Q3 2025 The Lovesac Co Earnings Call
Greetings and welcome to the Love Sac third quarter fiscal year 2025 earnings call. At this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded I would now like to turn the call over to your host Ms. Caitlin Churchill Investor Relations. Thank you you may begin.
Speaker Change: Thank you good morning, everyone with me on the call is Shawn Nelson Chief Executive Officer, Mary Fox, President and Chief operating Officer, and keeps Tickner Chief Financial Officer before we get started I would like to remind you that some of the information discussed will include forward looking statements regarding future events.
Speaker Change: And our future financial performance.
Speaker Change: These include statements about our future expectations financial projections, and our plans and prospects.
Speaker Change: Actual results may differ materially from those set forth in such statements.
Speaker Change: These risks and uncertainties you should review the company's filings with the SEC, which includes today's press release.
Speaker Change: You should not rely on our forward looking statements I forget a future about.
Speaker Change: All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by applicable law.
Speaker Change: Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA.
Speaker Change: non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of the most directly comparable GAAP financial measure.
Speaker Change: Such non-GAAP financial measure has been provided a supplemental financial information in our press release.
Speaker Change: Now I would like to turn the call over to Shawn Nelson Chief Executive Officer of the Love Sack Company Sean.
Shawn Nelson: Good morning, everyone and thank you for joining us I'll start by sharing our high level overview of our third quarter results and outlook, then marry Fox, our president and CFO will discuss our key growth initiatives finally, Keith Cigna, Our CFO will review, our financial results and a few other items related to our outlook in more detail.
Speaker Change: Turning to the highlights of our Q3 results.
Speaker Change: Total net sales were $149 9 million, reflecting a year over year decline of 2.7%.
Speaker Change: As you're aware from many others in our category headwinds clearly persisted in the pre election period.
Speaker Change: For us we felt they've seen some pressure on average order size, where we saw encouraging growth in quotes for very large setup, but less conversion of those quotes than we expected.
Speaker Change: Total omni channel comparable net sales decreased eight 3%, which was partially offset by new and non comp touch point contribution.
Speaker Change: Adjusted EBITDA and net loss were pressured by deleverage in SG&A, partially offset by gross margin expansion and leverage in advertising and marketing.
Speaker Change: Despite the quarter results being below our recent trends and expectations for third quarter still represented market share gains against the category that was down high single digits.
Speaker Change: <unk> us in the quarter with our highest pre holiday cash balance in years.
Speaker Change: Okay.
Speaker Change: Underpinning our performance is our highly productive omni channel footprint, which is built upon our designed for life platform enhanced by the loved evidenced in our customer engagement compounded by compelling marketing and reinforced by our accelerating focus on product innovation.
Speaker Change: Demonstrating our commitment to innovation in Q3, we successfully entered the case goods category with our any table completed an overhaul of our surface products like the drink holder coaster and then you try and address a common request from our fans by offering insert protectors.
Speaker Change: All of these new introductions expand our prolific sectional platform in ways that make it even more competitive in the marketplace, while simultaneously driving repeat business through add on opportunities to keep our installed base of over 1 million households, coming back for more.
Speaker Change: More details to come.
Speaker Change: As we are now well into Q4, we're also super excited to have even more new product news to share. We've recently launched the charge side extension to our stealth Tech platform now.
Speaker Change: Now you can add charging to any sexual side, even without the full surround sound embedded.
So things to collaborative work done by many teams we were able to pull forward and soft launch the long awaited fractionals recliner. This.
Speaker Change: This is the world's most innovative power recliner. If you haven't done so already you really need to find your way into any one of our 250, a proper love Sac showrooms to experience the sleek sophisticated zero, while clearance rearrange a bowl Marvel of engineering in person.
Speaker Change: Besides kicking back and enjoying the zero gravity positioning take the time to remove the cushions and look under the Hood.
Speaker Change: It is a thing of beauty nearly three years and more than 80000 design and engineering hours went into the creation of this product that will be selling now for decades.
Speaker Change: Of course, it can be utilized seamlessly with any sexual set up ever sold it simply replaces one seat.
Speaker Change: It works with the sides. These are the arms and backs that are customers already out.
Speaker Change: But even more miraculously it can be set up to function wide ways or deep ways in any sanctions configuration.
Speaker Change: As smooth and silent it is durable and of course love sack comfy.
Speaker Change: It is truly the only designed for life a cleaner on Earth and there are numerous patents pending and issued relating to it.
Speaker Change: To frame up the market opportunity or that are.
Speaker Change: A full 25% of the broader sectional category demands reclining capabilities.
Speaker Change: As successful as we have been to date with Saks off we believe sanctions are currently the best selling sectional platform in the U S already.
Speaker Change: We have been effectively locked out of the huge recliner market until we launched this product just a few weeks ago.
Speaker Change: Already it is exceeding our expectations in terms of our internal attachment rates and customer feedback.
Speaker Change: Just explained the reclining seat as reverse compatible but it is also future compatible in ways, we have not yet revealed.
Speaker Change: Signing seat really says to existing <unk> customers. The investment you made in <unk>, maybe years ago. It was one of the best investments you've ever made you can trust love Sac to continue to expand its product catalog in ways that makes your original purchase with us more valuable and compelling over time not less.
This way of doing business is 100% unique to the world of consumer goods and retail. This is designed for life and actions we are proud of it.
Speaker Change: Clearly the pace of innovation has stepped changed higher it loves shaq with many more significant product launches yet to be announced even for fiscal 2026.
Speaker Change: Yes, I said, even for fiscal 2026, which is only a few months away for us.
Speaker Change: All of this innovation comes from the compounding investments made over the last five years, including numerous product engineers and industrial designers specialists in research and marketing and supply chain and sourcing professionals all working in lockstep to deliver sophisticated design for life solutions that we will leverage to drive new and repeat business for decades.
Speaker Change: Hum.
Speaker Change: We have been investing in the foundation for profitable growth for years, despite a tough category.
Speaker Change: Hopefully you can see that these investments are now paying off which should reinforce why we're so excited about the massive growth potential for love Sac.
Our upcoming Investor day to be held in New York City next Tuesday December 17th we will reveal more about our strategic framework.
Speaker Change: New products and growth initiatives.
Speaker Change: <unk> to operational excellence and financial ambitions, which should supercharge our growth going forward.
Speaker Change: Despite our gains in new customers and some green shoots in attacking the repeat business opportunity off the back of these recent launches.
Speaker Change: The home category remains severely challenged.
Speaker Change: Still not recovered from post pandemic pull forwards black.
Speaker Change: Black Friday gave us so much to be excited about in terms of brand buzz double digit quote pipeline growth and more.
But as indicated by our outlook for fourth quarter, there is still lingering uncertainty holding the consumer back.
Speaker Change: We're focused on converting those clearly interested customers in our quote pipeline and bringing in new customers as well, but we believe it's wise to adjust our outlook accordingly, as Keith will share.
In summary, we remain focused on controlling expenses and protecting profitability.
Speaker Change: Even as we continue to invest prudently in what we believe is a unique and powerful secular growth story.
Speaker Change: One that is supported by an expanding portfolio of new design for life product platforms that will drive future growth and expansion for this brand.
Speaker Change: Our teams are at the heart of what we do day in and day out and they have all worked very hard to bring about the launch of the reclining seat months earlier than scheduled.
Speaker Change: Even while executing through the all important holiday season.
Speaker Change: Want to thank all of them for their ongoing hard work and disciplined execution as we continue to navigate through this dynamic consumer environment.
Speaker Change: Loves Saks runway for growth is long and attractive with large and extremely fragmented addressable markets of.
Speaker Change: Which we currently enjoy a very low share.
Speaker Change: Even in our current platforms.
Speaker Change: Our strengthening market position profitable and growing business and solid net cash position on the balance sheet. All enabled our first ever share buybacks made during Q3.
Speaker Change: As Keith will review, we intend to continue to operate and deploy capital with discipline.
Speaker Change: Focus on delivering long term sustainable profitable growth that should create value for all our stakeholders.
Speaker Change: We look forward to sharing more on our long term vision during our Investor day attendance by inviting me in New York City on December 17th.
Speaker Change: That I will hand, it over to Mary to cover our strategic priorities and progress in more detail.
Speaker Change: Great.
Mary Fox: Thank you, Sean and good morning, everyone as Shawn discussed on net sales of $149 9 million for quarter, three was slightly down from last year, but up 11, 2% on a two year basis, even if the category remains challenging importantly on a five year basis net sales are up almost twofold from pre.
Mary Fox: Pandemic level compared to the comparable category performance at flattish.
Mary Fox: Adjusted EBITDA margin has increased 895 basis points over the same time period.
Mary Fox: In quarter, three we continued to outperform the category gaining market share underpinned by our customer and product centric focus.
Mary Fox: Unique omnichannel Infinity flywheel, we've built a business model and our platform. Unlike anyone else in the category, resulting in a total addressable market opportunity that is significant Brian health that is strong and growing our best in class E Commerce experience.
Mary Fox: <unk> touch points economics, and an advantaged supply chain, we continue to extract benefits from disciplined investments in our strategic initiatives and capabilities.
Mary Fox: This upfront.
Mary Fox: <unk> profitability for years to come.
I will now provide key highlights about go forward plans on each of our strategic initiatives.
Mary Fox: Lastly product innovation.
Mary Fox: We know you're excited I'm curious so let's jump right into our most recent launch of the ultimate havoc lineup, we have been targeting a quarter one fiscal 'twenty six launch date for Delek lineup, but with a herculean effort from all of our team, including supply chain and commercialization, we are able to soft launch this and touch points.
Just ahead of the key holiday period, well lean in more aggressively to drive awareness and conversion of recliner throughout fiscal 'twenty six.
Mary Fox: Even without full media support it's off to a strong start.
The organizational capability, we have built to be able to bring design for life.
Mary Fox: The market is stronger than ever and I just want to add a few more details.
Mary Fox: But how many states is a breakthrough powered recliner innovation that will drive category penetration by attracting incremental customer to the sectional platform importantly, the reverse compatibility with existing factional enables us to drive greater repeat customer business.
Mary Fox: To deliver unparalleled comfort and flexibility while maintaining the sleek sophisticated aseptic that look back is known for.
Mary Fox: Traditional recliners that all limited to specifics within the casual sectional single reclining seats can be positioned virtually anywhere in the sectional configuration and a multiple orientation.
Mary Fox: We see tremendous opportunity to open the aperture for the fraction of the addressable market by tapping into the refining market and driving incremental customer lifetime value with this and future innovation. We will have the full launch campaign kickoff early next year and look forward to sharing more with you during our Investor day on December seven.
Mary Fox: <unk>.
Mary Fox: We also continue to forge brand relevance and back to the partnership that lean into culture real time.
Mary Fox: For example in quarter three we partnered with the lithium Rodrigo by creating but well talk back for her international comfort Tau Pet first worldwide tool has been widely anticipated by Lilly and she has more than 13 million followers on Instagram it ticked up.
Mary Fox: Becky exploded on the brand both in impressions and by helping grow I'll follow base by more than $6 million in a matter of days.
Mary Fox: Second our Omnichannel experience, we continue to strengthen our position as a true omnichannel retailer through a combination of all physical touch points in all digital platform.
Mary Fox: During the course of we opened five touch points and we remain on track to deliver at or just over 30 net new show opening in fiscal 'twenty five.
Mary Fox: During the quarter, we continued to launch website can hop.
Mary Fox: Such a long term relationship with new and existing customers and supports our plan to have the best in class Omnichannel experience, we made significant enhancements to the pre and post purchase experience.
Mary Fox: Clothing and improvements at the show and that takes us as well as enhancements to my hub improving the post purchase customer journey with enriched order information building long term relationship with a highly engaged addressable base of existing customers remains a significant opportunity for <unk>.
Mary Fox: A key strategic focus as we continue to launch new products that integrate into their existing touch says that.
Mary Fox: Backwards compatibility gives us a unique advantage to nurture and deepen customer relationships long after their initial purchase.
He'll have the pillows accent chair the launch of any table in quarter, three assisted and driving a double digit increase in existing customer mix and sales versus last year.
In addition to attracting new customers, we will continue to leverage our loyal base of existing customers as we launch new innovations like reclining seats and charge side.
Mary Fox: Another area of strategic focus is optimizing programming for our highly engaged open quote hold it back.
Mary Fox: Better data capture we are augmenting the efforts of our amazing Chevron partners, enabling us to reach out more to this audience. This domestically with the right message at the right time.
Mary Fox: So it is our ecosystem, which is centered around acquiring the licensing and maintaining relationships with loyal loving customers. We continue to leverage our marketing mix and spend throughout the quarter and strategically pull back on linear television during the period, leading into the 2020 for election.
Mary Fox: Our optimizations into video, including CTV and Youtube are generating positive traffic trends in auto by helping to offset continued inflationary pressures and paid search and social media.
Mary Fox: As effective as we've been in using marketing to build this beloved brand and grow net sell through good and bad macro conditions, we see significant upside potential from expanding and enhancing our marketing approach in playbook with a look back Brian well established and anchored by a portfolio of design for life product platform.
We are requesting a bus chief marketing officer to Shepherd us into the next chapter of growth, we will share developments that we have more information now.
Now an update on our first phase of launching services in quarter, three we launched a beta website offering meticulously inspected loves that products.
Mary Fox: We sell to our internal associates and a curated experience we've seen great results with this internal tests and we're looking forward to bringing that experience to our customers leveraging open box inventory to fuel our endeavor and continuing to expand on our promise to create products that are designed for life and supported by stuck at our operations.
Mary Fox: Finally, making disciplined infrastructure investments and driving efficiency in quarter, three we delivered material cost of goods and inbound freights improvement versus last year.
Mary Fox: Management and planned infrastructure investment both in capabilities and technology.
Mary Fox: Elements of this is all continued diversification of manufacturing outside of China, which is delivering savings from tariff cost year over year.
Mary Fox: As we mentioned earlier this year, we enhanced our inbound logistics strategy moving from a freight forwarder model to a direct carrier relationships minimizing our reliance on spot rate. This continues to benefit us both in better overall pricing and availability of containers as well as deemphasizing the spot market pricing inflation.
Representing significant cost avoidance.
Mary Fox: From a gross margin perspective. These savings are partially offset by an increase in promotional discounting in the quarter as we continue to see higher promotional levels and the cash that great.
Mary Fox: Also delivered a 3% reduction in total inventory at the end of the quarter driven by the benefits of recent investments, including our new order management system, which benefits our outbound logistics assets on that front, we continued to make strong advancements in our outbound logistics model are successfully introduced local parcel providers into key market.
Mary Fox: Which is helping deliver lower cost overall and improved customer satisfaction will continue to evaluate and expand this program into next year and beyond.
Speaker Change: So in summary, we're pleased with the progress on our strategic priorities as we continue to successfully expand the business and make important foundational investment to drive as well as support the substantial growth that lies ahead I will now pass the call over to Keith.
Keith Cigna: Thanks, Mary, let's jump right on into a quick review of the third quarter, followed by our outlook for the rest of fiscal 'twenty five at a high level third quarter net sales fell slightly short of our guidance for the reasons, Sean discussed the disciplined management of controllable expenses enabled us to achieve the favorable end of our guided profit ranges.
Regardless.
Keith Cigna: That's even despite incremental expenses related to last year's restatement of prior period financials as we begin with performance metrics. Please note that all references to the third quarter refer to fiscal 'twenty five unless otherwise noted.
Keith Cigna: Net sales decreased $4 1 million or two 7% to $149 9 million in the third quarter compared to the prior year period showroom net sales decreased $7 7 million or seven 8% to $91 million in the third quarter compared to the prior year period, driven by a deep.
Greece of eight 3% and Omnichannel comparable net sales, partially offset by the net addition of 28 new showrooms.
Keith Cigna: Internet net sales increased $4 9 million or 12, 1% to $44 9 million in the third quarter compared to the prior year period.
Keith Cigna: Other net sales, which include pop up shop shop in shop, and open box inventory transactions decreased $1 4 million or eight 6% to $14 million in the third quarter compared to the prior year period, primarily due to lower productivity of our temporary online pop up shops and <unk>.
Keith Cigna: Go Dot com.
Keith Cigna: Open box inventory transactions with eikon were flattish year over year at $2 5 million in the third quarter. We do not currently anticipate any of these transactions in the fiscal fourth quarter.
Keith Cigna: By product category in the third quarter, our section on net sales decreased 2%.
Keith Cigna: Net sales decreased 4%, we continue to expect we will be largely caught up with the backlog on stealth tech and pillows accent chair in the fourth quarter.
Keith Cigna: Buying these accounted for less than $5 million in transfer of net sales from second and third quarters to the fourth quarter. Our other net sales, which includes decorative pillows blankets and accessories decreased 16% over the prior year period.
Keith Cigna: Gross margin increased 110 basis points to 58, 5% of net sales in the third quarter.
Keith Cigna: Versus 57, 4% in the prior year period. This is primarily driven by decreases of 120 basis points in inbound transportation costs, and 40 basis points and outbound transportation and warehousing costs, partially offset by a decrease of 50 basis points in product margin driven by higher promotional does.
Keith Cigna: Counting.
Keith Cigna: SG&A expense as a percent of net sales was 47, 9% in the third quarter versus $43 nine in the prior year period. The increased percentage is primarily related to investments in payroll equity based compensation and rent as well as lower net sales the.
Keith Cigna: The increase in selling general and administrative expense dollars was primarily related to an increase of $5 million in payroll $1 7 million in equity based compensation.
Keith Cigna: $8 million in rate, partially offset by decreases of $1 4 million in professional fees 1.0 million in credit card fees and zero point $9 million in infrastructure investments in the business to support current and future growth.
Keith Cigna: Rent increased by <unk> 8 million related to $1 4 million increase in rent expense from the net addition of 28 showrooms, partially offset by <unk> 6 million reduction in percentage rent.
Keith Cigna: We expect nonrecurring incremental fees associated with the restatement of prior period financials was approximately $3 3 million in the third quarter, which included the settlement with the SEC is it very difficult to forecast and while we would hope this should be much smaller going forward, we'll continue to highlight.
Keith Cigna: If applicable each quarter.
Keith Cigna: Advertising and marketing expenses decreased $1 2 million or five 5% to $19 9 million for the third quarter compared to the prior year period adverts.
Keith Cigna: Advertising and marketing expenses remained flat at 13, 3% of net sales in the third quarter compared to 13, 7% of net sales in the prior year period.
Keith Cigna: Operating loss for the quarter was $7 7 million compared to $3 6 million in the third quarter of last year driven by the factors, we just discussed.
Keith Cigna: Before we turn our attention to net loss net loss per common share and adjusted EBITDA. Please refer to the terminology and reconciliation between each of our adjusted metrics and their most directly comparable GAAP measurements in our earnings release issued earlier this morning.
Keith Cigna: Net loss for the quarter was $4 9 million or negative 32 per common share compared to net loss of $2 3 million or negative <unk> 15 per common share in the prior year period.
Keith Cigna: During the third quarter, we recorded an income tax benefit of $2 1 million as compared to 1.0 million in the prior year.
Keith Cigna: Adjusted EBITDA for the quarter was $2 7 million as compared to $2 5 million in the prior year period.
Keith Cigna: Turning to our balance sheet, we ended the third quarter with a very healthy balance sheet. It provides substantial flexibility for love sac to invest in growth to enhance long term value creation for shareholders first we reported $61 7 million in cash and cash equivalents, while retaining $36 million in committed availability and new.
Keith Cigna: Borrowings on our recently amended credit facility.
Keith Cigna: While our cash balance was slightly down sequentially. It was up meaningfully from the third quarter balances in fiscal 'twenty four in fiscal 'twenty three third quarter has historically been our seasonally lowest cash flow balance as we build inventory ahead of the holiday selling season. So this emphasizes the strength of our net cash position.
Keith Cigna: Second our total merchandise inventory levels are in line with our projections, we feel very good about both the quality and quantity of our inventory and our ability to maintain industry, leading in stock positions and delivery times.
Keith Cigna: Third during the quarter, we repurchased approximately 131000 shares of our common stock at an average price of $26.13 for approximately $3 $4 million. This leaves approximately $36 6 million remaining under our existing share repurchase authorization.
We plan to provide more details around our strategic approach for managing potential excess capital next week at our Investor day.
Keith Cigna: Please refer to our earnings press release for other details on our third quarter financial performance.
Keith Cigna: Now for our outlook our early anecdotal evidence is that the cyber five period was quite a challenge for furniture companies. So we don't have hard numbers just yet.
Keith Cigna: Our baseline assumption for our 10% full year category declined largely still hold.
Keith Cigna: Unclear, whether the full fourth quarter will improve or deteriorate from the roughly 7% declines we saw in our fiscal third quarter, regardless, we aspire to grow irrespective of the category, let alone sustained market share gains we aim to recover quickly from our initial <unk> outlook and believe we have a salt.
Keith Cigna: <unk> secular growth plan to do so which we'll talk a lot more about next week at the Investor day, plus as always only through our unique business model. We are primed to capitalize on the category rebound as soon as it happens in a more real time than our peers.
Keith Cigna: This occurs the additional revenues should drive expanding flow through of topline growth bottom line growth.
Keith Cigna: For the full year fiscal 'twenty five we are lowering our guidance ranges, we estimate net sales of $660 million to $680 million. We expect adjusted EBITDA between 37 5 million and $48 5 million. This includes gross margins of 58% to 59% advertising and Mark.
Getting of approximately 13% as a percent of net sales and SG&A of approximately 42% as a percent of net sales. We estimate net income to be between $4 five and $12 5 million.
We estimate diluted income per common share in the range of 27 to 74 cents and approximately $16 9 million estimated diluted weighted average shares outstanding as a reminder, fiscal 'twenty five will contain 52 weeks versus fiscal 'twenty, four which contained an additional 50 <unk> week.
Keith Cigna: In the fourth quarter.
Keith Cigna: For the fourth quarter, we estimate net sales of $221 million to $241 million, we expect adjusted EBITDA between 43, and 55 million. This includes gross margins of approximately 65%.
Keith Cigna: Advertising and marketing of approximately 11, 5% as a percent of net sales and SG&A of approximately 29% as a percent of net sales. We estimate net income to be between $28 million and $36 million. We estimate diluted income per common share in the range of $1 67 to $2 14.
Keith Cigna: And approximately $16 8 million estimated diluted weighted average shares outstanding.
Keith Cigna: In conclusion stabilization of the category and an eventual return to category growths are ahead of us even if that exact timing remains unclear in the meantime, even while the category headwinds linger. We believe we can balance near term performance and profitability with investments in product innovation and long term growth, thereby optimally.
Positioning us to generate stakeholder value for years to come.
Keith Cigna: Before I turn the call back over to the operator to start our Q&A session, we'd like to ask the questions refer primarily to our results and near term expectations. We plan to provide full context and perspective around our strategic framework, new product growth initiatives and financial ambitions at our Investor Day next Tuesday, the 17th.
Keith Cigna: This event will include formal presentations a Q&A section.
Keith Cigna: We'll even have plenty of our amazing design for life products, there for folks to interact with we really hope you'll join us and please email investor relations at <unk> Dot com to request details with that over to you operator.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys to allow for as many questions as possible. We ask that you each keep to one question and one follow up thank you.
Speaker Change: Our first question comes from the line of Maria reps with Canaccord Genuity. Please proceed with your question.
Speaker Change: Great Good morning, and thanks for taking my questions.
Speaker Change: Firstly I just wanted to ask about your Q4 outlook. So if we look at your sort of updated guidance versus prior implied outlook can.
Speaker Change: Can you maybe share a little bit more color on how much of that sort of built up is.
Speaker Change: Attributable to the changes since doctors that you talked about last quarters last quarter, sorry, I like catching up on delayed shipments of new products and and just broader category improvement.
Speaker Change: Sure thing Thanks, I'll kick this off and then I'll pass it over to Sean to talk a little bit more about some of the details.
Sean: Honestly the biggest delta between the previous guidance and now is the category.
Sean: We were there were relatively few surprises in terms of the backlog amounts as we talked about last quarter it being in the mid single digit millions or in the single digit millions in turn out to be a little less than $5 million and supply chain teams did a great job getting back in stock. After some delays in our long lead times that we've had in sourcing.
Sean: But most of all of those factors were relatively consistent and even.
Yeah, we actually from a recliner perspective, pulling it forward and soft launching it has been very encouraging to us.
Sean: We've seen great feedback of great interest.
Sean: You know and I'm sure, we'll get into that more in this call, but like that that's been quite encouraging to us.
Sean: Really what it boils down to what is.
Sean: Conversion of quotes so Sean why don't you talk a little bit about more what we've seen in terms of that dynamic.
Sean: Yeah, we I think the most heartening.
Speaker Change: Partnering thing about what we're seeing in the business is our quotes way up year over year. This is the business are functioning as it's supposed to other than a conversion, which as we're experiencing anecdotally you know customers.
Speaker Change: I'm being more cautious with their spending, particularly pre holiday look the year's not over and we're going to fight until the last minute to drive sales drive revenue and put more people into the fold of our love Sac family, because that's where the repeat process begins and now that we have a full.
Speaker Change: Sweet.
Speaker Change: <unk> products, including a recliner that we just pulled forward to launch early.
Speaker Change: Which is driving tremendous new business for us as well as repeat business.
Speaker Change: Obviously not enough to offset this.
Speaker Change: You know headwind that we're seeing in this category that continues to persist as you know, it's it's well over a couple of years now going on three years of severe headwinds and when we'd recognize that Meanwhile, we're innovating and we've got exciting news to share next week at the Investor day, and so while we are.
Speaker Change: Yes.
Speaker Change: Paranoid about the day to day business and remain totally focused on driving sales.
Speaker Change: We just don't know exactly what's going to transpire with the consumer over the next few weeks that are left in our fiscal year.
Speaker Change: And so the guidance that you're seeing is us being.
Speaker Change: Cautious as well as of course optimistic and focused on driving business until the end.
Speaker Change: Got it and then and then secondly can you maybe talk about how your recent product launches in the pipeline for next year sort of inform your approach to building brand awareness.
That brought our marketing strategy for next year.
Sean I think you're on mute.
Speaker Change: Yeah, you're going to see a further expansion of our designed for life strategy rolled out I mean.
Speaker Change: I think most exciting is as youre seeing with the.
Speaker Change: All of the launches this year.
Speaker Change: The pace of innovation that loves Shaq is increasing.
Speaker Change: It it used to be two or three new introductions a year now.
Speaker Change: More than half a dozen this year and this not only provides customers with a more fulsome.
Speaker Change: Our ability to adopt our brand into their lives, but gives us so many opportunities to drive repeat or wanted to share. Some some data in a few days that it speaks to the power of this flywheel, where people you know make often large purchases with us one time and then over a number of years.
Speaker Change: Increase their spend with us as we give them opportunities to.
Speaker Change: To add on and this is not just a great business outcomes. This is totally unique in the landscape. There is no other.
Speaker Change: Consumer company that I'm aware of that.
Speaker Change: It allows you to.
Speaker Change: Truly expand on the initial purchase.
And not only in this way drive sustainability right. These are products that can actually sustain but also makes that initial purchase more valuable a few years later then.
Speaker Change: When you originally made it and so not only are you going to see evidence of this in on the platforms. You are aware of <unk> and sacs, but we're going to speak to new platforms that are coming and that's really exciting for us.
John: Yes. This is John.
On your question so a couple of things.
We continue to drive awareness, bringing more customers into the funnel and I think that you know cost is the evidence that we've seen very strong quote.
John: With double digit and actually building, even more and customer spend you know more than 30 minutes.
John: So that close in choosing their ideal configuration in the company. So we see that brand health continuing and awareness is obviously critical for us because that you know we still see a huge amounts of opportunity I think the second thing I talked about the fact that we gotta be hiring our first chief marketing officer.
I'm very excited about that opportunity you know and been able to drive funnel effectiveness and you know as we've shown you talked about the China launch, we haven't even Mitch Don All media campaign. This is a soft launch because we pulled it earlier just due to the herculean efforts of our teams with Justin.
John: Credible and it's such a great product and then we are going to switch on what is going to be an incredible campaign. Early next year to really tell people about why we have the best product lineup and how they can you know current customers can come and buy it so.
John: So that configuration, and then just attracting a lot of new customers that just wouldn't have considered that in the past because we didn't have rock lineup. We now have the best refiner on the market.
Speaker Change: Great. Thank you so much for the color and looking forward to Investor Day next week.
Speaker Change: Thank you.
Thank you. Our next question comes from the line of Thomas Forte with Maxim Group. Please proceed with your question.
Speaker Change: Great. Thanks, So first congrats on a recliner soft launch I have one question and one follow up.
Speaker Change: So Sean and team how should we think about your promotional strategy in what is a highly promotional environment for their category, including your willingness to lose sales to protect profitability.
Yeah I'll say.
Speaker Change: Say, a couple of things and Mary can add on.
Speaker Change:
Speaker Change: We have.
Speaker Change: Worked really hard over the past three years in particular since the since Covid.
Speaker Change: To be thoughtful about our promotional strategy and not extend.
Speaker Change: Into.
Speaker Change: <unk> further than sometimes what you'll see 30% off alright.
Speaker Change: Things.
Speaker Change: This is important to us there in the marketplace, we're seeing significantly higher promotional levels from our peers and we recognize that.
Speaker Change: Seeing 40, 50, 60% off a lot of.
Different products out there.
Speaker Change: And our peers admittedly have a much broader catalog than we do and there are obviously advantages and disadvantages to that.
Speaker Change: As it pertains to love sack in particular.
Speaker Change: We are not promoting as heavily on our new inventions for instance, like the recliner and any table and some of the new products out there and we're holding the line why are we doing that we're doing that because as Mary said, we're seeing double digit quote growth year on year right. So this is a sales and marketing machine.
That is functioning quite well up until the very end of conversion, where we need to invest a little bit more to get us over the hump and help us meet our original goals.
Speaker Change: We believe there is still time into in the fiscal to do that but we're being cautious as it pertains to the go forward.
Speaker Change: We are here to build the brand we're not here to just swing.
Speaker Change: Going south of us and make it back in and you.
Speaker Change: Myopically focused on that we believe that we're building out.
Speaker Change: A brand that will be here for decades, and I think as you see us expand into new categories.
Speaker Change: Some of which we'll talk about them in just a few days you'll understand why we're so confident about this business in real time and on of course on the go forward and so not being.
Speaker Change: Flipping to the current.
Speaker Change: State of the category that we're in where.
Speaker Change: We built cash we're protecting profitability.
Speaker Change: Profitability through.
Speaker Change: Controlling SG&A and so we're just not in a position where we want to.
Speaker Change: Go Crazy with discounts and promotions, we feel very good about the businesses that we're seeing for the most part.
Yeah, and I think just a little bit.
Speaker Change: Is that you know we continue to test and learn and I think that one of the great television spark team is that agility. So we'll continue to do that but as we have always talked to as long as we have a three in front of our promotions, we don't need to go as deep as we see others that are 40, 50 60 of them.
Speaker Change: And again that goes back to as a powerful brand and you know the new innovation doesn't have a material discount at all and yet we're seeing really good uptake that so you know continue to what the team are determined to be able to pull those really strong quote pipeline street to compassion and we appreciate them.
Speaker Change: To that and that tenacity.
Speaker Change: Yeah.
Speaker Change: Wonderful and that's where my follow up how does the gross margin of a client or compare relative to your other products.
Speaker Change: Yeah.
Speaker Change: Yes, it's in line.
Speaker Change: We're really proud of this product we've targeted to have it be in line with our overall.
Speaker Change: Gross margin profile, we're proud of our gross margins as you know are there.
Speaker Change: Perhaps the highest in the category are amongst the highest in the category.
Speaker Change: And.
Speaker Change: We're seeing significant adoption of the recliner.
Speaker Change: At the moment, you know almost 50 50 between customers that existing and new customers, obviously, adding into their configuration. So.
Speaker Change: It's often running and we are.
Speaker Change: Haven't even begun advertising it to default to its full extent.
Speaker Change: Thanks for taking my questions.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question comes from the line of Matt Koranda with Roth Capital Partners. Please proceed with your question.
Speaker Change: Hey, guys. Good morning, just in the interest of focusing on near term stuff wondering if you could unpack how the fourth quarter is tracking relative to the down 7% guide.
Speaker Change: Guess, what did you see.
Speaker Change: Specifically during the Black Friday, cyber Monday period was it sort of negative high single digits in line with that guide and then maybe Keith could you share the the underlying comp assumption that's embedded in the fourth quarter guidance, just trying to get a sense for apples to apples comparison.
Keith Cigna: That extra week last year.
Keith Cigna: Sure thing Matt too.
Totally fair question, we appreciate that.
Keith Cigna: Just to be clear in terms of the specific trends for black Friday as to how they do.
Keith Cigna: <unk> sold into our full Q Q4 guidance I understand where we're gonna be a you know we're not going to be totally clear there for a couple of reasons.
Keith Cigna: You know, we still have a long way to go in this quarter, we have double digit quote pipeline growth year over year.
Keith Cigna: <unk> seen some of the let's call it lower conversion rates, particularly at the very large configuration dies.
Keith Cigna: But theres a long time to go here in this quarter, there's tons of interest we have phone numbers email and relationships with that entire quote pipeline of people that we are focused on converting as Sean mentioned, we've taken a very conservative and pragmatic approach to our ability to accelerate that conversion that's what's factored in.
We would hope that we were able to be more successful at converting a law like that that pipeline through the rest of the quarter, but given the backdrop right now where you know we're not going to read it too much.
Keith Cigna: In terms of the guidance.
Keith Cigna: The Black Friday period, the cyber five period is fully encapsulated within that updated guidance, we gave for Q4.
Keith Cigna: What I would tell you is a couple of things to think about with the Omnichannel quotes and how it pertains to let's call. It say showrooms versus web than others, just because of I think it would be useful for you. So first remember in July we had rolled out a few of our my hub, which is our omnichannel cool in CRM tool.
Keith Cigna: So now no matter, where you begin your journey would love sack, whether it's in a showroom whether it's on our website, whether it's any of that.
Keith Cigna: You now have a full seamless omnichannel way to engage with us include that quote.
Keith Cigna: As expected before launch and as we've talked about we continue to see people come into the fold in the showrooms, but then execute or close on the web which is driving our internet sales growth higher.
Keith Cigna: That that's totally as expected and what we want as an omnichannel brand. So when you're thinking about our omnichannel quota the internet sales growth that you see in the Q versus others, just keep that in mind.
Keith Cigna: The trends that the once you take that into account.
Keith Cigna: The difference between the Omnichannel.
Keith Cigna: And revenue growth really will be consistent because the contribution from the new showroom openings on a year over year basis. Its stable Q2, Q3, Q4, so really the Delta will remain the same in Q4 as well.
Speaker Change: Okay, all right got it.
Speaker Change: I'm wondering on the.
Speaker Change: It sounds like we have like a near term conversion challenge just given the double digit growth in quotes that you guys have mentioned several times, maybe could you put a finer point on just the initiatives that we have in place or the tools at our disposal to start boosting conversion within this quarter curious on that front.
Speaker Change: And then maybe just anything on the recliner.
Initial reads that you have in terms of attach rates to the sectional platform that'd be very helpful.
Speaker Change: Hey, Matt let me take those questions. So I think that.
Speaker Change: You know as we.
Speaker Change: Continue to test and you know with the quote pipeline strength that we have.
Speaker Change: You know we have an email address is we have a great way to be able to connect with our customers and we'll continue to test.
Speaker Change: In terms of how to drive that convergence. The question for US is is it you know the.
Speaker Change: Timing, because we've had a lot around you know with the compressed holiday shopping period.
Speaker Change: People are just really need to focus on buying them, but you know they came in to build a configuration because they know that they want. This it's just a matter of timing in terms of getting through this holiday period. It will stay connected with our customers. We're testing them you know, we're going to you're going to see a couple of great events that we thought leading through into the holidays with it.
Speaker Change: Gifts with purchase there is to you as well as convert family so, but again the agility of the organization to be able to drive that powered by the connections that we have with our customers and relationships, we feel very strongly with them and we'll continue that through the quarter in terms of on the recliner performance.
Speaker Change: You know we sell really good in terms of the stuff that just launched three weeks ago.
Speaker Change: Into our showrooms and online as we talked about pulling that forward and just great work. The team's early result.
With significant eating all kpis, you've already sold as a full payout and unit and that's the best customers that Havent factional already in arriving at Dan and that just super excited to have that and applying that component and then also a very great level of new customers that are coming in to add back into that.
Speaker Change: Their initial set up and we've done this without switching on them any of the media campaign or any material discounts as Sean mentioned, because we really believe in the power of this incredible innovation customers coming back and they're telling us that just blown away by the comfort.
Speaker Change: Love. The fact that you were able to put it in any location all the sectional which is just a huge advantage to anyone else and then also that you can actually have it set up.
Speaker Change: Flat against the wall without having to have any clearance, which is a huge advantage for that so what you know Super Rally day, you know in a lot more opportunity for us to go after the eyeballs that are buying.
Speaker Change: Since we launched the campaign.
Speaker Change: And you know in the meantime, Sydney backup the teams are all over the opportunity to be able to drive the improvement.
Speaker Change: Water fall as we certainly have the customers that we just need to get them across the line, but we're very grateful for that.
Speaker Change: Yeah, and just to build on what Mary said I think we're we're very optimistic about the period post Christmas you know remember our fiscal year doesn't wrap up until the end of January which is a strong month for home decor as people shift their thinking from entertaining or celebrating too.
Speaker Change: You know steadying their space for the year and it's also as Mary said, a shortened whereas we've talked about a shortened holiday season, right. So I think that the frenetic pace of holiday buying and being an election year. All these things pile on to really change the dynamic.
Speaker Change: Purchasing cars.
Speaker Change: You might say why not lead your guidance, where it was or chase that look.
Speaker Change: We're seeing these shifts in real time, we remain optimistic we have a lot of tools at our disposal and this quote pipeline that married speaks of is it just to put a finer point on that.
Speaker Change: Really unique to love sack, let me explain why.
Speaker Change: While it's certainly not unique in the furniture landscape to come in to some of our better competitors.
And Gen.
Speaker Change: Generate quotes for different things there is no way to transact on Sac cells, particularly a showroom without a handheld or a handheld experience with one of our tremendous.
Speaker Change: My salespeople are good at what they do you know you're going to play with some blocks you're going to look at all the add ons that are that can be quite complex and stealth tactic deep sides to reclining seats. Your choice of arms. This requires a court process that gives us.
Speaker Change: Not just the customers email, but their phone number in most cases, we're texting, we're calling we're working and client telling in ways that I think a lot of businesses don't and can't because either the information wasn't gathered as people wander around AR showrooms and look at price tags can make their own notes.
Speaker Change: Which you can't really do it loves shaq or from our e-commerce competitors, where no such client telling as possible and so love socket. This is a really unique strength for loves shaq in and that's why you know I think.
Speaker Change: If we sound calm in the face of some of these headwinds it's because we're seeing just significant quote growth, we will find a way to to to close a lot of that it's just a question of whether we will close it enough of it before the end of this fiscal year exactly and so we continue to charge for it and appreciate.
Speaker Change: The questions.
Speaker Change: Okay guys. Thank you for all the detail and then I'll leave it there and look forward to next week.
Speaker Change: Thank you. Our next question comes from the line of Alex Furman with Craig Hallum Capital Group. Please proceed with your question.
Alex Furman: Hey, guys. Thanks, very much for taking my question I would love to ask about the transition to the new media buying agency I think I remember earlier. This year there were some headwinds just during the very early days of the transition now that you've had more time in some experienced during the peak holiday season.
Alex Furman: Can you talk about how that transition has gone.
Alex Furman: And if you think that was a good move.
Speaker Change: Hey, Alex Thank you so much yet, but we continue to see based on our.
Speaker Change: Our media performance and the return on AD spend we feel very good about that transition and it's wechat before it was choppy and culture, one that Oh, we lose that we're seeing across but that you know that performance has continued to be a lot stronger both in buying power.
Speaker Change: The ability to get access to a much better pricing as well as even just much better media spot. So we've been investing in things like M. B, a which we know is happening a key cultural moment and a lot of us left in terms of customers really watching that set medium as well as even just a lot more optimal.
Speaker Change: <unk> as we see inflation and paid search.
Speaker Change: That continually moving and driving it a lot more real time than we were able to do a year like that so what you know from that side, we feel very good on that performance and obviously, that's led with our teams working with them.
Speaker Change: We do though see a kick.
Speaker Change: Can you talk about unity as we've talked about the strength of our brands and being able to drive that accelerated conversions that we can to continue to test and then again they have more resources that are able to be doing that for us.
Speaker Change: And we're seeing even more step into things like insurance and marketing, but you know we've done a great job with but the teams are really starting to drive that mall.
Speaker Change: And then I think the last piece is just the digital marketing effort really heavily focused around localized targeted tactics to get shoppers and so on.
Speaker Change: That touch points in and build a quote and have a demo I think as Sean talked about is just such an important task.
Speaker Change: Media.
Speaker Change: Affect hitting us so feel good I think continuing to drive that.
Speaker Change: So of course, it all and looking forward to Oh, what's the thing that I think Christmas comes threat.
Speaker Change: Okay. Thanks, very much Mary I appreciate that color.
Thank you Alex.
Speaker Change: Thank you. Our next question comes from the line of Brian Nagel with Oppenheimer. Please proceed with your question.
Speaker Change: Hi, This is Andrew on for Brian Thanks for taking your questions.
Speaker Change: So the first is just kind of a follow up to a lot of the commentary around Q4 guidance I know in your prepared remarks, John you commented on the near term weakness around Preelection period, well Austin during the market share gains and the strength and the competitive positioning around recent product launches. So I guess the question is really what are you seeing in this post election period, and how we should balance the commentary.
Speaker Change: Around product launches being positive and potentially market share gaining was also softer topline guidance for Q4.
Speaker Change: Yeah, Great Great question, it's a mixed bag for sure we are.
Speaker Change: Certainly we're.
Speaker Change: Interested to see how the consumer would react post election.
Speaker Change: You know pre election choppy for all the obvious reasons and post election for for this category has continued to be about the same you know we haven't seen a major shift in consumer behavior that that perhaps we were hoping for them on the other hand, we as we said it's a combination of the <unk>.
<unk> quote pipeline people are out there people are shopping they're just being a lot more cautious.
Speaker Change: With their wallets and.
Speaker Change: Being more considered them, especially in the short end.
Speaker Change: <unk> period.
Speaker Change: As it pertains to market share gains there.
Speaker Change: Our our comments and in conclusions there come from the fact that love Sac has continued to beat the category yet. Despite the fact that you know.
Speaker Change: We're a little bit down or flat.
Speaker Change: Depending on which metric we're talking about the categories double digit down and has been for a very long time and so we.
We feel good that we are gaining market share. We also are you know we have a real time or near real time brand tracker.
Speaker Change: Loves Shaq is data obsessed right and so we're looking at how our brand compares to other brands in the marketplace. We have very detailed research.
Speaker Change: In the landscape that we pay close attention to and we feel good about the efficacy of our top of funnel and mid funnel marketing really all the way through but we're just not closing on quite enough quotes in real time before Christmas.
Speaker Change: To make a steel Uber confident about the guidance and it stood before and so we'll see what happens post Christmas we will continue to pull levers. We will continue to find more clever ways to promote more clever ways to communicate.
Speaker Change: And are you.
Speaker Change: We're cautiously optimistic but so far.
Speaker Change: It's been steady as she goes which in this environment for this category is not ideal.
Speaker Change: And where.
Speaker Change: Where we.
We're recognizing that.
Speaker Change: Yeah.
Speaker Change: One other thing to add on this just a dynamic that's been playing out that we're working on understanding and addressing real time as it's been the use of our customers are the of the loves that financing program.
Speaker Change: Through the third quarter and through Black Friday, we saw almost.
Speaker Change: Almost 500 basis points less of our revenues flowing through that financing program. Then we saw the year before.
Speaker Change: There's a number of things number of things that could be driving that including changes that came out through that whole industry earlier. This year, where there was a program. He has put in place for programs like the equal payment no interest.
Speaker Change: You know and as such we've been toying around with.
Speaker Change: Shorter duration types of programs that don't have the you know the.
Speaker Change: The initial fee.
Speaker Change: So on and so forth. So we're in the process of tweaking that with our partner and synchrony to try to optimize.
Speaker Change: And see if that could be part of what's leading to less.
Speaker Change: Conversion at the end of the day of course, thus far so that's another opportunity for us to lean into and sort through what's the optimal approach for our financing promotional offer to help drive that quote conversion.
Speaker Change: But I did I did think that might be interesting.
Speaker Change: Absolutely no I appreciate that and then if I could just do a follow up and I. Appreciate your commentary around the recliner seating and the consumer reaction around that but any additional commentary you can provide around consumer reaction to the other various product launches you've had throughout the year.
Speaker Change: Hey, yes, and yes.
Speaker Change: Oh, Yeah sure do you want to take it back.
Speaker Change: You got it.
Speaker Change: Yeah. So we've said with you before any table came out that you know in quarter three and you know, we're seeing a great opportunity with current customers, where they are adding in any table and then new customers that they you know great opportunity to be able to have that.
Speaker Change: Coffee table all in line a table that they cannot see support how they live their lives with all of that functionality.
Speaker Change: So we see that and we've not been promoting as Sean said around on our renovations, though again learning through in terms of the fee, but when it is full price and where the customer engagement is we're seeing customers, particularly with larger configuration.
Speaker Change: I really engaging in any table and then I think the other one just probably as I highlighted the pillows accent chair.
Speaker Change: As we said before that was off to an incredibly strong start highlights does the accent chair of the season and we did sell out so that was all that in terms of.
Speaker Change: Yeah recovery around supply chain, which is the piece that we're starting to think waterfall.
Speaker Change: And be able to switch back on that media that like Wow, because with the longer lead times, you know, we could pull that back a little bit so that one in particular, we feel very excited as we build out and then I don't know Sean if you want to talk about the other exciting innovation on the charter side that we just launched a few weeks ago.
Shawn Nelson: Yeah, I mean to the list of innovations from love sack. This year is our longest ever and it speaks to.
Shawn Nelson: The bigger picture of the brand we're building and the investments that we've made you know we've invested in and a lot of head count and a lot of resource in order to put out innovations faster.
Shawn Nelson: Drive sales and this is a big reason for our market share gains even in this down a year.
Shawn Nelson: And it's important I think to recognize that were it not for these new product introductions.
Speaker Change: We would not be making the market share gains he believed that we're making and so as Mary said, besides the pillar sector absent frame, which has its now kind of internet famous this product. It's it's gone viral on tick tock and Instagram, we sold out not because we order to to you obviously.
Speaker Change: We order to a plan, but we believe the cover off the ball of that product.
Speaker Change: Even in this context.
Speaker Change: And recently the charge side right. This is the stealth Tech introduction. This is a side where you can have one of those embedded chargers invisible to attach invisible to the eye underneath the sectional cover and this one you can not just having one position on the arm or the back by the way there.
No change all right a sectional side can be used as an arm or a pack, but then the charger itself can be placed within the pes near the front near the middle near the back of that arm.
Speaker Change: Underneath the cover it every these are inventions that don't exist. They don't exist in the marketplace. We're on the cutting edge of technology embedded in furniture, we're the only one doing anything like this particularly with this degree of sophistication, it's a faster wireless charger then.
The one that preceded it in the original stuff Tech program.
Speaker Change: And we have a lot of other stuff tech innovations to come over this next year on top of of course, the furniture innovations. What's this all driving it's.
Speaker Change: It's driving.
Speaker Change: Not only attachment rate of course in a L V up over over all in the bigger picture.
Speaker Change: But it's driving customer loyalty right because you can't once you're on this platform. It's a very sticky platform and it pays off you know your major sexual divestment a couple of years ago. Now you can add on there to chase Holy Cow I didn't even.
Speaker Change: No that this thing we'd be able to do this stuff when I bought a couple of years ago, but it's also driving a huge repeat business.
Speaker Change: I think what's really exciting is that a few of these innovations. Most of these innovations have been mentioned and theres more by the way that we're not even talking about.
Speaker Change: Surface products, we've got the we call them P protectors that the insert protector is easier.
Speaker Change: Hovers within your coverage to protect.
Speaker Change: Your animals have you or your kids for making messes unused tax laws and protecting that investment. These are things that the customer has been asking for so what we're seeing with almost all of these introductions mentioned, it's about 50 50 adoption right, we're seeing as much repeat business.
Speaker Change: Old customers coming back and adding on as we are to new customers picking it up because their demo it in real time in children. So it's a really exciting time, it's frustrating that the macro is not cooperating.
Speaker Change: And we'll see where it goes but were who isn't cucumber. We are focused on the future. We've got a lots of cash in and lots of ability to pull levers and protect SG&A and and we're prudent about this business you know we're not here to.
Speaker Change: Yeah, you know just need a quarter or or or what have you. We're here to build a brand that's here for decades, and we're going to manage the business in that manner.
Speaker Change: Thank you very much for that color I appreciate it and yeah looking forward to hearing about your initiatives next week at your Investor day. So thank you.
Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Nelson for any final comments.
Shawn Nelson: Yeah, we just want to say thank you to all of the investors that continue to support this business and of course to all the love Sac family members out there both the employees and customers that really.
Shawn Nelson: This business thrives hope you have a wonderful holiday season.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.