Q2 2026 La-Z-Boy Inc Earnings Call

Yesterday, following the close of the market, we reported solid October ended second quarter results.

We were pleased to once again. Deliver modest sales growth particularly in our wholesale segment where we also again delivered margin expansion continuing to create our own momentum and what remains a choppy Market.

Highlights for our second quarter included total delivered sales of $522 million, up slightly from the prior year.

in our retail segment delivered sales increased slightly and total written sales increased 4%

with same store sales improving sequentially over the last two quarters.

In addition, we opened 5 new company-owned stores in the quarter, bringing our total to 15 new company-owned stores over the last 12 months.

And our wholesale segment delivered sales growth of 2%, once again led by growth in our core North American La-Z-Boy wholesale business.

And we made continued progress on our distribution and Home Delivery transformation project with the consolidation of two additional distribution centers.

Our GAAP operating margin was 6.9%.

And adjusted operating margin was 7.1%.

We generated strong, operating cash flow of $50 million for the quarter. Triple last year's comparable, period.

And we announced a 10% dividend increase.

Marking our fifth consecutive year of double-digit increases.

Overall, our operating performance for the second quarter was solid in the midst of a choppy landscape, with sales slightly ahead of the midpoint of our guidance and adjusted operating margin that exceeded our expectations.

As I noted total written sales for our company-owned retail segment, increased 4% versus last year's second, quarter driven by new and acquired stores.

Written seems store sales which exclude the benefit of new and acquired stores. Decreased 2% for the quarter but demonstrated a continued sequential Improvement. In written same store sales Trends over the last 2 quarters.

While consumer trends remain challenging for our industry, we continue to be agile and hone our execution.

We saw our strongest results of the second quarter in October, where we achieved positive written same-store sales.

However, results in early November remain mixed.

And for joybird total written sales for the quarter, where a positive 1% increase versus year ago, demonstrating significant Improvement versus the prior 2 quarters and driven by strength in retail store performance.

We also have made substantial progress against our strategic initiatives, focusing on our core vertically integrated North American upholstery business.

13-store acquisition in the Southeast US region, expanding our ownership of important growing markets.

We announced the planned exit of non-core businesses, including Kincaid case goods, American Drew case goods, and Kanna upholstery.

And we announced the proposed closure of our UK manufacturing facility.

Notably. We expect all of these exits to be substantially completed by the end of our fiscal year.

We have strategically realigned our senior commercial leadership, as well as realigned our corporate staffing to more efficiently support our streamlined business.

These strategic initiatives are a clear demonstration of our proactive approach to driving our own momentum in what remains a challenged marketplace.

We remain agile and committed to strengthening our business to prudently navigate the current environment, while at the same time best positioning ourselves for the next 100 years.

To expand a bit more on these important Century Vision strategic initiatives.

We were thrilled to complete our acquisition of the 15 storeys.

These acquired stores are located in attractive markets: Atlanta, Georgia; Orlando and Jacksonville, Florida; and Knoxville, Tennessee.

And our ownership of these markets will enable new store growth on top of the already high-performing existing store base.

this is the largest independent store acquisition in our company's history and we'll add an estimated 80 million dollars in annual retail sales and

Roughly $40 million, net to the total company on a consolidated basis.

Recall, our wholesale segment already manufactured and sold products to this business and therefore already recognized the wholesale portion of these annual sales.

Given the strong profitability of this network, immediate sales and profit accretion and opportunity for further marketing expansion. This is a very attractive investment for our company.

As an important pillar of our Century Vision strategy over the last several years, we have maintained a consistent cadence of independent dealer acquisitions, and we see opportunity for a continued pipeline over time with roughly 40 independent dealers and nearly 150 independent stores still in our network.

New store growth is another key lever to growing our retail business. Our strong balance sheet gives us the flexibility to make disciplined investments even in more challenging macroeconomic conditions.

We opened 5 new company-owned stores in the quarter and close 3.

And we opened 15 new stores in the last 12 months and closed 5.

As we deliver the most significant period of new retail store growth in our company's history.

Looking back over the last 24 months, we have added 20 new company-owned stores as we continue to expand our La-Z-Boy store network towards our target of over 400 stores.

And with this recently completed acquisition of company-owned stores. Now,

Representing 60% of the current 30,070 La-Z-Boy stores, Network is experiencing a significant increase from 45% of the approximately 350-store Network just 5 years ago.

We were also pleased to open our 15th Joybird store just last week in Eastern Town Center in Columbus, Ohio, one of the Midwest's premier open-air shopping and dining destinations.

We remain on track to open 3 to 4 new Joybird stores this fiscal year and are pleased with the ramp-up and performance of our Joybird retail stores.

In wholesale, our refined channel. Strategy is also contributing to our sales momentum, as we expand our brand reach with compatible strategic partners,

We also launched the La-Z-Boy product at Costco.

On floors in over 350 locations, as well as on Costco.com.

This follows the addition of Farmers Home Furniture, and there are over 260 stores in the Southeast in our first quarter.

Each of these strategic additions is complementary to our existing distribution and expands our brand reach to even more consumers.

And lastly, highlighting our industry-leading service levels. We're proud to once again be named to Forbes' 2026 Best Customer Service list, recognizing our team's passion and commitment to our mission of transforming homes, rooms, and communities for our customers and consumers.

we're also capitalizing on the momentum, from our ongoing initiatives to continue, rolling out, our new brand identity, which has been well received

The response from media customers and consumers has been overwhelmingly positive, generating headlines such as "La-Z-Boy just rebranded to prove it’s more than your grandmother’s recliner," and "How La-Z-Boy made comfort cool again."

We plan to build on this success and continue executing our strategy to drive brand consideration and purchase intent across a broad range of consumers, including Millennials and Gen X.

On our final strategic pillar strengthening our foundational capabilities including building a more agile supply chain.

We are making strong progress on our multi-year project to transform our distribution Network and Home Delivery program.

This transformation will reduce our distribution footprint, from a total of 15 large distribution centers to 3 centralized hubs.

In the second quarter, we Consolidated an additional 2 distribution centers.

As a reminder, the cumulative benefits of this transformation will include an estimated 30% reduction in square footage across our warehouse Network.

An approximate 20% reduction in mileage of inventory, traveled across our Network.

Doubling our delivery radius from 75 to 150 miles, enabling us to reach even more consumers.

And improved inventory productivity and working capital levels.

All while improving an already strong consumer experience.

And once completed, delivering 50 to 75 basis points of wholesale segment margin improvement, the equivalent of up to 50 basis points on the total enterprise margin.

Finally, as I noted earlier, we are taking steps to optimize our portfolio by focusing on our core vertically integrated North American upholstery business.

We have announced plans to exit our non-core, wholesale case, goods businesses, which include Kincaid case goods American, Drew case, goods and Kincaid upholstery.

We are currently evaluating alternatives for these exits, and we'll provide more details as negotiations progress.

Importantly we will continue to offer optimized case goods offerings in our Lazy Boy, stores Comfort Studios, and branded spaces as they enable consumers to furnish their homes and Elevate our design business.

And we are confident our new structure will further enhance our offerings in the future.

In addition.

While we remain committed to Growing our lazy boy, business in the UK.

We have announced the proposed closure of our UK manufacturing facility in favor of more financially sustainable sourcing alternatives.

We are currently in the required 45-day collective consultation period, as required by the UK statutory process.

We expect all of these strategic actions to be substantially completed by the end of our fiscal year.

And we are committed to supporting our customers, our consumers, and our employees through these transitions.

And as we announced last month,

And corporate staffing to focus on our core and enhance operating efficiency.

As our industry continues to evolve, it's important we remain agile and evolve our business to position us for continued profitable growth into the future.

Collectively these initiatives sharpen, our focus on growing our Core Business, where we have a leadership position and a right to win with the consumer.

They also align with our Century Vision goals of growing, double the market and delivering double digit operating margins over the long term.

The furniture industry has experienced tremendous change and challenge in recent years. Despite this, our mission remains the same.

To empower our people to transform rooms, homes, and communities.

Our iconic brand, well-positioned manufacturing base, strong balance sheet, and talented team provide the foundation for sustained sales growth and margin expansion.

And now, let me turn the call over to Taylor to review the financial results in more detail.

Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a gap and adjusted basis. We believe the adjusted presentation better reflects underlying operating trends and performance of the business.

Adjusted results exclude items that are detailed in our press release and in the tables in the appendix section of our conference call slides.

On a Consolidated basis, fiscal 2026 second quarter sales. Increased slightly from prior year to 522 million as growth in our retail and wholesale business. Partially all set by lower delivered volume in our joy bird business.

Consolidated Gap: Operating income was $36 million in adjusted operating income and $37 million.

Consolidated Gap, operating margin was 6.9% and adjusted operating margin was 7.1%.

Retail margin delivered due to lower delivered same-store sales and the impact of investment in new stores was partially offset by stronger wholesale segment margin, which included solid operating trends as well as the 110 basis point benefits of a change in our dealer warranty arrangements during the quarter.

Diluted earnings per share totaled. 70 cents on a gap basis and adjusted diluted EPS with 71 cents flat versus last year's comparable period.

As I moved to the segment discussion, my comments from here will focus on our adjusted reporting unless specifically stated otherwise.

Starting with the retail segment, for the second quarter, delivered sales increased slightly to $222 million.

Retail, adjusted operating margin was 10.7% versus 12.6%, due to fixed cost to leverage on Lower delivered, same store sales and investments in new stores.

For our wholesale segment, delivered sales for the first quarter increased 2% to $369 million versus last year, driven by growth in our core North America La-Z-Boy branded wholesale business.

Adjusted operating margin for the wholesale segment was 8.1% versus 6.8%, a 160 basis point improvement driven by lower warranty expense due to the change in our dealer warranty arrangements, as well as solid operating trends.

Partially offset by incremental expenses related to our distribution transformation project and increased advertising expenses.

On our wholesale business. We view our North America supply chain as a competitive Advantage with approximately 90% of finished good Goods. Produced in the US as such we are well positioned to navigate the current trade and tariff environment.

For Joybird, reported in corporate and other delivered sales for $35 million, down 10%, primarily due to lower delivered sales volume.

Joybird's operating loss increased versus the prior year primarily due to leverage on lower Joybird delivered sales.

Moving on to our Consolidated, adjusted gross margin and sgna performance for fiscal 2026. Second quarter.

Consolidated, adjusted gross margin for the entire company increased 10 basis, points versus the prior year of second quarter.

The increase in gross margin was primarily driven by lower input costs, led by favorable ocean freight and improved sourcing.

Partially offset by higher supply chain costs, including friction costs related to our distribution and Home Delivery transformation.

Bit of a change in our dealer warranty Arrangements in the quarter, that resulted in a 1-time benefit, due to a reduction in our ongoing warranty liability.

This change has no impact on the end consumer and provides significant improvements in program management and administration.

Our effective tax rate on a gap basis. For the second quarter was largely unchanged at 26.7% versus 26.3% in the second quarter of fiscal 2025.

Turning to liquidity, we ended the quarter with $339 million in cash and no externally funded debt. We generated a strong $50 million in cash from operating activities in the second quarter, triple the year-ago period, with improved working capital and higher customer deposits.

We invested 20 million in capital expenditures during the quarter primarily related to new stores and remodels and supply chain related Investments.

We continue to believe that the best use of our cash and a highest return on investment is prudently. Reinvesting back into the business as such. We remain committed to disciplined investment of new stores, Acquisitions in our distribution and Home Delivery transformation project to profitably grow our Core Business.

Regarding cash return to shareholders year to date, we will return $31 million to shareholders through dividends and share repurchases, including $18 million paid in dividends.

We repurchased 23,000 shares in the quarter, which leaves 3.4 million shares available under our existing, share repurchase authorization.

Subsequent to quarter, end reflecting the confidence in the company's Financial strength and long-term growth prospects, the board of directors increased, the regular according regular quarterly dividend by 10%. This is the 5th consecutive year of double-digit increases to the dividend.

We continue to also view share purchases in our dividend as an attractive use of our cash and a positive return to shareholders.

Capital allocation of fiscal. 2026 is tilted more into the business through investments in the recent 15 store acquisition and our distribution and Home Delivery transformation project.

Longer term, our Capital allocation Target remains consistent to reinvest. 50% of operating cash flow back into the business and returned, 50% to shareholders and share our purchases and dividends.

Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our third quarter.

We expect fiscal third quarter sales to be in the range of $525 million to $545 million. A growth of 1% to 4% year-over-year in adjusted operating margin is to be in the range of 5% to 6%, reflecting advancements in our sensory vision initiatives.

Friction costs related to portfolio optimizations and supply chain transformation, along with a measured view on the uncertain macroeconomic backdrop.

We expect to open approximately 15 new companies in independent La-Z-Boy stores during the full fiscal year, with the majority of those being company-owned, as well as 3 to 4 new Joybird stores.

We continue to expect our tax rate for the full year to be in the range of 26% to 27%.

We expect Capital expenditures to be in the range of 90 to 100 million for fiscal 2026 consistent with prior guidance.

This includes Investments for new stores and remodels. Our multi-year project to transform our distribution Network and Home Delivery program and continued manufacturing related Investments,

Of note, I want to spend a few moments on the expected Financial benefits of our strategic initiatives, to hone our portfolio, which Melinda covered earlier.

With the combined impacts of our 15 store acquisition, our case goods exit, our proposed closure of the UK facility, and our management reorganization, we expect the going annual impact on our enterprise to be an approximate $30 million net sales decrease, in a significant adjusted operating margin improvement of 75 to 100 basis points to the entire enterprise.

We expect all of these initiatives to be substantially completed by the end of this fiscal year. At this time, we do not expect these exits to have a material one-time gain or loss to the enterprise.

Lastly, we anticipate adjustments for all other purchases counting charges for the year to be in the range of 1 cent to 2 cents per share.

And with that, I will turn the call back to Melinda

We are sharpening our focus on our core businesses and enhancing our agility to navigate the challenging home furnishings environment. At the same time, we're executing on our long-term strategic objectives.

Before I close, I want to welcome the employees of our latest acquisition.

And I want to thank all of our employees around the world for their continued dedication to our mission of bringing the transformational power of comfort to more homes.

And now I'll turn the call back to mark.

Thank you. Melinda.

We will begin the question and answer period. Now

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Your first question for today is from Anthony Libedinsky with Sidonian Company.

Hey, good morning everyone and thank you for taking the questions. Um so you know first uh uh just wanted to uh check in with you about um just if you saw any differences in Geographic uh,

Um, you know sales dispersion, you know, in your markets? Or was it more or less kind of consistent in your operating area?

Nothing. Uh, nothing dramatic. Anthony, good morning. Um, you know it on any given and on any given week you might see a little bit of choppiness. You know across different different geographies but nothing significant. Um you know, Canada continues to be more challenged just you know, with trade tariffs situation and and some of those areas there, so that is maybe a little more bouncy but nothing. Dramatic.

Gotcha. All right. Yeah. Thanks, Melinda. And then, um, just, you know, can you also comment on the extent of your pricing actions? And also, just just wanted to get a better understanding of, of how do we think about unit volumes and Q2 and your expectations for Q3 as it relates to unit volumes?

Hey Anthony. Good morning. Uh, yes. So on on pricing, we mentioned, you know, throughout the year um, in our Playbook to deal with uh trade and and tariff changes um, 1 of our levers, uh, Beyond just sourcing adjustments or inventory. Moves is, is some nominal pricing action. So earlier in the year, we took a round of nominal pricing, um, based on uh, trade, uh, policies at that time.

given, uh, some changes with the 232 and the sectoral tariffs on up, upholstered furniture within the quarter, we actually took another round, um, of nominal pricing, um, to help offset, um, but still well positioned, um,

Competitively versus our peers again, you know, 90% of the products we make are in the U.S. Um, so that other 10% is a little bit exposed but still very well positioned. So, in aggregate, through the course of calendar year '25, we're still in the single digits, which, based on everything we hear from other manufacturers or retailers, is at the very low end of what we're hearing is out in the market, um, on volume, per se.

Directly related to pricing, you know, it's just the hard to piece out in this industry. Particularly with everything else going on around traffic and other kind of just general um, consumer uncertainty. Um, but in our quarter on our main North America wholesale, lazy boy business, we saw a volume flat year-over-year which relatively you know, speaks to, you know our pricing is going well in the market.

Thank you, Taylor, for that. And then, um, also, you know, in terms of the guidance, uh, you talked about friction costs related to portfolio and supply chain optimization costs. Can you expand on that and help us better understand the expected impact of this? And, you know, when should we see less of those friction costs?

a, a

Those transitions completed by the end of our fiscal year. Um so I'm really just talking more about the back half of the year um and particularly quarter of 3. As I outline, those friction costs as it relates to those those 2 areas.

Gotcha. All right and then my last question, you know? So you mentioned you know expanding into Living Spaces and Costco. I know last year you expanded more into Rooms To Go. How do you guys think about the opportunity there as far as as it relates to expanding to other wholesale Partners? Um, you know, just just broadly speaking. How do we think about the opportunity going forward?

I think, um,

Couple of things. Our Focus over recent years has been very much around making sure we've got the right, strategic partners that are going to represent our brand. Well, um, and that are looking to to, um,

Grow and accelerate and give the consumer the right experience. Going forward, we certainly see that those that are winning out there in a very tough marketplace right now. Tend to be the more sophisticated kind of midsize Regional players. And a lot of those are the type of partners that we are that we're working with. Um, It's always important that it's compatible distribution, that it's not going to, you know, it's going to reach a consumer that we're not otherwise going to reach in our Furniture Galleries.

Um we've had some really good wins. Um as you noted here in the last couple of months with particularly you know as you mentioned the Living Spaces the farmers down in the Southeast, um, you know recent Costco which just puts more eyeballs on the product. Um I think going forward because we want to make sure that distribution is is compatible with also growing our own retail. Um but we'll see is is probably as much an expansion of growth with the existing base and really building um building with those as opposed to lots of big additional um, you know, big additional new customers. But at the same time, the the uh the the world is always changing and we're going to make sure we're working with the right partners for the uh, for the medium-term in the long term.

Uh, that makes a lot of sense. Well, thank you very much and best of luck.

Thanks Anthony. Thanks Anthony.

Your next question is from Bobby Griffin. With Raymond James?

Thanks for taking my questions.

I guess first Taylor just want to make sure I understand the impact here of all, all the different moving parts. So the the acquisition of the 15 stores is going to add 40 million of net sales to the Enterprise. Then we sold off some of the non-core businesses in. I believe, in your preparing March, you were kind of netting the 2 against each other. So, does that? Is it correct to imply that the the

To win from selling off the non-core businesses is about 70 million dollars of of sales that needs to come out of the wholesale segment.

Yeah. Your math is correct, Bobby, and, and note were in a process now of evaluating sales or other strategic transactions, but net of caught this fiscal year. That should be the impact of the entire Enterprises that plus 40 from the retail acquisition minus 70 from the exit of these non-core businesses.

Okay. And then that would then you would see the corresponding step up within wholesale, margins from the savings and the, in the better efficiency. So that the the, um, I believe you called it. 75 to 100, is really kind of just a wholesale margin. Step up that segment 75, the 75, it's all bucketed together. Uh, Bobby on the retail acquisition, these wholesale moves on non-core as well as the commercial leadership realignment. So, all of that together is the 7500 to the entire Lazy Boy Enterprise.

Okay. All right. That's helpful. Um, that helps clean it up. And then secondly, on the tariff aspect, some good commentary. I appreciate that it does the nominal pricing you guys took here in Q2. Will that cover for the expected kind of modest step up that we see on January 1st in the 232?

Yes.

Okay, so you're so you're all, you're all covered. Now, based on what we know today, from tariffs, we've we've executed our Playbook. And some of it is also adjusting where we make products. It's more optimized, our Network for current trade policies, but as well as additional nominal pricing, we put into Market, um, at the tail end of the quarter, um, to both cover the current, as well as the expected change on January 1. Um, obviously we'll continue to be agile, um, if anything changes between now and then, but, you know, overall, we feel really good and, well, positioned with our 90% of our product made in the US.

Questions, uh, inventories were down pretty big. This quarter is that just some of the efficiency gains starting to flow through or, or just kind of any commentary around that on a year-over-year basis. I was referring to

Um, you know, just just great work by our supply chain team on being really tight on our inventory management while also protecting in stock and service levels. I mean, we continue to get better year-over-year. Um, so really, it's just, you know, the, the everyday blocking and tackling and just getting and getting smarter. Uh, you know, this time, we do have a little bit of a, a build in the comparator period. As we were building some building, some stock, uh, to protect ourselves in certain cases on cover availability, but overall, just great work. Across the organization are getting tighter on our working Capital Management.

Okay, I appreciate it. And then lastly, I guess Melinda this is the big acquisition uh with 15 stores. So um, and really good to see you kind of get over the Finish Line. Can you just talk about, you know, now with the with the some of the organizational changes the integration to that and then also on the retail Network, as we think about kind of the next leg of growth here, where we at from, you know, quality of the store base in terms of like, you know, which ones would, how many remodels would you like to see? And and kind of opportunities there for the next, you know, multi-year uh kind of Journey.

Yeah, a couple of things on on retail. Um, you know, we will open a estimated about 15 this year and we've talked about continuing the pace of, you know, sort of net new stores in the 10 to 15 range. So we we intend to continue that, you know, that trajectory, um, you know, as we've talked, we see our way to over 400 stores and we're about 370 across the network at this point. And uh, you know, those will be more heavily weighted towards company-owned stores. As we continue that expansion from a remodel standpoint. We have invested heavily over the last 5 plus years to make sure that our stores across the network along with our independently owned are the appropriate reflection of our brand. And so I feel good about the overall um, youth of our Fleet, if you will. Um, and we're going to continue to make sure that that that um, city is that

Way because it, it's important that consumers are inspired when they come into our stores, particularly when they're going to come in and participate and design, and really think about bringing that product and investing into their home. Um, we will, uh, continue to expand our rebranding across all of our stores over the next several years and we're doing that prudently just given the time right now, but we've had such a great reception to the, you know, the the the new branding. Um, and we want to get

That out across all those stores, but as I say, we're going to do that prudently as we go.

The other way to expand the company-owned is, of course, the transactions. Like you said, um, very pleased with the integration of this, of, this big acquisition and how that's all been working together for for the company. Um, and I think there's still pipeline there again, those are those are um, you know, those are our arms length transactions, but there are still a lot of independently owned out there and I think over time we'll have more opportunity to expand in that way.

Um, and then I, I can't talk about retail without calling out. Just the fact that super pleased with in-store execution, even in really challenging times. Um, and so we continue to strengthen strengthen that execution and then to your point, make sure that we are appropriately. But efficiently, uh, supporting that, that those operations as well. And that kind of speaks to your point on on overall reorganization. Um, so really good about how that's going right now with our 2 commercial presidents and and the move of marketing over into the retail organization. Um, we're already seeing some some early wins there. Um, and again, important to be as agile and effective as we can be um in uh, what's still going to be? I think a challenging environment here for a while.

Thank you and I guess 1 final 1. If I can sneak 1 more in is, is the, you know, kind of selling the non-core businesses. And then, as you think about, giving your designers in the stores, the the product portfolio, they need. How do you kind of balance that I guess? Is there is there opportunities on case goods for Partnerships or do you still have some case, good sourcing that could be there and this is just a different non-core business, that was sold just anything around uh, that aspect.

Store. Uh, we have the ability to to, um, service the consumer around whole room and particularly, with our design sales, and even in our branded spaces, and our comfort Studios, with our strategic Partners, it's important that we have the right case goods to enhance what we're doing from an upholstery standpoint that said. Um, it's not our core competency uh to to own the entire um design and and creation of the case goods or even our right to win with customers on our wholesale, uh, case goods business. It's just it's not our core competency so we believe there are better places to do that and we're excited about sort of Reinventing that space. Recognizing that change is always a challenge. Um, but we are committed to having the right case goods products in our Stores, um, to enhance the upholstery side, but do it in a, in a more efficient way. And in a way where we have a real right to win on the design,

Side as well.

Thank you very helpful. Best of luck going forward.

Thank you. Thanks. Bye.

Your next question for today is from Brad Thomas with keybanc capital markets.

Uh, hey good morning. This is Taylor Zeon for Brad. Um, Melinda, you give some good color on Trends throughout the quarter while. Also noting that no, no, you know, November was a bit mixed. If I recall, I think last year you saw in the industry saw improved demand in in November post-election. So just giving the comparable month was a bit stronger. Um, you know, how are you thinking about underlying demand Trends as you head into, you know, your physical 3 Q?

Yeah, good morning. Um, yeah, you you're spot on. I think the the consumer first of all, if you just look at in the absolute, the consumer is is challenged and and demand remains remains choppy. Um, and so we need to be agile and prudent. As as we deal with that, you're absolutely right. That the, the comparison period for post election last year is a challenging 1. Um, and so again, that's kind of why we are. We are navigating this in a in a prudent way, um, and looking to make sure that we are efficient in how we're executing, but doing everything we can to reach those consumers that are out there and driving the strongest absolute results that we can

Gotcha. Um, and and maybe if we could just follow up on, um, I I don't think I heard much on the prepared remarks but just curious on what you're seeing, um, out there in the market relative to, uh, promotions and maybe what you're thinking about, uh, how you're thinking about promotion promotional intensity. Um,

You know, later in in this quarter and maybe into 2026 as the industry kind of seems to be flattening out.

Yeah, I think to, to start at the supply side, you know, as as Taylor noted we are, you know, our our pricing has been been relatively nominal single digit, um, and so we're positioned very well what we've seen from other suppliers. Other manufacturers is, is significantly higher pricing and so, that's going to drive cost into the business overall. We're talking, you know, double digits, pretty pretty wide spread. Um, some of that is taking time to to ultimately shift all the way out to the end consumer. But but we are seeing that at the same time, if I go back to Labor Day, um, which was our last big tent pole for the industry, we did see, sharpened deeper price points to drive traffic. Not not overall, in absolute bigger discounting, but a lot of a lot of, um, again traffic driving kind of deep attention, getting type of activity, um, increase than from, what we'd seen the same.

Day like at Memorial Day. So it is um it's a very active Marketplace out there and trying to um do the right things to drive that drive that traffic and give particularly um the increasingly value conscious consumer and opportunity to uh to take care of their homes and get into our brand. But at the same time recognize there's still, you know, you talk about

About that bifurcated. Consumer that k-shaped economy. We are still seeing, you know, design sales, hold up really well. Um and seeing consumers that are coming in ready to do a whole rooms and and you know, and leather and power and all of those big upgrades. So it is a uh it requires some laser Precision to navigate that environment.

Appreciate the color. Uh, maybe if I can sneak one in for Taylor. Um, you know, Taylor, you may comment that, um,

In the 2026, um, between reinvestments and maybe some return to shareholders.

Yeah, good question, Taylor. So, um, you know, right now, uh, a little early to comment to any change in our Capital allocation for the year, you know, we're we're thrilled with where we're at for this year. As we've mentioned, we think our best use of cash with its currently reinvested back in business. Um, last year was a little tilted towards shareholders right now. It's a little bit back in the business with this acquisition. Um as well as capex on our distribution Transformations as well as new source standards. So, um, right now, you know, we're we're still working through these exits on those businesses that Melinda had mentioned, um, any any new information as we progress through that we'll share um, on Capital decisions. Um, but I am thrilled actually with our, our level of investment back to the business and and very pleased. Um, to once again, return a double digit increase, uh, to our dividend the fifth consecutive year, um, which I think speaks to Testament to our strong, um, Financial footing, um, and confidence in our business moving forward.

Understood. All right. Well, great, thanks for the additional call here. I'll pass it along.

Thank you. Thank you.

We have reached the end of the question-and-answer session, and I will now turn the call over to Mark for closing remarks.

Thanks everyone, Linda Taylor and I will be in our offices to take any follow-up calls, thanks. And have a great holiday.

Concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.