getting more efficient inside the facilities and kind of back to what I would say that.

Speaker Change: Normal lazy boy wholesale performances.

Robert Gerard Lucian: Bobby, I would say it's probably the former more than the latter. We continue to make progress on the efficiencies of our plants, but during that quarter, we're still in the process of our Mexico project where we're moving production, and we're moving our cut and sow facilities and trying to get that all ready to go. So that was happening, and that had some drag costs in Q4. The rest of the business did fairly well from a plant production perspective.

Speaker Change: Bobby.

Speaker Change: I would say, it's probably the former more than the latter we continue to make progress on the efficiencies of our plants.

Speaker Change: During the quarter, we're still in the process of our.

Speaker Change: Mexico project, where we're moving around production and we're moving our cut and sew facilities and trying to get that at all.

Speaker Change: We're ready to go so that was occurring and that had some some some drag costs. In Q4 are the rest of the business did do fairly well from a plant production perspective, it really was more a function of the higher volume that we got as you recall, we had a pretty challenging January due to weather.

Robert Gerard Lucian: It really was more a function of the higher volume that we got. As you recall, we had a pretty challenging January due to weather, and that pushed more volume into Q4, and as a result, that helped to drive the overall margins up a little bit higher than we had expected.

Speaker Change: Push more volume into that quarter into into Q4, and as a result that helped to drive the overall margins up a little bit higher than what we had expected.

Robert Gerard Lucian: Okay, and that was actually a good segue to my next question. I was going to ask about the restructuring process, just, you know, how is it progressing on time? Are we still expecting the 50 to 60 basis points, I believe, was what we talked about for wholesale margin improvement.

Speaker Change: Okay and that was actually a good segue to my next one I was going to ask about the restructuring process. Just how is it progressing on time or are we still expecting the 50 to 60 basis points. I believe was what we talked about for wholesale margin improvement.

Robert Gerard Lucian: We still expect that improvement to occur, but we are, I would say, one quarter delayed. As we're going through and making all the changes across all the plants, there are a number of plants that are involved in this. We've been going a little bit more prudently and cautiously to ensure that, number one, that we're maintaining the quality, and this is all about our cut and sew operations down in Mexico, that we're maintaining the quality of the product as we bring new people online, as well as ensuring customer service and that we don't fall behind and get behind there. So we're being a little bit more cautious. By the end of Q1, we expect that to be completed, and then we'll start seeing those 50 to 60 basis points we talked about.

Speaker Change: We still expect that improvement to occur, but we are I would say one quarter delayed as we were going through and making all the changes across all the plants as a number of plants that are involved in this.

Speaker Change: Going a little bit more prudently and cautiously to ensure that our number one that we're maintaining with the quality and this is all about our cut and sew operations down in Mexico that we're maintaining the quality of the product as we bring new people online as well as ensuring customer service.

Speaker Change: We don't fall behind and get behind there so were being a little bit more cautious by the end of Q1, we expect that to be to be completed and then we will start seeing that 50 to 60 basis points, we've talked about.

Robert Gerard Lucian: Okay, great. And then on the new store galleries, the 12 to 15, that's all organic and doesn't include if you buy in any of the independents, or does it include, I guess, the one that you've already signed?

Speaker Change: Okay, Great and then on the new store galleries, the 12% to 15 Thats all organic and doesn't include if you buy in any of the independence or does it include I guess, the one that you've already signed.

Robert Gerard Lucian: That's correct; that's a new store opening separate from any acquisitions that we would do.

Speaker Change: That's correct, that's new store openings separate from acquisitions that we would do so.

Robert Gerard Lucian: So maybe, I guess the question then is, that's a nice step up versus, I believe it was six that we opened an F-

Speaker Change: So maybe I guess the question then is that's a nice step up versus I believe it was six that we opened in FY 'twenty fours and Melinda Bob can you, maybe unpack kind of what youre seeing from the real estate side is it just the timing that you know kind of have the pipeline built out that allows you to accelerate it or you do something different from a capital standpoint, you know, putting a little bit more of your own capital.

Speaker Change: Up first to kind of accelerate and then and then sell them back or something.

Melinda D. Whittington: from a lease standpoint. Yes, so certainly our goal has been to go after that pace and get ourselves up kind of a north of ten a year. This year we opened six new stores and as you said it does take a little bit of time to get that machine going and we and we've done some things to help you know move that along. Bob alluded to the fact that where we need to it's not going to be our business for the long term but you know where we need to we're leveraging some of that balance sheet to put the capital up so that we can keep these stores moving rather than then be delayed again and that's that's you know the the just laying the groundwork because we don't want to open up sites for the sake of, you know, for the sake of opening them and not have good sites, but having that groundwork laid on where we want to be and then the decision to help that process with using our own capital on a limited basis, those two things are sort of the inflection between, you know, six closed this year and, or six opened this year versus, you know, north of a dozen next year.

Speaker Change: From a lease standpoint.

Speaker Change: Yes, so certainly our goal has been to go after that pace and get ourselves up kind of a north of 10 a year. This year, we opened six new stores and as you said it does take a little bit of time to get that machine going and we and we've done some things to help move that along Bob alluded to the fact that where we need to.

Speaker Change: Secondly, our business for the long term, but where we need to we're leveraging some of that balance sheet to put the capital up so that we can keep these stores moving rather than men be delayed again and that's that's the the.

Speaker Change: Just laying the groundwork because we don't want to open up sites for the sake.

Speaker Change: For the sake of opening them and not have good sites, but having that groundwork laid on where we want to be and then the decision to to help that process using our own capital on a limited basis. Those two things are sort of the inflection between six closed this year and six opened this share versus north of a dozen.

Speaker Change: Next year.

Robert Kenneth Griffin: Very good. I appreciate the details. I'll jump back in the queue, turn it over to somebody else, but congratulations on the strong quarter.

Speaker Change: Very good I appreciate the details I'll jump back in the queue turn it over to somebody else, but congrats on the strong quarter.

Pat: Thanks Pat.

Bradley Bingham Thomas: Thank you very much. Just a reminder, if anyone has any questions from the audience, you can press star 1 on your phone keypad. Our next question is coming from Brad Chomas of KeyBank Capital Market. Brad, your line is live.

Speaker Change: Thank you very much just a reminder, that if anyone has any questions from the audience you can press star one on your phone keypad now.

Brad: Our next question is coming from Brad <unk> of Keybanc capital markets. Brad Your line is live.

Melinda D. Whittington: Thanks. Good morning, Melinda, Bob, and Mark. [inaudible] First of all, congratulations on the good year and strong execution. The backdrop is still tough, though. I guess, just as we look at the first few quarters of the year, you are up against these positive comps in 1Q and 2Q, you know, where written signature sales are positive in fiscal 1Q and fiscal 2Q. And so I guess the question is, you know, you commented on being happy or pleased with what you were seeing out of Memorial Day weekend, but just as we're thinking about the shape of the year and the beginning of the year, how should we take into consideration the fact that comparisons get a little bit easier?

Brad: Thanks, Good morning, blended Bob and Mark.

Brad: Sure.

Speaker Change: Thank you.

Brad: First of all.

Speaker Change: Congrats on the good year and strong execution in a still tough.

Brad: Backdrops.

Speaker Change: I guess.

Speaker Change: As we look at the first few quarters of the year you are up against these positive comps in <unk> and <unk> were written same store sales were positive in fiscal <unk> <unk> in fiscal <unk> and so I guess the question is your commentary on being happy or were pleased with what you were seeing out of Memorial day weekend.

Speaker Change: But just as we're thinking about the shape of the year and the beginning of the year.

How should we take into consideration. The fact, the comparisons get a little bit easier does that really even matter because the two and three year comparisons or send noisy.

Melinda D. Whittington: Do you really think that matters because the two and three-year comparisons are so noisy? But I guess from your comments, it would seem like hopefully, signature sales get better from the negative three that you just did in the fourth quarter. But again, I just want to make sure we're not missing anything as we think about, you know, timing and comparison.

Speaker Change: But I guess from your comments it would seem like hopefully same store sales get better from the negative 3% you just did in the fourth quarter.

But again I just want to make sure we're not missing anything as we think about timing and comparisons.

Melinda D. Whittington: Sure. I appreciate the question. Speaking first to Memorial Day and sort of how our May started, we commented, as you said, in the prepared remarks about a solid start. I think, as we were on the call this morning, the government's numbers came out on the industry for May, and they're pretty negative numbers. And I can say with comfort that we are continuing to outperform the market. I am very pleased with that.

Speaker Change: Sure.

Speaker Change: Appreciate the question.

Speaker Change: Speaking first to.

Speaker Change: To memorial day, and sort of how our May started we commented as you said in the prepared remarks about a solid start.

Speaker Change: Think as we've been in the call. This morning, the government's number it came out in the industry for May.

Speaker Change: They are pretty negative numbers and I would say I can I can say with comfort that we are continuing to outperform the market. So so very pleased with that I think the consumer overall.

Melinda D. Whittington: I think the consumer overall is still bumpy, and we're seeing behaviors like the holidays tend to be stronger, and the periods in between tend to be a little bit weaker. So we remain cautious, keeping our eyes on what we can control in this space. But broadly, we feel good about our ability to continue to outperform, and that's reflected in our guidance put out for Q1. But I'd also note that summer tends to be a super-slow period for furniture, and we expect, between the actions we're taking and then, hopefully, by the end of our fiscal year, a little bit of help from maybe seeing some interest rate help and seeing some of that start to trickle through the We feel good about being able to grow this year.

Speaker Change: Is still bumpy and we're seeing behaviors like the holidays tend to be stronger and the periods in between tend to be a little bit weaker. So we remain cautious keeping our eyes on what we can control in this space, but broadly we feel good about our ability to continue to outperform and thats reflected in.

Speaker Change: In.

Speaker Change: In.

Speaker Change: Our guidance put out for Q1, but I would also note that summer tends to be a super Super slow period for furniture, and we expect between the actions we're taking.

Speaker Change: And then hopefully by the end of our fiscal a little bit of help out it may be seeing some interest rate health and seeing some of that start to trickle through the economy. We feel we feel good about being able to grow this year.

Melinda D. Whittington: That's very helpful, Melinda. And maybe just to follow up on that, it seems to us that you have many, many encouraging initiatives underway to help drive the business. But just as you think about them across, you know, marketing, the merchandising, some of the store execution, are there a couple of things that you think will be most impactful as you look out over the year ahead?

That's very helpful Melinda.

Speaker Change: Maybe just to follow up on that it seems to us that you have.

Speaker Change: Many many encouraging initiatives underway to help drive the business, but just as you think about it across the marketing merchandising some of the store execution or there are a couple of things that you think will be most impactful as you look out over the year ahead.

Melinda D. Whittington: Yeah, you know, as you call out, our century vision, which we're entering the fourth year on now, is really around a lot of tightening up on a sound foundation, some of the things that have gotten us through our first hundred years but getting better at them, right? So building, we've always had this great supply chain, but making it even more agile and leveraging the learnings that we've had over the last couple of years of, you know, a lot of curveballs thrown at us, as one example.

Speaker Change: Yes.

Speaker Change: As you call out our century vision that we're entering the fourth year on now is really around a lot of tightening up on sound Foundation. Some of the things that have gotten us through our first 100 years, but getting better at that rate. So building. We've always had this great supply chain, making it even more.

Speaker Change: <unk> and leveraging the learnings that we've had over the last couple of years of.

Speaker Change: A lot of curve balls thrown at us as one example.

Melinda D. Whittington: You know, reinvigorating our brand and really investing in consumer knowledge to educate us on how to really drive the brand, both in the products and the messaging, and then bringing that to life and investing. We know there are consumers out there still investing in their home, even in a challenging economy, and we believe we're disproportionately capturing them. But if I were to step back and say, what is the biggest pivot for us as a total enterprise?

Speaker Change: Reinvigorating, our brand and really investing in both the consumer knowledge.

Speaker Change: Two to educate us on how the how to really drive the brand both in the products and the messaging and then bringing that to life in investing we know there are consumers out there still investing in their home even in a challenging economy and we believe we are disproportionately capturing them, but if I were to step back and say what is the biggest pivot for.

Melinda D. Whittington: It's really this focus on driving our own company-owned retail, and the reason for that is twofold. We can control that brand experience for the consumer end-to-end. We can avail ourselves of the data from that consumer by interacting with them directly, and from a financial standpoint, we can take advantage of that integrated margin of owning the entire chain from, you know, pieces of fabric and steel all the way to putting that product in the consumer's home.

Speaker Change: For us as a total enterprise, it's really this focus on driving our own company owned retail and the reason for that is twofold. We can control that brand experience for the consumer end to end.

Speaker Change: Can avail ourselves of the data from that consumer by interacting with them directly and from a financial standpoint, we can take advantage of that integrated margin of owning the entire chain from from pieces of fabric and steal all the way to putting that product in a consumer's home and so we believe that's good for the consumer.

Melinda D. Whittington: And so we believe that's good for the consumer, and that's good for our financials as well. So really, I would call continuing to expand our reach of our own retail probably the number one biggest driver.

Speaker Change: And thats good for our financials as well, so really I would call continuing to expand our reach of our own retail is probably the number one figure.

Speaker Change: Biggest driver.

Bradley Bingham Thomas: That's very helpful. Thank you, Melinda.

Speaker Change: That's very helpful. Thanks, Thank you Melinda.

Speaker Change: And if I could squeeze in one more here for Bob just on how to think about margins for the year would appreciate any color maybe kind of asking it from two different ways for one.

Bradley Bingham Thomas: And if I could squeeze in one more here for Bob, just on how to think about margins for the year, would appreciate any color, maybe kind of asking it from two different ways. You know, for one, maybe in a world where all else is sort of equal from a sales perspective, can you help us think about what's going on in terms of cost initiatives and raw materials and how that might impact margins? Or maybe said another way, if sales remain pressured through the year because the industry is still challenged, maybe what levers can you pull? How much flexibility do you have to support margins and support earnings in a challenging environment?

Speaker Change: Maybe in a world where.

Speaker Change: All else is sort of equal from a sales perspective can you help us think about what's going on in terms of cost initiatives in raw materials and what that might.

Speaker Change: Impact how that might impact the margins or maybe said another way.

If sales remain pressured through the year because the industry is still challenged.

Speaker Change: Maybe what levers can you pull how much how much flexibility do you have.

Speaker Change: Two.

Speaker Change: <unk> margins and support earnings in a challenging backdrop.

Speaker Change: Thanks.

Speaker Change: And any kind of a challenging backdrop drop we have opportunities for how we are operating our plants relative to the number of shifts in the number of hours the plants are working.

Speaker Change: If things were to really get chat more challenged we are operating opportunities with how we operate our stores with the hours that they are open as well as.

Speaker Change: The number of personnel we have in those stores. So there are things that we can do from a margin protection perspective, if things get more challenging than they have been but we're really focusing on the other side of it which is really focusing on the in store execution and growing those same store sales as we do that we ended up getting some of the margin accretion we expect to see in retail.

Speaker Change: And then we are we will continue to work on the project and I, just I mentioned, where Bobby was answering asking his question, we expect to get that 50% to 60 basis points on an annualized basis, we won't get it in the first quarter, but the big project that we have as we've readjusted, where our upholstery is being made as well as where our.

Speaker Change: So it is being done in Mexico that project goes when it starts up in its finalized going into Q2, we'll deliver some some meaningful.

Speaker Change: Uh huh.

Speaker Change: Margin improvement for the overall company that we have that we've talked about last year is just coming a little bit later than we had expected.

Speaker Change: Very helpful. Thank you so much.

Speaker: Thank you so much. Thanks, Rex.

Speaker Change: Thanks Brooks Thanks, Greg.

Speaker: Thanks, Brad. Thank you very much.

Robert Gerard Lucian: Thanks.

Speaker Change: Thank you very much. Your next question is coming from Bobby Griffin of Raymond James Your line is open.

Speaker: Your next question is coming from Bobby Griffin of Raymond James. Bobby Online is nice.

Robert Gerard Lucian: Thanks. Well, in any kind of a challenging backdrop, we have opportunities for how we operate our plants relative to the number of shifts and the number of hours the plants are working. If things were to really get more challenging, we have opportunities with how we operate our stores with the hours that they're open as well as the number of personnel we have in those stores. So there are things that we can do from a margin protection perspective if things get more challenging than they have been.

Robert Griffin: Thank you, everybody. Just a couple of quick follow-ups for me. I guess Bob, I want to talk about cash flow and some of the moving parts there. It was just clear 24 fairly normal year from a working capital standpoint. So we look at the 158 million of cash flow from ops that's fairly normal at this level of demand. I would say yes. We made some improvements in inventory. We had some very high external wholesale sales in the fourth course. And I caused receivables to go up in general. I would say I would answer yes. Okay, and then I guess the build off of that is, you know, that's the case.

Robert Kenneth Griffin: Thank you everybody just a couple of quick follow ups for me.

Robert Gerard Lucian: But we're really focusing on the other side of it, which is really focusing on the in-store execution and growing those same-store sales. As we do that, we end up getting some of the margin accretion we expect to see in retail. And then we will continue to work on the project that I just mentioned when Bobby was asking his question. We expect to get that 50 to 60 basis points on an annualized basis.

Robert Gerard Lucian: We won't get it in the first quarter. But that big project that we have as we've readjusted where our upholstery is being made as well as where our cut and sew is being done in Mexico, that project is – when it, again, starts up and is finalized going into Q2, we'll deliver some meaningful Margin Improvement for the overall company that we talked about last year, just coming a little bit later than we had expected.

Robert Kenneth Griffin: Bob I wanted to talk about cash flow and in some of the moving parts. There was with fiscal year 'twenty for a fairly normal year from a working capital standpoint. So when we look at the $158 million of cash flow from ops, that's fairly normal at this level of demand.

Bradley Bingham Thomas: Very helpful. Thank you so much.

Robert Kenneth Griffin: Thank you very much. Your next question is coming from Bobby Griffin of Raymond James. Bobby, your line is live.

Robert Kenneth Griffin: Thank you, everybody. Just a couple quick follow-ups for me. I guess, Bob, I wanted to talk about cash flow and some of the moving parts there. Was fiscal year 24 a fairly normal year from a working capital standpoint? So when we look at the $158 million of cash flow from OPS, that's fairly normal at this level of demand.

Robert Gerard Lucian: I would say yes. We made some improvements in inventory. We had some very high external wholesale sales in the fourth quarter, so that caused receivables to go up. But in general, I would say yes.

Speaker Change: I would I would say, yes, we made some improvements in inventory we had some very high external wholesale sales in the fourth quarter. So that caused receivables to go up but in general I would say I would answer yes.

Robert Kenneth Griffin: Okay, and then I guess the build off of that is, you know, if that's the case and we kind of plug in the midpoint of CapEx and modestly higher dividends and maybe inline shares, we're probably trending pretty close to about $160 million in cash flow, I mean, in total cash spent next fiscal year or this fiscal year 25, which leaves the cash balance relatively flat year over year. Rough numbers. So, just curious kind of thoughts around that and, you know, what you need to see, you and

Speaker Change: Okay, and then I guess the build off of that is if that's the case and we kind of plug in the midpoint of Capex and modestly higher dividends and maybe inline shares we're probably trending pretty close to about $160 million in cash flow and total cash spent next fiscal year. This fiscal year 25, which leaves the cash balance relatively flat year.

Robert Griffin: And we kind of plug in the midpoint of cap X and modestly higher dividends and maybe in line shares. We're probably turning pretty close to about 160 million in cash flow. I mean, in total cash spent. Next fiscal year, this fiscal year 25, which leaves the cash balance relatively flat year of year. Rough numbers. So just curious kind of thoughts around that. And you know what you need to see.

Speaker Change: Over year rough numbers, so just curious kind of thoughts around that and what you need to see you and Melinda and the border or everybody their need to see from the economy or the industry to maybe start working down the cash balance a little bit.

Robert Griffin: You and Melinda and the border or everybody there need to see from, you know, the economy or the industry to maybe start working down the cash balance a little bit. The, as you were, as I was, I'm not sure how you were doing your math. There, but the, if you think about the, what we're, we're looking at, and again, the acquisitions that we do particularly independent furniture galleries. Yeah, I didn't do any of those. Yeah, so I didn't. I'm sorry. Yeah, so with, with those and again, as we think about the, the capital we're doing, the acquisitions will continue to pursue when we're able to, along with a good healthy share buyback and a continued dividend, will be in excess of the operating cash flow that we would expect to have this year.

Robert Gerard Lucian: The, um, as you were, as I was, I'm not sure how you were doing your math there, but if you think about what we're looking at, and again, the acquisitions that we do, particularly with the independent furniture galleries, those we can't predict. Yeah, I didn't include any of those. Yeah. So I didn't, yeah, I'm sorry.

Speaker Change: The.

Speaker Change: As you are as I was I'm not sure how you were doing your math.

Speaker Change: There, but the if.

Speaker Change: If you think about the what we're looking at again the acquisitions that we do particularly the independent furniture galleries, those we'd be adding renewed any of those yeah. So I didn't I'm sorry, yes.

Speaker Change: So with those and again as we think about the.

Robert Gerard Lucian: Yeah. Yeah. Yeah. So with those, and again, as we think about the capital we're doing, the acquisitions we'll continue to pursue when we're able to, along with a good, healthy share buyback and a continued dividend, we'll be in excess of the operating cash flow that we would expect to have this year.

Speaker Change: The capital we are doing the acquisitions will continue to pursue when we're able to along with a good healthy share buyback and our continued dividend will be will be in excess of.

Speaker Change: The operating cash flow that we would expect to have this year.

Robert Kenneth Griffin: Okay, so that, yeah, that was my next question. Okay, so you do still feel there's a good pipeline for acquisitions, so because in the map I just ran through, I didn't include the acquisitions of independents, so that was the next question. Okay, right. We continue to look for those. We can't predict those. They aren't call options, but we continue to work with dealers who are interested in selling their business That's very helpful.

Robert Griffin: Okay, so that, yeah, that was my next is okay. So you do still feel there's a good pipeline and for acquisitions. So because in the map, I just ran through, I didn't include the acquisitions of the independence; that was the next question. Yeah, okay. We can, we can change it. Look for those. We can't predict those. Those aren't call options. But we can continue to work with dealers who are interested in selling their business. Okay, very good. That's, that's very helpful. That's, that's good to hear as well.

Speaker Change: So yes that was my next is okay. So you do still feel there's a good pipeline for acquisitions. So it does in the map I just ran through I didn't include the acquisitions of the independent so that was the next question, yes. Okay. Alright, we continue to look for those we can't predict those those are call options, whereby we continue to work with dealers who are interested in selling their business.

Robert Kenneth Griffin: That's good to hear as well. And I guess, lastly for me, if we could dig in a little more into kind of just the progression of the quarter, it seems like things were strong to start, maybe tailed off a little bit after what would be, I guess, the present-day holiday. And then you caught a nice, you caught a pickup back in May. Is it right to think that May picked up to kind of how things start in the quarter, or could you put any more color around, you know, the May and the quarter-to-date written performance to help us think about how the business is trending here around Memorial Day and into mid-June?

Speaker Change: Okay very good that's very helpful. That's good to hear as well and I guess, maybe lastly for me is if we can dig in a little more into kind of just the progression of the quarter. It seems like things were strong to start maybe tailed off a little bit after what would be I guess the presence the holiday and then you called out a nice color.

Speaker: And I guess that maybe lastly for me is, if we could dig in a little more and to kind of just the progression of the quarter, it seems like things were strong to start, maybe tailed off a little bit after what would be, I guess, the presence they holiday. And then you call it out a nice; you call it a pick up back in May. Is, is it right to think that May picked up to kind of how things start at the quarter or could you put any more color around, you know, the May and the quarter to date written performance to help us think about how the business is trending here around Memorial Day and into mid June.

Speaker Change: Pick a pickup back in May is is it right to think that may picked up to kind of how things started the quarter or can you put any more color around.

Speaker Change: The may in the quarter to date rate and performance to help us think about how the business is trending year around memorial day and into mid June.

Speaker: Yeah, I think, you know, go back to sort of the importance of some of these key holidays. And so Memorial Day is a very important, you know, period for our, for our industry. And so, you know, as we noted, you know, really pleased with, with kind of the solid start into the year with Memorial Day. The balance of the quarter, you know, consumers have better things to do than shop for furniture, you know, through June and July. And even from a, from a financial standpoint, you know, we close down our plants for routine maintenance, everything over July 4th; give our folks a rest.

Melinda D. Whittington: Yeah, I think, you know, I'd go back to sort of the importance of some of these key holidays. And so Memorial Day is a very important period for our industry. And so, you know, as we noted, we were really pleased with kind of the solid start to the year with Memorial Day. But for the balance of the quarter, consumers have better things to do than shop for furniture, you know, through June and July. And even from a financial standpoint, you know, we close down our plants for routine maintenance, everything over July 4th, to give our folks a rest. So, you know, again, I guess I would go into that.

Speaker Change: Yeah I think.

Speaker Change: And I'd go back to sort of the importance of some of these key holidays and so memorial day is a very important.

Speaker Change: Period for our for our industry.

Speaker Change: And so as we noted.

Speaker Change: Really pleased with with kind of a solid start into the year with with memorial day, the balance of the quarter.

Speaker Change: And consumers have better things to do than shop for furniture.

Speaker Change: Through through June and July and even from a from a financial standpoint, we closed down our plans for routine maintenance everything over July 4th give our folks our arrest.

Speaker: So, you know, again, I guess I would go into. We've felt very good about May. We've seen the industry data come out in May. It doesn't look like the industry feels particularly good about May. And that just points to a challenge, consumer. And I'm not in the position to make a prediction of when the consumer broadly is feeling a little less pressure. What I did do know is we are seeing the results of where we're playing offense, where we're investing in messaging, where we're investing and having the right products and the right experience for our consumer, because there are folks out there that are still buying furniture.

Speaker Change: So.

Speaker Change: Again, I guess I would go into.

Melinda D. Whittington: We felt very good about May. We've seen the industry data come out about May. Doesn't look like the industry feels particularly good about May, and that just points to a challenged consumer. I'm not in a position to make a prediction of when the consumer broadly is feeling a little less pressure.

We felt very good about may we've seen the industry data would come out in may it doesn't look like the industry feels particularly good about may.

Speaker Change: And that just points to a challenged consumer and I.

Speaker Change: I'm not in a position to make a prediction of when that consumer broadly is spilling a little less pressure. What I did do know is we are seeing the results of where we're playing offense, where we're investing in messaging, where we're investing in having the right products and the right experience for our consumer because there are folks out there.

Melinda D. Whittington: What I do know is we are seeing the results of where we're playing offense, where we're investing in messaging, where we're investing in having the right products and the right experience for our consumers because there are folks out there that are still buying furniture. And we are fortunate in that, given the quality of our products and what our brand stands for, we attract a consumer that tends to be a little more in the upper middle income range, and so they still have a little more discretionary spending if you can convince them that it's worth it.

Speaker Change: That are still buying furniture, and we are fortunate in that given the quality of our products and what our brand stands for that we attract.

Speaker: And we are fortunate in that, given the quality of our products and what our brand stands for, that we attract a consumer that tends to be a little more in the upper middle income range, and so they still have a little more discretionary spending. If you can convince them that it's worth it. And I think we're doing a good job of that with everything around our brand and our execution. So again, May's off to a solid start. We're going to operate this year, prudently. We believe we will get to growth in the year. And that helps us with our bottom line, but we expect the year's going to be still going to be challenged from just the environment that we're operating in for the majority of the year.

Speaker Change: Our consumer that tends to be a little more.

Speaker Change: The upper middle income range and so they still have a little more discretionary spending if you can convince them.

Speaker Change: That it's worth it and I think we're doing a good job of that with everything around our brand and our execution.

Melinda D. Whittington: And I think we're doing a good job of that with everything around our brand and our execution. So again, maze off to a solid start. We're going to operate this year prudently. We believe we will get to growth in the year and that helps us with our bottom line but we expect the year is going to be still going to be challenged from just the environment that we're operating in for the majority of the year. Very good.

Speaker Change: So again <unk> is off to a solid start we're going to we're going to operate this year prudently.

Speaker Change: We believe we will get to growth in the year and that helps us with our bottom line, but we expect the year is going to be still going to be challenge from just the environment that we're operating in for the majority of the year.

Speaker: You're good.

Robert Kenneth Griffin: Very good. I appreciate the second chance at questions and congratulations again on putting up a good year in a tough operating environment. Best of luck here in the first quarter.

Speaker: I appreciate the second chance of questions, and I can grab again on putting up a good year in a tough operating environment. Best of luck here in the first quarter. Thank you. Thanks, Bobby.

Speaker Change: Very good I appreciate the second to answer the questions and congrats again on putting up a good year in a tough operating environment best of luck here in the first quarter.

Speaker Change: Thanks, Bobby.

Speaker: Thank you very much.

Mark Becks: Thank you very much. Well, we appear to have reached the end of our question and answer session, and I will now turn the call back over to Mark for closing comments.

Speaker Change: Thank you very much well we appear to have reached the end of our question and answer session and I will now turn the call back over to Mark for closing comments.

Speaker: Well, we appear to have reached the end of our question-and-answer session. And I will now turn the call back over to Mark for closing comments. Thanks, Jenny.

Mark Becks: Thanks, Jenny. Melinda, Bob, and I will be in our offices today to take any follow-up questions. Have a great day.

Jenny: Thanks Jenny.

Speaker: Monday, Bob and I will be in our offices today to take any follow-up questions. Have a great day. Thank you very much, everyone.

Speaker Change: Bob and I will be in our offices today to take any follow up questions have a great day.

Operator: Thank you very much, everyone. This does conclude today's conference. You may now disconnect your phone lines and have a wonderful day. Thank you for your participation.

Speaker Change: Thank you very much everyone. This does conclude today's conference you may now disconnect your phone lines and have a wonderful day. Thank you for your participation.

Speaker: This does conclude today's conference. You may now disconnect your phone lines and have a wonderful day. Thank you for your button.