Q3 2024 Bassett Furniture Industries Inc Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to Bassett Furniture Industries Q3 2024 earnings conference call. At this time, Opartis events are an illicit only mode. After the speaker's presentation, there will be a question and suggestion.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand the conference over to your speaker today. Mike Daniel, CFO, please go ahead.
Mike Daniel: Thank you, Gigi for the introduction. Welcome to Bass at Parnacher's earnings call for the third quarter ending August 31, 2024.
Mike Daniel: Joining me today is our chairman and CEO Rob Spilman. We issued our news release yesterday after the market closed and it's available on our website.
Mike Daniel: After today's remarks about our quarter, we will open the call up for a Q&A session.
Mike Daniel: We will post the transcript of the call on our investor site within 48 hours of this call. In addition, we filed the 10 to this morning and that's available on our website under SEC filings on the investor relations tab.
Mike Daniel: During today's call, certain statements we may be considered forward-looking and inherently involve risk and uncertainties that cause actual results to differ materially from management's present view.
Mike Daniel: The statements are made pursuant to the safe horrible provision of the private security litigation reform act of 1995.
Mike Daniel: The company cannot guarantee the accuracy of any forecast or estimate, nor to undertake any obligation to update such forward-looking statements.
Mike Daniel: For more information including important cost-in-airing notes.
Mike Daniel: Please see the company's annual report on Form 10K for the fiscal year ended November 25, 2023.
Mike Daniel: Other filings with the SEC describing risk related to our business or available on our corporate website.
Speaker Change: Now I'll turn the call over to Rob for comments about our third quarter, Rob.
Rob Spilman: Thank you, Mike, good morning everyone and thank you for joining us for today's call.
Rob Spilman: The integration of our industry with the weak US housing market continued to pressure sales during our third quarter.
Rob Spilman: All the mortgage rates have started to ease since the VAD 50 Bases Point right cut three weeks ago.
Rob Spilman: Overall housing affordability and inventory availability remained impediments in the short term.
Rob Spilman: Our industry is ready for a transformational shift in the next several quarters and best at plants to benefit as it happens.
Rob Spilman: I also want to mention two events that have occurred subsequent to the third quarter that will potentially have a bearing on our fourth quarter.
Rob Spilman: Hurricane Helene and the East Coast, Doc Stripe.
Rob Spilman: Many customers and employees were deeply affected by the devastating effects of hurricane healing.
Rob Spilman: Our thoughts are with them.
Rob Spilman: Hurricane Elaine impacted our distribution center in Katoba County, North Carolina and it was shut down due to damage and power outages for two days during the first week of October.
Rob Spilman: We've recovered as quickly as possible to get shipments back on track.
Rob Spilman: The larger long-term impact on our logistics and distribution systems are related to the damage to the eye-forty infrastructure, which is our main route to the west.
Rob Spilman: and while the East Coast Docs Reich was just three days, the impact on our business has pushed shipments back one to two weeks.
Speaker Change: Excuse me. Now let's move on to the discussion about third quarter results.
Speaker Change: Like last quarter, revenue in both our wholesale and retail segments was down.
Speaker Change: with greater pressure on our retail business due to the higher level of associated fixed costs.
Speaker Change: heading into the corner our memorial day event and our subsequent Fourth of July event both produce increases compared to last year.
Speaker Change: But the ambituin weeks were especially difficult as consumers stayed on the sidelines.
Speaker Change: The third quarter is always our weakest reporting theory. This year's combination of the annual July 4th weekly operational shutdown followed by the cyber attack that we suffered.
Speaker Change: Men said our manufacturer facilities were shut down for over 16%.
Speaker Change: of the Corner's Work Days.
Speaker Change: Thank you for watching!
Speaker Change: The solidated gross margin was 53% up 1.4%.
Speaker Change: from last year.
Speaker Change: This slightly lower on a sequential basis.
Speaker Change: wholesale brush margins improve by 50 basis points.
Speaker Change: Despite lower volume, largely driven by improvement in club-level margins.
Speaker Change: In the Tories, we're down more than ten million dollars a year every year, and slightly down sequentially.
Speaker Change: We're reinforcing our belief that we can run with Laneor Ambitory.
Speaker Change: Thank you for watching!
Speaker Change: retail gross margins improved by 210 basis points to 53.7%.
Speaker Change: A Tributable Tahir, Adam Delivery, and come in better margin on clearance and
Speaker Change: Our average ticket was thirty nine hundred dollars up five percent.
Speaker Change: While total retail rent sales were down 5%.
Speaker Change: 41% of retail sales were designed makeovers also down slightly from last year.
Speaker Change: We remain focused on top-line enhancements and both retail and open market efforts.
Speaker Change: A initial self-ruh of our fall, a post-free introduction, was very strong heading in the Labor Day.
Speaker Change: The reception of a leather option to our crew custom program for day-stroke sales in the quarter and should be an important feature going forward.
Speaker Change: Since the end of the third quarter, we have added nine new Bassett Custom Studio dealers to the Prover.
Speaker Change: We have made the custom studio a centerpiece.
Speaker Change: of our share room at the upcoming fall.
Speaker Change: High Point furniture market. We also plan to support that reach.
Speaker Change: would trade every time I think.
Speaker Change: Something we have not done in several years.
Speaker Change: Last quarter we initiated a five-point restructuring plan to set, excuse me, to set massive up for improved, long-term, operational, and financial performance.
Speaker Change: We make good progress during the quarter on executing this plan.
Speaker Change: and we believe that we are better positioned as a result.
Speaker Change: Point one of our strategic plan was to drive organic growth through massive branded retail locations, omnichannel capabilities, and enhanced customization positioning to expand our dedicated distribution footprints.
Speaker Change: We are remaking a significant portion of the product line and the upcoming quarters to address new styling and price point opportunities.
Speaker Change: In case good, we will launch three major collections beginning this fall and culminating.
Speaker Change: in the spring of 2020.
Speaker Change: The three imported collections are comprehensive bedroom dining and occasional and entertaining product offerings.
Speaker Change: Oh, the domestic front, we are expanding our successful origins dining program this fall.
Speaker Change: Our solid wood mixed mate program will also undergo a makeover over the next two seasons.
Speaker Change: and a postory strong sales in our domestic motion assortment weren't expansion of the category, especially in our recliner line.
Speaker Change: We have a targeted outreach to the Interior Design community underway as well.
Speaker Change: Recognizing the growing importance of this channel throughout the industry.
Speaker Change: For the second consecutive year, we will operate a designer showroom.
Speaker Change: at Inner Hall and High Point at the fall market in two weeks.
Speaker Change: Wait.
Speaker Change: contacted more than 400 designers and designed firms at the spring market and are encouraged by their recognition of our strength.
Speaker Change: for the desired trade.
Speaker Change: We have continue to invest in our multi-year cross-functional digital transformation this year even in these challenging types.
Speaker Change: E-commerce stales are still a small portion of retail revenue.
Speaker Change: We are optimistic about the potential of our Omni-Channel capabilities. And we're excited to see double-digit e-commerce growth this quarter.
Speaker Change: With these investments, we expect stronger, massive brand and design presentations to complement our Enho Makeover Proficiency.
Speaker Change: I'm a little bit scared.
Speaker Change: Point two of our plan was to rationalize U.S. wood manufacturing from two sites into one primary location supported by a small satellite operation.
Speaker Change: As expected with any rationalization, there was some disruption in August during the transition which impacted margins.
Speaker Change: This consolidation is now complete and we are seeing improved overhead absorption with operating one location.
Speaker Change: .3 was to optimize inventory and drop unproductive lines.
Speaker Change: We are continuing on this path as part of the domestic wood plant consolidation strategy.
Speaker Change: As expected, this reduction of clearance and slow-moving products, back to March in the third quarter.
Speaker Change: is designed to strengthen overall productivity of our line and of our stores.
Speaker Change: 0.4, let's get improved over our cost structure of both wholesale and retail businesses.
Speaker Change: and retail we are consolidating warehouse operations.
Speaker Change: after the closure of three warehouses during the second quarter.
Speaker Change: In today's reporting order, we move facilities in East Texas and Oklahoma into our North Texas Home Delivery Center and also consolidated two Virginia facilities into one.
Speaker Change: This process will continue until we realize the completion of our new footprint.
Speaker Change: in wholesale and addition to the aforementioned wood plant consolidation.
Speaker Change: We have completed our plan to move out of a major west coast wholesale distribution center.
Speaker Change: which resulted in a $1.2 million charge this quarter.
Speaker Change: We continue to thoroughly review the SGNA structure of both retail and wholesale to further identify opportunities to pair operating expenses.
Speaker Change: On the capital side, we are beginning a program to refurbish certain stories within the retail fleet. With the recently completed Greensboro North Carolina, the store being the first.
Speaker Change: Our last point in the Restructuring Plan was to close no home.
Speaker Change: The mid-price e-commerce furniture retailer had ported in Canada with operations in Canada Singapore, the US and the United Kingdom.
Speaker Change: This work is still in progress as we plan. No operations and remaining inventory will line down by the end of this current fiscal year.
Speaker Change: Our capital spending plans for the fiscal year are primary complete, primarily complete.
Speaker Change: We will continue to purchase shares opportunistically and drive returns to share holders through dividends, including the regular board of week-to-week demand that our board of directors are pretty this week.
Speaker Change: We continue to have a strong balance sheet.
Speaker Change: but is imperative for us to improve profitability.
Speaker Change: That means we continue to evaluate the efficient use of our resources that we can align fastest operating expense structure with projected revenue.
Speaker Change: Getting these spaces in place, along with the launching of new product and services I mentioned earlier, are expected to better position ourselves for the eventual turnaround and consumer demand.
Speaker Change: Now, I'll turn it over to my for more details on our financials. Bye. Thanks, Rob.
Mike Daniel: In my commentary, the Comparison site will discuss will be the third quarter of fiscal 2024 compared to the third quarter of fiscal 2023 unless otherwise noted.
Speaker Change: But before I get into the results, I want to provide more context on our cyber instant that occurred in July.
Speaker Change: As we reported in our SEC filings, our IT team detected unauthorized occurrences on a portion of our systems.
Speaker Change: The team immediately took steps to contain the issue by shutting down those systems.
Speaker Change: We activated our insulate response plan and quickly began working with external cyber security consultants to assess and monitor the activity by an unknown threat actor.
Speaker Change: The system shut down interrupted Bassets' manufacturing plants for one week, which resulted in delays on some wholesale and retail orders.
Speaker Change: by July 17th, and we essentially had all systems up and running. We were able to recover all data from backups and began full operating, fully operating as normal within two weeks.
Speaker Change: We do not believe that any consumer personal information was compromised.
Speaker Change: This issue resulted in an estimated loss of between $1 to $2 million for the third quarter and we're in the process of filing a claim with our insurance provider and expecting to receive the proceeds in the fourth quarter.
Speaker Change: So for the third quarter, Consolidator revenues declined to $11.6 million or 13%.
Speaker Change: primarily due to a 16% decrease in wholesale sales and a 10% decrease in retail sales through our company own stores.
Speaker Change: Consolidated gross margins increased to 140 basis points to 53.0%.
Speaker Change: Due to improved margins in both the retail and wholesale segments.
Speaker Change: This is partially offset by $609,000 of unproductive labor cost incurred during the temporary shutdown resulting from the cybersecurity incident.
Speaker Change: Excluding these unproductive labor costs, our consolidated gross margin would have been 53.8%.
Speaker Change: As compared to 52.7% in the prior year which included $900,000 of additional inventory valuation charges.
Speaker Change: We reported a consolidated operating loss of 6.4 million dollars compared to we lost a 3.2 million dollars from the third quarter of 2023.
Speaker Change: and non-recurring factors impacting the operating loss was the estimated loss from the cyber-insnip and the 1.2 million dollar loss on the logistical services contract at Rob mentioned earlier.
Speaker Change: based on the progress Rob discussed in the restructuring plan. We are on target to realize our projected annual cost savings of between five and a half and six and a half million dollars.
Speaker Change: Starting with this goal, 2025.
Speaker Change: Now I'll provide this information regarding our wholesale operations.
Speaker Change: Net sells the increased $8.8 million or 16% from the prior year period, due primarily to a 22% decrease in shipments to the open market.
Speaker Change: A 13% decrease in shipments to our retail store network and a 6% decrease in lane venture shipments.
Speaker Change: Gross margins for the three months ended August 31, 2024, increased 50 basis points over the prior year primarily due to the expected improvement in the club level leather business that Ron previously highlighted.
Speaker Change: This improvement was partially offset by lower margins in the basic custom a post-free business due to de-laborage of fixed cost from lower sales volumes.
Speaker Change: and $600,000 of unproductive labor costs for 1.3% of sales incurred during the temporary shutdown from the cybersecurity incident.
Speaker Change: Well, SD&A expenses decreased $500,000, SD&A expenses as a percentage of sales increased 240 basis points.
Speaker Change: Due to reduced leverage of fixed calls from little sales volumes.
Speaker Change: wholesale backlog record ran with 18.5 million dollars as compared to 19.4 million dollars at the end of the second quarter.
Speaker Change: Now moving on to retail store operations.
Speaker Change: Net sales decreased by $5 million or $9.6% from the prior year periods.
Speaker Change: Written sales, the value of sales orders taken, but not delivered.
Speaker Change: Declined 4.8% compared to the prior year period.
Speaker Change: Gross margin for the colder improved to 120 basis points over the prior year period due to higher margins in both inline and clearance goods and higher delivery income.
Speaker Change: Well, FDNA expenses decreased to $2.2 million.
Speaker Change: FGNA expenses as a percentage of sales for the quarter increased 150 basis points. Again, primarily due to decreased leverage of fixed costs from lower sales volumes.
Speaker Change: Partially offset my reduced advertising in fixed delivery calls.
Speaker Change: In our goal to increase efficiency at the store level, we have redirected our customer service functions and our centrally located call center.
Speaker Change: to each individual's store.
Speaker Change: This transition eliminated 30 positions, responsibility now for customer engagement on scheduling deliveries, taking payments and handling issues is now at the store level, which enhances local relationship building and engagement.
Speaker Change: We get the small staff at our Central Call Center to handle product claims.
Speaker Change: Retail Backlog at the end of the third quarter was $33.3 million up from $31.5 million at the end of the second quarter.
Speaker Change: Finally, let's turn to the balance sheet and capital allocation.
Speaker Change: We ended the quarter with 56.2 million dollars in cash and short-term investments.
Speaker Change: We limited our operating cash plug deficit for the quarter to $400,000.
Speaker Change: In addition to the estimated one to two million dollar loss related to the fiber incident, we historically have increased cash outflows during the third quarter as we pay our annual premiums on company owned life insurance.
Speaker Change: Funding significant portion of our annual property in casualty insurance renewal and give our manufacturing workers vacation pay for the week of July 4th when the plants are shut down.
Speaker Change: Last quarter we've mentioned our plans to spend an additional $4 to $5 million of capital investments in our business over the back half of the year with the majority of that spending limited retail store remodels.
Speaker Change: As the pace of business continued to be weak during the quarter, instead of the $10 million we had planned to spend for fiscal 2024.
Speaker Change: at the end of Q2. We now expect the annual total to range between $6 to $8,000,000 or $1.5 to $2.5,000,000 for the fourth quarter.
Speaker Change: Our financial condition remains solid and provides us with a platform to whether the current economic storm, while executing our plans for the future. As Rob previously said, we will complete the plan restructuring activities during the fourth quarter.
Speaker Change: While continuing to challenge our call structure so that we can align operating expenses to our revenue.
Speaker Change: It's imperative for us to improve profitability so the basket provides our shareholders a reasonable return.
Speaker Change: Now, we will open up the line for questions.
Speaker Change: GG, please provide instructions to do so.
Speaker Change: Thank you. As a reminder to ask a question, please press star 1-1 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 1-1 again.
Speaker Change: Please stand by when we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Anthony LeBidzinski from Sadodi.
Anthony LeBidzinski: Good morning, gentlemen. Thanks for taking the questions. So first just a quick comment for me. I mean, you know, certainly despite the difficult environment and the nice to see the...
Anthony LeBidzinski: Company maintaining a strong balance sheet. So I guess as far as my first question, so obviously Q3 was the normal shutdown during Fourth of July, you're...
Anthony LeBidzinski: You have the cyber attack issue, so you really only operational for 10 or 11 out of the 30 week. So it looks like the weekly revenue on an adjusted basis and proved actually from the second fiscal quarter, your customer deposits also are up sequentially as well.
Speaker Change: How should we think about, you know, in that context as far as the results and kind of your near-term outlook? I know you mentioned the hurricane and the port strike issue but just we're just wondering also if you could just comment as to what you've seen so far as far as the Labor Day. I know it's a multiple part question, but hopefully you can address all that. Thank you very much.
Rob: Anthony, this is Rob. Good morning. You know, that's a lot to unpack there. I would say, you know, July was really tough because we only operated a week and a half or so in the month. Our fourth to July was good, as I said in my remarks, and as I was Memorial Day, in between was very solved. We have, you know, historically, things start getting better in the back half of August leading into Labor Day; this was no exception this year. And, you know, September is one of the stronger months for us in the stores in the 10-year-old for the year.
Speaker Change: As a lot to unpack there, I would say, you know, July was really tough because we only operated a week and a half or so in the month.
Speaker Change: Our fourth to July was good as I said in my remarks in a so-as Memorial Day in between was very solved.
Speaker Change: We have historically, things start getting better and the back half of August leading in the Labor Day. This was no exception this year and September is one of the stronger months.
Speaker Change: for us in the stores in the 10-year-old workforce.
Rob: And it has; it's definitely better, slightly better during that time period, but I still say if you just want to relate this with past years, we're still in a tough environment. That's the way I would describe it.
Speaker Change: during that time period, but I'd still say if you just relay this with past years we're still in a tough environment. That's the way I would describe it.
Unknown Executive: I'm just, I'm just okay.
Rob: You know, your average ticket was up.
Unknown Executive: You know, what's driving that, and how sustainable do you think that is?
Speaker Change: I understand, okay, you know your average ticket was up, you know what's driving that and how sustainable do you think that is?
Rob: Our average ticket is about where it's been. It'll be down one quarter to be up. We're right around that $4,000 mark. And so that's, it's kind of lumpy depending on the size of the design projects that we have. So, I would not say that, of course, everybody would like to have a bigger average ticket all the time. But we're, as efficiently as we are in that, we're also interested in store traffic and transactions and all the above.
Speaker Change: Our average ticket.
Speaker Change: is about where it's been. It'll be down one quarter to be up. We're right around that $4,000 mark. And so that's it's kind of lumpy depending on the size of the...
Speaker Change: Design Projects that we have. So...
Speaker Change: I would not say that, of course, everybody would like to have a bigger average ticket all the time, but we're as sensitive as we are in that we're also interested in
Rob: So, I think our average ticket has basically been in this high $3,000 right at $4,000 range for the last couple of years. And, you know, it's I expected to stay in that range.
Speaker Change: Historic and Transactions and all the above. So I think our average ticket is...
Speaker Change: Basically Ben in this
Ben: High $3,000 right at $4,000 range for the last couple of years.
Ben: you know it's expected to stay in that range.
Unknown Executive: And then, you know, in terms of the gross margin improvement, so even with the headwind of paying your workers at 600,000, you had a nice improvement from last year.
Speaker Change: Okay, and then, you know, in terms of the gross margin improvement, so even with the headwind of paying your workers at 600,000, you had a nice improvement from last year. So I'm just curious, when business recovers?
Unknown Executive: So, I'm just curious, when business recovers, you know, even the improvement that you're making to the business with the restructuring efforts, you know, what kind of gross margin could we see in a better environment? You know, I'm not, you know, it would love to hear your thoughts on that.
Speaker Change: You know...
Speaker Change: and given the...
Speaker Change: Improvement that you're making to the business with the restructuring efforts, you know what kind of gross margin could we see in a better environment? You know, I'm not, you know, it would love to hear your thoughts on that.
Rob: I, you know, I think we could improve further improve the gross margin. There are challenges, of course, with the absorption.
Speaker Change: Yes, I think we could improve further improve the gross margin there.
Rob: We put two factories together. This quarter, which is a tough thing to do. We had to really embark upon a new model on the five. That hurt our margins. We could not.
Speaker Change: They're challenges of course with the absorption we put two factories together, this quarter which is a tough thing to do. We had to really...
Speaker Change: and Bark upon a new model along with a five. That hurt our margins, we could not.
Speaker Change: In addition, we did this right in July and early August so not only do we have the cyber event, we had that going on. And so the first couple weeks of that consolidation of those plants was lumpy.
Speaker Change: As often as, unfortunately, over the years we've had to do some of this. And, but it got better as the month of August and so.
Speaker Change: It's hard for me to quantify it's actually where this could be, but I do think we still can move some...
Speaker Change: It's a piece of progress in Grace Martin's over on the wholesale side.
Speaker Change: in the future and frankly, we expect it.
Speaker Change: Now, the flip side of that is...
Speaker Change: We want to offer value, and this is a very competitive market at the moment. So as we price our goods and the settlement retail we definitely want to.
Speaker Change: At least on the open price point side for sure.
Speaker Change: have some recognizable value, but overall I feel pretty good about the trajectory of our...
Speaker Change: Gross margin and the ability to further improve it.
Speaker Change: That sounds good and my last question as far as the bass that designed studio concept, how many stores is that in right now and what is your expectation for the end of the fiscal year?
Speaker Change: Well, we now have 40 of these out in the field. They're not all set up yet, because we've...
Speaker Change: We got seven of them in the month of September, so we just...
Speaker Change: They made the deal but so they're you know we haven't shipped all the goods and the fixtures and all that yet. We had said earlier in the year we want to have 50 of these signed and we've got the upcoming market at high point and we have reconfigured our showroom to make this a major focal point of the effort down there and look forward to seeing you and showing it to you. So I think we could still still get that that 50 we talked about earlier. You know the bigger question is.
Speaker Change: The Wall Term of...
Speaker Change: The long-term potential of this. Now, we do not sell entry-level goods. We sell better goods, and there are certain markets where that you just don't have the demographics to support this, but we are very encouraged and slightly.
Speaker Change: So perhaps a little bit, frankly, that with the reception that we're getting to this thing with
Speaker Change: with some of the markets that we didn't really...
Speaker Change: This is Sarah McKellon, so...
Speaker Change: Over time, we thank between this and then our next iteration of our dedicated distribution footprint, of course, is our Basset Design Center, which is...
Speaker Change: You know, the full blooded, but with the case goods and everything around it, what we used to call a gallery back in the day and then store. So this is a great way to get into the Bassett program inexpensively for the dealers and it's a proven piece of our line that we do every day. So very excited about the potential and the enthusiasm around it so far.
Speaker Change: Well that sounds great, yeah look forward to seeing that at a high point and I'll pass it on to others. Thank you very much, gentlemen.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Brian Gordon from Water Tower Research.
Brian Gordon: Good morning, Robert. Good morning, Mike. Thank you for taking my questions today. I want to dig in a little bit on an earlier question. I think if I got this right in your remarks that you said that order that retail were down something like 4.8%.
Brian Gordon: and given the cyber event. That would come to something like 11% of production days by itself. I know that you had mentioned something like 16% of production days were missed, but part of that I assume was the plan July 4 shutdowns. If we back out that cyber, would it be fair to say that shipments might have been down something closer to 5% from wholesale?
Brian Gordon: Keep in mind that...
Brian Gordon: But.
Speaker Change: We were essentially able to catch up on.
Speaker Change: The majority of the shipments that we missed.
Speaker Change: The I think the real issue when you kind of Peel back the onion.
Speaker Change: As on the retail side.
Speaker Change: Although we were open and theoretically taking orders.
Speaker Change: We had several customers that would come in.
Speaker Change: And not right in order.
Speaker Change: Because we were doing it on paper so.
Speaker Change: So I think when you really think about.
Speaker Change: Got you.
Speaker Change: Our sales you lost.
It was really during that time period on the retail side.
Speaker Change: People were coming in but.
Speaker Change: Essentially turning turning around and leaving because.
Speaker Change: We didn't have our systems up and running.
Speaker Change: So.
Thats.
Speaker Change: That's really the main the main thing that affected our sales and our shipments for the quarter.
Speaker Change: I'll add one other comment to that Brian and that is as.
Speaker Change: As we.
I mean, we've shut down a week for the fourth of July four.
Speaker Change: My lifetime around here and in North Carolina is kind of a traditional furniture.
Speaker Change: Furniture companies I know did the same thing and.
Speaker Change: But it takes a little bit of time to get.
Speaker Change: <unk>.
Speaker Change: The wheels, turning again when you come back from that week off and also in our case, where we have.
Speaker Change: Captive distribution system, we don't have a lot of different freight lines coming in here and doing this but so.
Speaker Change: In other words.
Speaker Change: The loads are depleted you have to build the loads up again and so.
Speaker Change: Lynn when you have that factor and then immediately after a day you shut down again.
Speaker Change: Sure.
Speaker Change: We're awake right. We just Mike said then.
Speaker Change: And then Ed just exacerbated all of that said the efficiency in the pipeline and getting these loads built back and filling the trucks and get them out there.
Speaker Change: Definitely affected.
Speaker Change: July and August we did catch up.
Speaker Change: Some of that is just it was just an inefficient.
Speaker Change: And in the factories to all this stuff did affect us.
Speaker Change: Back to Anthony's question on the gross margins.
Definitely.
Speaker Change: There but.
Speaker Change: I would say, it's slightly affected us, but we caught up.
Speaker Change: A good part of it.
Speaker Change: His way and I would say.
Speaker Change: Yes, no. Thank you for that but that definitely helps kind of understand the impact from that.
Speaker Change: The reason why I'm asking is it does seem like when we when we take a look at the retail orders and if we were to back out.
Speaker Change: The inefficiencies in the cyber event that maybe close to a bottom.
We might be seeing something like that.
Speaker Change: Like a bottoming put in from a demand perspective with it.
Speaker Change: Would you would you agree with something like that.
Speaker Change: <unk>.
Speaker Change: That of course is a great observation in question and one we ask ourselves all the time and in all candor we were.
Speaker Change: Asking ourselves this time last year.
Speaker Change: Yes.
Speaker Change: Post COVID-19.
Speaker Change: Melt down I guess.
Our retail business around the whole industry.
Speaker Change: And we had.
Speaker Change: Nine consecutive months last year pretty much the same business.
Speaker Change: Came into this year, saying hey.
I think this is a trend now we've kind of bumping along the bottom and this thing is going to come back at some point.
Speaker Change: Well it went down again this year.
Speaker Change: So that that really surprised the heck out of Spain honest with you.
Speaker Change: But it does feel.
Speaker Change: And then last if I take this.
Speaker Change: Third quarter, we just reported kind of the back part of that the last several weeks of that and then into September that were.
Speaker Change: We are.
Speaker Change: I think we've reached the bottom of this thing now the question is how long does he.
Speaker Change: And because we're not we're not seeing.
Speaker Change: In our case, even though we will have a very good week, but then we will get a couple of tough weeks. So we're not seeing.
The momentum that we want to see and of course, we're doing everything in our power to.
Speaker Change: Right.
Speaker Change: Make that happen.
Speaker Change: But.
Speaker Change: If you.
Speaker Change: You can't come come up until you reach the bottom.
Speaker Change: So from that perspective.
Speaker Change: I do feel like we are.
Speaker Change: Are there.
Speaker Change: Let me add Brian.
Brian Gordon: If you look at.
Speaker Change: <unk>.
The retail written.
Speaker Change: Last quarter it was down two 5% retail written this quarter down four 8%.
Speaker Change: And as you point out on the on the cyber and the effects of the cyber.
Speaker Change: I think you could come to.
Speaker Change: That assumption.
Speaker Change: That we are sort of bumping along the bottom.
Speaker Change: Yes, that's all very encouraging.
Speaker Change: So just kind of shifting.
Speaker Change: A little bit.
Speaker Change: Are you thinking about growth for next year.
Speaker Change: You kind of put that number is something like 50 designed.
<unk> by the end of the year.
Speaker Change: Do you have any kind of thoughts on how big that could be.
Speaker Change: As we look to fiscal year 'twenty five and then kind of the follow on question to that would be I know.
Speaker Change: Theres been no store openings planned for the end of the year, but how many new stores might potentially be on the water side I know you said.
Speaker Change: On the last call that you were actually traveling in July to look at some sites.
Speaker Change: How many of those might be and the warrants.
Speaker Change: Well honestly I would say.
Speaker Change: At the moment, we've got one market that we're looking at we're still more.
Speaker Change: Working on the.
Speaker Change: <unk>.
Speaker Change: Economics of that.
So, but that's at the moment.
We have planned is one new market one new store.
Speaker Change: And we should.
Speaker Change: Reached some kind of conclusion on that decision.
Speaker Change: And the next few weeks and so.
Speaker Change: So honestly, what we're really doing is looking at <unk> on our current slate to.
Reverb that.
Speaker Change: I also alluded to the.
Speaker Change: Increase.
Speaker Change: Increase.
Speaker Change: E Commerce that we're seeing again on small.
Speaker Change: Basis.
Base, but nevertheless.
Speaker Change: Encouraging and some some good things are happening there.
Speaker Change: As terms of the custom studio.
Speaker Change: It's so new it's six six months in and it's really difficult to say, but I think we're going to see steady.
Speaker Change: Growth in that program now we signed another 50 next year.
Speaker Change: Honestly I don't know.
Speaker Change: But I do think that that will provide growth for us and.
Again, the ones that have opened already are doing well we report on that every Monday and our market review and that's encouraging to see so.
Speaker Change: Those are the kind of things we're counting on for next year.
Speaker Change: Great. Thank you very much and really excited to see the new product at high point when become visit.
Speaker Change: Brian listen I, Thank you and I can't.
Speaker Change: The call and with that without.
Speaker Change: Recognition of Bud.
Speaker Change: We miss him.
Speaker Change: Sure.
Speaker Change: He was.
Speaker Change: You are encouraging us to do conference calls, which we hadn't done in the past.
Speaker Change: Second one in.
Speaker Change: And we miss him but.
Speaker Change: Youre doing a great job on that we can be proud of whats going on with your organization.
Speaker Change: And looking ahead.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: I'd now like to turn the conference back over to Rob Spellman for closing remarks.
Rob Spilman: Okay. Thank you.
Rob Spilman: And.
Rob Spilman: I just wanted to thank everyone for your interest today in <unk> and for the questions. We did receive.
Speaker Change: As we said our restructuring plan is well underway and is designed to align our cost structure with our current revenue and is something we're focused on every day around here.
Speaker Change: We look forward to launching the new collections I talked about growing the facet custom studio.
Speaker Change: Further connecting with the interior design community and advancing our omni channel presence.
Speaker Change: As we head into the upcoming high point market.
And on into 2025.
Speaker Change: Thank you very much.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
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Unknown Executive: In the next episode, we'll see you in the next episode.
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Speaker Change: Thanks.
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