Ethan Allen Q2 2026 Ethan Allen Interiors Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Ethan Allen Interiors Inc Earnings Call
Speaker #1: Good afternoon. And welcome to the ETHAN ALLEN Fiscal 2026 second quarter analyst conference call. At this time, all participants are in a listen-only follow the formal presentation.
Operator: Good afternoon, and welcome to the Ethan Allen Fiscal 2026 Q2 analyst conference call. At this time, all participants are in a listen-only mode. Question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. It's now my pleasure to introduce you to our host, Matt McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you. You may begin.
Operator: Good afternoon, and welcome to the Ethan Allen Fiscal 2026 Q2 analyst conference call. At this time, all participants are in a listen-only mode. Question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. It's now my pleasure to introduce you to our host, Matt McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you. You may begin.
Speaker #1: mode. Question and answer session will If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Speaker #1: I would like to introduce you to our host, Matt McNulty, Senior Vice President, Chief Financial Officer, and Treasurer. Thank you. You may begin.
Speaker #2: Thank you, Operator. Good afternoon, and thank you all for joining us today to discuss ETHAN ALLEN's Fiscal 2026 second quarter results. With me today is Bruce Kathwari, our Chairman, President, and CEO.
Matt McNulty: ... Thank you, operator. Good afternoon, and thank you all for joining us today to discuss Ethan Allen's fiscal 2026 second quarter results. With me today is Farooq Kathwari, our chairman, president, and CEO. Mr. Kathwari will open and close our prepared remarks, while I will speak to our financial performance midway through. After our prepared remarks, we will then open the call up for your questions. Before I begin, I'd like to remind the audience that this call is being webcast live under the News and Events tab within our Investor Relations website. A replay of and transcript of today's call will also be made available on our Investor Relations website. There you'll find a copy of today's press release, which contains reconciliations of the non-GAAP financial measures referred to on this call and in the press release.
Matt McNulty: ... Thank you, operator. Good afternoon, and thank you all for joining us today to discuss Ethan Allen's fiscal 2026 second quarter results. With me today is Farooq Kathwari, our chairman, president, and CEO. Mr. Kathwari will open and close our prepared remarks, while I will speak to our financial performance midway through. After our prepared remarks, we will then open the call up for your questions. Before I begin, I'd like to remind the audience that this call is being webcast live under the News and Events tab within our Investor Relations website. A replay of and transcript of today's call will also be made available on our Investor Relations website. There you'll find a copy of today's press release, which contains reconciliations of the non-GAAP financial measures referred to on this call and in the press release.
Speaker #2: open and close our prepared remarks while I will speak to our Financial Performance Midway Through. After our prepared Mr. Kathwari will remarks, we will then open the call up for your questions.
Speaker #2: I'd like to remind the audience that this call is Before I begin, the News and Events tab within our Investor being webcast live under Relations website.
Speaker #2: A replay of and transcript of today's call will also be made available on our Investor Relations website. There you'll find a copy of today's press release, which contains reconciliations of the non-GAAP financial measures, referred to on release.
Speaker #2: This call and in the press may include forward-looking statements that are subject to risk and uncertainties that could cause actual results to differ materially. Our comments today may include such statements.
Matt McNulty: Our comments today may include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our most recent quarterly report on Form 10-Q. Please refer to our SEC filings for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. With that, I'm pleased to now turn the call over to Mr. Kathwari.
Our comments today may include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. The most significant risk factors that could affect our future results are described in our most recent quarterly report on Form 10-Q. Please refer to our SEC filings for a complete review of those risks. The company assumes no obligation to update or revise any forward-looking matters discussed during this call. With that, I'm pleased to now turn the call over to Mr. Kathwari.
Speaker #2: The most significant risk factors that could affect our future results are described in our most recent quarterly report on Form 10Q. Please refer to our SEC filings for a complete review of those risks.
Speaker #2: The company assumes no obligation to update or revise any forward-looking matters discussed during this call. With that, I am pleased to now turn the call over to Mr. Kathwari.
Speaker #3: Well, thank you, Matt. And thank you for joining our second quarter, ending December 31, 2025, earnings call, and our initiative to grow our business.
Farooq Kathwari: Well, thank you, Matt, and thank you for joining our Q2, ending 31 December 2025, earnings call, and our initiatives to grow our business. The Q2 results were strongly impacted by the government shutdown, resulting in lower consumer confidence, lower traffic to our design centers, and lower orders at retail, and especially from the US government contract. Also impacted by a very strong previous year comparison. The good news is that we have started the Q3 with stronger traffic and positive written sales in January, as we mentioned in our press release. During the last few years, we have made major changes to our vertically integrated structure, including our retail network, manufacturing, marketing, logistics, and are positioned well.
Farooq Kathwari: Well, thank you, Matt, and thank you for joining our Q2, ending 31 December 2025, earnings call, and our initiatives to grow our business. The Q2 results were strongly impacted by the government shutdown, resulting in lower consumer confidence, lower traffic to our design centers, and lower orders at retail, and especially from the US government contract. Also impacted by a very strong previous year comparison. The good news is that we have started the Q3 with stronger traffic and positive written sales in January, as we mentioned in our press release. During the last few years, we have made major changes to our vertically integrated structure, including our retail network, manufacturing, marketing, logistics, and are positioned well.
Speaker #3: The second quarter results were strongly impacted by the government shutdown, resulting in lower consumer confidence, lower traffic to our design centers, and lower orders at retail and especially from the US government contract.
Speaker #3: Also impacted by a very strong previous year comparison. The good news is that we have started the third quarter with stronger traffic and positive written sales in January.
Speaker #3: As we mentioned in our press release, during the last few years we have made major changes to our vertically integrated structure, including our retail network, manufacturing, and our position well.
Speaker #3: Marketing, logistics, a brief overview of our second quarter financial results—I will provide more details of our business, of our initiative to grow our business, and then we'll open up for any questions or comments.
Farooq Kathwari: After Matt provides a brief overview of our second quarter financial results, I will provide more details of our business, of our initiatives to grow our business, and then we'll open up for any questions or comments. Matt, please proceed.
After Matt provides a brief overview of our second quarter financial results, I will provide more details of our business, of our initiatives to grow our business, and then we'll open up for any questions or comments. Matt, please proceed.
Speaker #3: Matt, please
Speaker #3: proceed. Thank you, Mr.
Matt McNulty: Thank you, Mr. Kathwari. Our financial performance in the just completed Q2 was highlighted by a robust balance sheet and strong margins, despite a challenging environment. Our consolidated net sales of $149.9 million benefited from a higher starting retail backlog, a higher average ticket price, incremental clearance sales, and fewer returns. These increases were offset by fewer contract sales and lower demand. Retail written orders declined 17.9%, while wholesaler orders were 19.3% lower than a year ago, with both metrics declining sequentially throughout the quarter as our prior year comparables got tougher. Our demand trends reflect a combination of macroeconomic challenges and a difficult prior year comparison, as well as an 11% decline in design center traffic. With that said, we are pleased to see positive written order growth in January.
Matt McNulty: Thank you, Mr. Kathwari. Our financial performance in the just completed Q2 was highlighted by a robust balance sheet and strong margins, despite a challenging environment. Our consolidated net sales of $149.9 million benefited from a higher starting retail backlog, a higher average ticket price, incremental clearance sales, and fewer returns. These increases were offset by fewer contract sales and lower demand. Retail written orders declined 17.9%, while wholesaler orders were 19.3% lower than a year ago, with both metrics declining sequentially throughout the quarter as our prior year comparables got tougher. Our demand trends reflect a combination of macroeconomic challenges and a difficult prior year comparison, as well as an 11% decline in design center traffic. With that said, we are pleased to see positive written order growth in January.
Speaker #2: Kathwari: Our financial performance in the just completed second quarter was highlighted by a robust balance sheet and strong margins, despite a challenging environment. Our consolidated net sales of $149.9 million benefited from a higher starting retail backlog, a higher average ticket price, incremental clearance sales, and fewer returns.
Speaker #2: These increases were offset by fewer contract sales and lower demand. Retail written orders declined 17.9% while wholesale orders were 19.3% lower than a year ago, with both metrics declining sequentially throughout the quarter as our prior year comparables got tougher.
Speaker #2: Our demand trends reflect a combination of macroeconomic challenges and a difficult prior year comparison, as well as an 11% decline in design center traffic.
Speaker #2: With that said, we are pleased to see positive written order growth in January. We ended the quarter with a wholesale backlog of $49.8 million. A lower volume of contract orders, combined with improved customer lead times, helped reduce our backlog.
Matt McNulty: We ended the quarter with wholesale backlog of $49.8 million. A lower volume of contract orders, combined with improved customer lead times, helped reduce our backlog. Our consolidated gross margin was 60.9%, up 60 basis points from a year ago due to a change in sales mix, reduced headcount, a higher average ticket price, and lower inbound freight, partially offset by increased promotional activity, incremental tariffs, and elevated clearance sales. Our adjusted operating income was $13.5 million, with an operating margin of 9%. For historical context, adjusted operating margin during the pre-pandemic 2019 Q2 was 5.4%, or 360 basis points lower than it is today.
We ended the quarter with wholesale backlog of $49.8 million. A lower volume of contract orders, combined with improved customer lead times, helped reduce our backlog. Our consolidated gross margin was 60.9%, up 60 basis points from a year ago due to a change in sales mix, reduced headcount, a higher average ticket price, and lower inbound freight, partially offset by increased promotional activity, incremental tariffs, and elevated clearance sales. Our adjusted operating income was $13.5 million, with an operating margin of 9%. For historical context, adjusted operating margin during the pre-pandemic 2019 Q2 was 5.4%, or 360 basis points lower than it is today.
Speaker #2: Our consolidated gross margin was 60.9%, up 60 basis points from a year ago due to a change in sales mix, reduced headcount, a higher average ticket price, and lower inbound freight, partially offset by increased promotional activity, incremental tariffs, and elevated clearance sales.
Speaker #2: Our adjusted operating income was $13.5 million, with an operating margin of 9%. For historical context, adjusted operating margin during the pre-pandemic 2019 second quarter was lower—points lower than it is today—at 5.4%, or 360 basis points lower.
Matt McNulty: Our current year operating margin was impacted by fixed cost deleveraging from lower sales, combined with delivering out orders with higher promotions, additional marketing, higher occupancy costs from new design centers, increased employee benefit costs, and as well as incremental tariffs. These increases were partially offset by disciplined approach to controlling operating expenses, including reduced headcount. At quarter end, we had 3,149 total associates, a decrease of 5.1% from a year ago. Adjusted diluted EPS was $0.44. Our effective tax rate was 25.3%, which varies from the 21% federal statutory rate, primarily due to state taxes. Now turning to our liquidity. We ended the quarter with a robust balance sheet, including total cash and investments of $179.3 million with no debt.
Our current year operating margin was impacted by fixed cost deleveraging from lower sales, combined with delivering out orders with higher promotions, additional marketing, higher occupancy costs from new design centers, increased employee benefit costs, and as well as incremental tariffs. These increases were partially offset by disciplined approach to controlling operating expenses, including reduced headcount. At quarter end, we had 3,149 total associates, a decrease of 5.1% from a year ago. Adjusted diluted EPS was $0.44. Our effective tax rate was 25.3%, which varies from the 21% federal statutory rate, primarily due to state taxes. Now turning to our liquidity. We ended the quarter with a robust balance sheet, including total cash and investments of $179.3 million with no debt.
Speaker #2: Impacted by six cost de-leveraging from our current year, operating margin was lower—sales combined with delivering out orders with higher promotions, additional marketing, higher occupancy costs from new design centers, increased employee benefit costs, as well as incremental tariffs.
Speaker #2: These increases were partially offset by disciplined approach to controlling operating expenses, including reduced headcount. At quarter end, we had 3,149 total associates, a decrease of 5.1% from a year ago.
Speaker #2: Adjusted diluted EPS was $0.44. Our effective tax rate was 25.3%, which varies from the 21% federal statutory rate primarily due to state taxes. Now turning to our liquidity.
Speaker #2: We ended the quarter with a robust balance sheet, including total cash and investments of $179.3 million, with no debt. Our liquidity position remained strong, although we generated an operating cash flow deficit of $1.8 million during the quarter due to changes in working capital, including lower customer deposits and the timing of our biweekly payroll.
Matt McNulty: Our liquidity position remains strong, although we generated an operating capital deficit of $1.8 million during the quarter due to changes in working capital, including lower customer deposits and the timing of our biweekly payroll. In November, we paid a regular quarterly cash dividend of $10 million, or $0.39 per share. Also, as just announced in our earnings release, our board declared a regular quarterly cash dividend of $0.39 per share, which will be paid in February. We are pleased to continue to pay cash dividends while maintaining a strong cash position. Before closing, I'd like to spend a few moments on tariffs. We are exposed to tariffs assessed on raw materials and finished goods we import into the US.
Our liquidity position remains strong, although we generated an operating capital deficit of $1.8 million during the quarter due to changes in working capital, including lower customer deposits and the timing of our biweekly payroll. In November, we paid a regular quarterly cash dividend of $10 million, or $0.39 per share. Also, as just announced in our earnings release, our board declared a regular quarterly cash dividend of $0.39 per share, which will be paid in February. We are pleased to continue to pay cash dividends while maintaining a strong cash position. Before closing, I'd like to spend a few moments on tariffs. We are exposed to tariffs assessed on raw materials and finished goods we import into the US.
Speaker #2: In November, we paid a regular quarterly cash dividend of $10 million, or $0.39 per share. Also, as just announced in our earnings release, our board declared a regular quarterly cash dividend of $0.39 per share, which will be paid in February.
Speaker #2: We are pleased to continue to pay cash dividends while maintaining a strong cash position. Before closing, I'd like to spend a few moments on tariffs.
Speaker #2: We are exposed to tariffs assessed on raw materials and finished goods we import into the US. Recently enacted Section 232 tariffs, made effective in mid-October, have resulted in manufacturing upholstered wood products being subject to a 25% tariff.
Matt McNulty: Recently enacted Section 232 tariffs, made effective in mid-October, have resulted in manufacturing of manufactured upholstered wood products being subject to a 25% tariff. Our non-US manufactured case goods are currently subject to a 10% tariff that is partially reduced based on the consumption of US-sourced materials. With regards to imports, our exposure is primarily concentrated on imported case goods from Indonesia, select fabrics from Asia, and imported accents consisting of lighting and area rugs. To help offset some of this tariff impact, we worked with our vendors on cost sharing, performed additional sourcing diversification, and recently pushed through selective retail price increases, which averaged 5%. These carefully measured price increases were applied strategically across select SKUs rather than broadly. We will continue to review pricing and will respond quickly and thoughtfully as conditions evolve.
Recently enacted Section 232 tariffs, made effective in mid-October, have resulted in manufacturing of manufactured upholstered wood products being subject to a 25% tariff. Our non-US manufactured case goods are currently subject to a 10% tariff that is partially reduced based on the consumption of US-sourced materials. With regards to imports, our exposure is primarily concentrated on imported case goods from Indonesia, select fabrics from Asia, and imported accents consisting of lighting and area rugs. To help offset some of this tariff impact, we worked with our vendors on cost sharing, performed additional sourcing diversification, and recently pushed through selective retail price increases, which averaged 5%. These carefully measured price increases were applied strategically across select SKUs rather than broadly. We will continue to review pricing and will respond quickly and thoughtfully as conditions evolve.
Speaker #2: Our non-U.S.-manufactured case goods are currently subject to a 10% tariff that is partially reduced based on the consumption of U.S. source materials. With regards to imports, our exposure is primarily concentrated on imported case goods from Indonesia, black fabrics from Asia, and imported accents consisting of lighting and area rugs.
Speaker #2: To help offset some of the tariff impact, we worked with our vendors on cost sharing, performed additional sourcing diversification, and recently pushed through selective retail price increases which averaged 5%.
Speaker #2: These carefully measured price increases were applied strategically across select SKUs rather than broadly. We'll continue to review pricing and will respond quickly and thoughtfully as conditions evolve.
Speaker #2: We believe our North American manufacturing, which represents approximately 75% of the furniture we sell, provides us with a strategic advantage. By controlling more aspects of the production process within North America, we believe we can mitigate some of our tariff exposure.
Matt McNulty: We believe our North American manufacturing, which represents approximately 75% of the furniture we sell, provides us with a strategic advantage. By controlling more aspects of the production process within North America, we believe we can mitigate some of our tariff exposure. As I conclude my prepared remarks, we are pleased that our disciplined investments and strong expense management are helpful, are helping to build a fundamentally stronger company. We delivered another strong quarter and enter the 2026 calendar year with a debt-free balance sheet, strong liquidity, and a proven ability to provide clients with custom furniture and complimentary design services. With that, I will now turn the call back over to Mr. Kathwari.
We believe our North American manufacturing, which represents approximately 75% of the furniture we sell, provides us with a strategic advantage. By controlling more aspects of the production process within North America, we believe we can mitigate some of our tariff exposure. As I conclude my prepared remarks, we are pleased that our disciplined investments and strong expense management are helpful, are helping to build a fundamentally stronger company. We delivered another strong quarter and enter the 2026 calendar year with a debt-free balance sheet, strong liquidity, and a proven ability to provide clients with custom furniture and complimentary design services. With that, I will now turn the call back over to Mr. Kathwari.
Speaker #2: Remarks, we are pleased that our—as I conclude my prepared—disciplined investments and strong expense management are helpful, are helping to build a fundamentally stronger company.
Speaker #2: We delivered another strong quarter and enter the 2026 calendar year with a debt-free balance sheet, strong liquidity, and a proven ability to provide clients with customer furniture and complimentary design services.
Speaker #2: With that, I will now turn the call back over to Mr.
Speaker #2: Kathwari. Thank you,
Farooq Kathwari: Thank you, Matt. I'm pleased to share our initiatives to help us to grow our business as we move forward. Our key focus remains to continue to strengthen our unique, vertically integrated structure, including: continued strengthening our product programs. Our design centers have started to receive our new products introduced in the fall of last year. Our products continue to be developed under the umbrella of classics with a modern perspective. About 75% of our furniture is made in our manufacturing workshops in North America, and all products are custom made. All products made in North America, I'm talking of furniture, are custom made on the receipt of orders. This is possible because of our North American manufacturing and provides a strong competitive advantage. Strengthening our marketing programs. In our Q2, we continue to utilize various mediums, including direct mail, and digital advertising.
Farooq Kathwari: Thank you, Matt. I'm pleased to share our initiatives to help us to grow our business as we move forward. Our key focus remains to continue to strengthen our unique, vertically integrated structure, including: continued strengthening our product programs. Our design centers have started to receive our new products introduced in the fall of last year. Our products continue to be developed under the umbrella of classics with a modern perspective. About 75% of our furniture is made in our manufacturing workshops in North America, and all products are custom made. All products made in North America, I'm talking of furniture, are custom made on the receipt of orders. This is possible because of our North American manufacturing and provides a strong competitive advantage. Strengthening our marketing programs. In our Q2, we continue to utilize various mediums, including direct mail, and digital advertising.
Speaker #3: Matt. I'm pleased to share our initiatives to help us to grow our business as we move forward. Our key focus remains to continue to strengthen our unique vertically integrated structure including continued strengthening of product programs, our design centers have started to receive our new products introduced in the fall of last developed under the umbrella year, our products continue to be of classics with a modern perspective, about 75% of our furniture is made in our manufacturing workshops in North America, and all products are custom-made; all products made in North America I'm talking of furniture are custom-made on the receipt of orders.
Speaker #3: This is possible because of our North American manufacturing and provides a strong competitive advantage. Strengthening our marketing programs in our second quarter, we continue to utilize various mediums including direct mail and digital advertising.
Speaker #3: We increase our advertising by 25%, mostly in digital mediums. While we did not get the full benefit in our second quarter of this increased marketing spend due to economic slowdown, we feel it will benefit us in the future.
Farooq Kathwari: We increased our advertising by 25%, mostly in digital mediums. While we did not get the full benefit in our Q2 of this increased marketing spend due to economic slowdown, we feel it will benefit us in the future. Our retail network. Today, we operate 172 design centers in North America, and reflects our current projection under the umbrella of, we say, Classics with a Modern Perspective. The design centers reflect the reduction of the size due to strong interior design, talent, and digital technology. Continued strengthening of manufacturing. As I mentioned, about 75% of our furniture is made in our North American facilities. Combination of strong talent and technology is key to our productivity. Again, I repeat that all our manufacturing in North America is based on custom-made furniture.
We increased our advertising by 25%, mostly in digital mediums. While we did not get the full benefit in our Q2 of this increased marketing spend due to economic slowdown, we feel it will benefit us in the future. Our retail network. Today, we operate 172 design centers in North America, and reflects our current projection under the umbrella of, we say, Classics with a Modern Perspective. The design centers reflect the reduction of the size due to strong interior design, talent, and digital technology. Continued strengthening of manufacturing. As I mentioned, about 75% of our furniture is made in our North American facilities. Combination of strong talent and technology is key to our productivity. Again, I repeat that all our manufacturing in North America is based on custom-made furniture.
Speaker #3: Our retail network, today we operate 172 design centers in North America, and reflects our current projection under the umbrella of, we say, classics with a modern projection.
Speaker #3: The design centers reflect the reduction of the size due to strong interior design talent and digital technology. Continued strengthening our manufacturing, as I mentioned, about 75% of our furniture is made in our North American facilities.
Speaker #3: The combination of strong talent and technology is key to our productivity. Again, I repeat that all our manufacturing in North America is based on custom-made furniture.
Farooq Kathwari: You know, 20 years back, 80% was in stock, that, that we sold furniture, especially what we call case goods. Strengthening our national and retail logistics continues to be a very important initiative. We deliver our products to our clients all across North America at one delivered price with what we call white glove service. Very unique. If a customer is in Seattle, in Florida, or in Texas, it's exactly the same delivered price, and it took us a long time to do this, and it reflects the investments we have made to have a very strong logistics network. And again, very, very important, the focus on continued strengthening of talent combined with technology. Combined with technology is key to future. With this, happy to take any questions.
You know, 20 years back, 80% was in stock, that, that we sold furniture, especially what we call case goods. Strengthening our national and retail logistics continues to be a very important initiative. We deliver our products to our clients all across North America at one delivered price with what we call white glove service. Very unique. If a customer is in Seattle, in Florida, or in Texas, it's exactly the same delivered price, and it took us a long time to do this, and it reflects the investments we have made to have a very strong logistics network. And again, very, very important, the focus on continued strengthening of talent combined with technology. Combined with technology is key to future. With this, happy to take any questions.
Speaker #3: 20 years back, 80% was in stock that we sold furniture, especially what we call case goods. Strengthening our national and retail logistics continues to be a very important initiative.
Speaker #3: We deliver our products to our clients all across North America at one delivered price with what we call white glove service. Very unique. If a customer is in Seattle, or in Florida, or in Texas, it's exactly the same delivered price, and it took us a long time to do this, and it reflects the investments we have made to have a very strong logistics network.
Speaker #3: And again, very, very important: the focus on continued strengthening of talent combined with technology. 'Combined with technology' is key to the future. With this, happy to take any—
Speaker #3: questions. Thank
Operator: Thank you. With that, we'll now be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. Confirmation tone to indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. And our first question comes from the line of Taylor Zick with KeyBanc Capital Markets. Please proceed with your question.
Operator: Thank you. With that, we'll now be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. Confirmation tone to indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. And our first question comes from the line of Taylor Zick with KeyBanc Capital Markets. Please proceed with your question.
Speaker #1: You. With that, we'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.
Speaker #1: A confirmation tone will indicate that your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
Speaker #1: One moment while we pull for questions. And our first question comes from the line of Taylor Zick with KeyBank Capital Markets. Please proceed with your question.
Speaker #4: Yeah. Hello, Taylor. How are
Farooq Kathwari: Yeah. Hello, Taylor. How are you?
Farooq Kathwari: Yeah. Hello, Taylor. How are you?
Speaker #4: you? Hi, Faruk.
Taylor Zick: Hi, Farooq. I'm doing well. How are you doing?
Tyler Zick: Hi, Farooq. I'm doing well. How are you doing?
Speaker #5: I'm doing well. How are you doing?
Speaker #4: Very
Farooq Kathwari: Very much.
Farooq Kathwari: Very much.
Speaker #4: much. Good.
Taylor Zick: Good. I just wanted to ask about the retail written orders during the quarter. You know, you noted that the monthly trends decelerated during the quarter, just due to difficult comparisons. But as you kind of look through that, do you have any sense of what the underlying trends were during Q2?
Tyler Zick: Good. I just wanted to ask about the retail written orders during the quarter. You know, you noted that the monthly trends decelerated during the quarter, just due to difficult comparisons. But as you kind of look through that, do you have any sense of what the underlying trends were during Q2?
Speaker #5: I just wanted to ask about the retail written orders during the quarter. You noted that the monthly trends decelerated during the quarter just due to difficult comparisons.
Speaker #5: But as you kind of look through that, do you have any sense of what the underlying trends were during the second quarter?
Speaker #4: Yes, I think Matt can give you the exact numbers for the retail. I mean, our retail business in the quarter was somewhat impacted, but Matt, what are the numbers?
Farooq Kathwari: Yes, I think, Matt, Matt can give you the exact numbers of the retail. I mean, from our retail business in the quarter was somewhat impacted. But Matt, what are the numbers?
Farooq Kathwari: Yes, I think, Matt, Matt can give you the exact numbers of the retail. I mean, from our retail business in the quarter was somewhat impacted. But Matt, what are the numbers?
Speaker #6: Yes. Each sequential month during Q2 decreased by a higher percentage. We don't typically disclose the breakdown on a month-to-month basis, but it did blend to an average decrease of 18%.
Matt McNulty: ... Yes, each sequential month in Q2 decreased by a higher percentage. We don't typically disclose the breakdown on a month-to-month basis, but it did blend to an average decrease of 18%. But we started out stronger in October, and it decelerated more so for the government shutdown, combined with the prior year comparison. If you recall, November, December last year were very strong, so it was a difficult prior year comparison. If we go back two years to fiscal 2024, December, that calendar year 2023, we were only down very low single digits compared to this past. A year ago, it was much higher written.
Matt McNulty: ... Yes, each sequential month in Q2 decreased by a higher percentage. We don't typically disclose the breakdown on a month-to-month basis, but it did blend to an average decrease of 18%. But we started out stronger in October, and it decelerated more so for the government shutdown, combined with the prior year comparison. If you recall, November, December last year were very strong, so it was a difficult prior year comparison. If we go back two years to fiscal 2024, December, that calendar year 2023, we were only down very low single digits compared to this past. A year ago, it was much higher written.
Speaker #6: But we started out stronger in October, and it decelerated more so due to the government shutdown combined with the prior year comparison. If you recall, November and December last year were very strong.
Speaker #6: Difficult prior year comparison. If we go back two—so it was a years, fiscal '24, that calendar year '23, we were only down a very low single digit compared to this past year ago, with much higher written.
Speaker #5: Got it. Yeah. And certainly good to see the positive written comps here in January. That's great. And Faruk, maybe for my second question, can you touch a bit on the contracts side of the business?
Taylor Zick: Got it. Yeah, and certainly good to see, you know, the positive rent comps here in January. That's great. And, Farooq, maybe for my second question, can you touch a bit on the contract side of the business? You have obviously cited the government shutdown as, as sort of a headwind here, but, you know, since the government has reopened, have you seen any improvement in the orders, or does those, you know, remain relatively soft?
Tyler Zick: Got it. Yeah, and certainly good to see, you know, the positive rent comps here in January. That's great. And, Farooq, maybe for my second question, can you touch a bit on the contract side of the business? You have obviously cited the government shutdown as, as sort of a headwind here, but, you know, since the government has reopened, have you seen any improvement in the orders, or does those, you know, remain relatively soft?
Speaker #5: You have obviously cited the government shutdown as sort of a headwind here, but since the government has reopened, have you seen any improvement in the orders or those remain relatively soft?
Speaker #4: Well, during the last quarter, the orders stopped. That, of course, had a major impact on our results last quarter. Because of the fact that the government being closed, they were not sending any orders.
Farooq Kathwari: Well, during the last quarter, the orders stopped. That, of course, had a major impact on our results last quarter because of the fact that, you know, the government being closed, they were not sending any orders. The good news is, the orders are coming in, and they are coming in reasonably high, but not as strong as, you know, we had last year because they, it is now taking the government, all the embassies, all over the world, little time to get back on. So yes, we are seeing new orders. It's a little bit lower than last year, but every week it's growing.
Farooq Kathwari: Well, during the last quarter, the orders stopped. That, of course, had a major impact on our results last quarter because of the fact that, you know, the government being closed, they were not sending any orders. The good news is, the orders are coming in, and they are coming in reasonably high, but not as strong as, you know, we had last year because they, it is now taking the government, all the embassies, all over the world, little time to get back on. So yes, we are seeing new orders. It's a little bit lower than last year, but every week it's growing.
Speaker #4: The good news is the orders are coming in, and they are coming in reasonably high, but not as strong as we had last year.
Speaker #4: Because it is now taking the government—all the embassies, all over the world—a little time to get back on. So yes, we are seeing new orders.
Speaker #4: It's a little bit lower than last year, but every week it's growing.
Speaker #5: Understood. And then maybe one last question for me before I turn it over to others. The company continues to put up very strong gross margins here despite the difficult environment and tariffs and all that.
Taylor Zick: Understood. Then maybe, maybe one last question for me before I turn it over to others. You know, the company continues to put up, you know, very strong gross margins here, despite, you know, the, the difficult environment and, and tariffs and all that. So how should we think about the sustainability of these margins as we, you know, look to Q3 and Q4 ahead?
Tyler Zick: Understood. Then maybe, maybe one last question for me before I turn it over to others. You know, the company continues to put up, you know, very strong gross margins here, despite, you know, the, the difficult environment and, and tariffs and all that. So how should we think about the sustainability of these margins as we, you know, look to Q3 and Q4 ahead?
Speaker #5: So, how should we think as we look to Q3 and Q4?
Speaker #5: ahead? I
Speaker #4: I think we have a good opportunity of maintaining them, because of the fact that lots of work has been done at all levels in terms of combining great talent and technology.
Farooq Kathwari: I think we have a good opportunity of maintaining them because of the fact that a lot of work has been done at all levels in terms of combining great talent and technology. That has really impacted all elements, especially our retail network, in our manufacturing, our logistics. So I believe that obviously, the volumes have an important factor, but we have an opportunity of maintaining them.
Farooq Kathwari: I think we have a good opportunity of maintaining them because of the fact that a lot of work has been done at all levels in terms of combining great talent and technology. That has really impacted all elements, especially our retail network, in our manufacturing, our logistics. So I believe that obviously, the volumes have an important factor, but we have an opportunity of maintaining them.
Speaker #4: That has really impacted all elements, especially our retail network. Our manufacturing, our logistics show, I believe, that obviously the volumes have an important factor, but we have an opportunity of maintaining them.
Speaker #5: Very good. Thanks so
Taylor Zick: Great. Thanks so much.
Tyler Zick: Great. Thanks so much.
Speaker #5: much. All right.
Farooq Kathwari: All right, thanks.
Farooq Kathwari: All right, thanks.
Speaker #4: Thanks.
Speaker #1: Thank
Operator: Thank you. Our next question comes from the line of Cristina Fernandez with Telsey Advisory Group. Please proceed with your question.
Operator: Thank you. Our next question comes from the line of Cristina Fernandez with Telsey Advisory Group. Please proceed with your question.
Speaker #1: You. And our next question comes from the line of Christina Fernandez with Telsey Advisory Group. Please proceed with your question.
Speaker #7: Hello. Hello, Christina. Hi. Good afternoon. Hi, Faruk. Hi, Matt. I appreciate all the color on the tariffs that you gave. I wanted to see if you could give more details as far as, I guess, what the total impact is, and you mentioned that you were mitigating some of it.
Farooq Kathwari: Hello, Christina.
Farooq Kathwari: Hello, Christina.
Cristina Fernandez: Hi, good afternoon. Hi, Farooq. Hi, Matt. I appreciate all the color on the tariffs, Matt, that you gave. I wanted to see if you could give more detail as far as, I guess, what the total impact is. And you mentioned that you were mitigating some of it. So I want to see if you can give some color on what the mitigated amount is, and how should we think about that impact as we move forward. Do you think with the price increase and some of the changes you've made, you can mitigate the costs, or we're gonna see some impact flowing through the, you know, the cost base?
Cristina Fernandez: Hi, good afternoon. Hi, Farooq. Hi, Matt. I appreciate all the color on the tariffs, Matt, that you gave. I wanted to see if you could give more detail as far as, I guess, what the total impact is. And you mentioned that you were mitigating some of it. So I want to see if you can give some color on what the mitigated amount is, and how should we think about that impact as we move forward. Do you think with the price increase and some of the changes you've made, you can mitigate the costs, or we're gonna see some impact flowing through the, you know, the cost base?
Speaker #7: So, I want to see if you can give some color on what the mitigated amount is, and how should we think about that impact as we move forward.
Speaker #7: Do you think with the price increase and some of the changes you've made, you can mitigate the cost, or are we going to see some impact flowing through to the cost?
Speaker #7: base? Yeah.
Farooq Kathwari: Yeah, go ahead, Matt.
Farooq Kathwari: Yeah, go ahead, Matt.
Speaker #4: Go
Speaker #4: ahead, Matt. Sure.
Matt McNulty: Sure. Yeah, I'm happy to answer that one. So there's a couple strategies we took. It's really a three-pronged approach to trying to mitigate some of the tariff impact. One is vendor cost sharing or partner cost sharing, reaching out to partners to help negotiate and sharing some of the costs. That we did over the last several months and was very successful. Another strategy that we've employed is supplier sourcing diversification, trying to source from other countries, which we've done to some extent. And then the third prong is really the retail price increases, and which I've mentioned, we pushed through a select about a blended average of 5%, in October, this past quarter increase. Those did help mitigate some of the tariff impact. It did not do all of it.
Matt McNulty: Sure. Yeah, I'm happy to answer that one. So there's a couple strategies we took. It's really a three-pronged approach to trying to mitigate some of the tariff impact. One is vendor cost sharing or partner cost sharing, reaching out to partners to help negotiate and sharing some of the costs. That we did over the last several months and was very successful. Another strategy that we've employed is supplier sourcing diversification, trying to source from other countries, which we've done to some extent. And then the third prong is really the retail price increases, and which I've mentioned, we pushed through a select about a blended average of 5%, in October, this past quarter increase. Those did help mitigate some of the tariff impact. It did not do all of it.
Speaker #6: Yeah, I'm happy to answer that one. So, there's a couple of strategies we took. It's really a three-pronged approach to trying to mitigate some of the tariff impact.
Speaker #6: One is vendor cost sharing or partner cost sharing—reaching out to partners to help negotiate and share in some of the costs. That we did over the last several months and it was very successful.
Speaker #6: Another strategy that we've employed is supplier sourcing diversification, trying to source from other countries, which we've done to some extent. And then the third prong is really the retail price increases.
Speaker #6: And which I mentioned, we pushed through a select about a blended average of 5% in October, this past quarter, increase. Those did help mitigate some of the tariff impact.
Speaker #6: It did not do all of it. Now, price increases were late in the beginning of October, but late from a delivered perspective. A lot of those orders did not get delivered out fully in the quarter.
Matt McNulty: Now, price increases were late in the beginning of October, but late from a delivered perspective. A lot of those orders did not get delivered out fully in the quarter, so we'll see a little bit more of a benefit from price increases moving forward. With that said, there, there will still be some more headwinds. We mentioned the Section 232 tariffs that came into play mid-October. That - so we hadn't really experienced a full quarter worth of those. That's probably the largest. That's about 40% of our overall tariff exposure is there. And then the IEEPA tariffs, which are currently under review by the Supreme Court, is about 40%, and the remainder is Section 301 tariffs. I would say all in, we're still seeing a headwind.
Now, price increases were late in the beginning of October, but late from a delivered perspective. A lot of those orders did not get delivered out fully in the quarter, so we'll see a little bit more of a benefit from price increases moving forward. With that said, there, there will still be some more headwinds. We mentioned the Section 232 tariffs that came into play mid-October. That - so we hadn't really experienced a full quarter worth of those. That's probably the largest. That's about 40% of our overall tariff exposure is there. And then the IEEPA tariffs, which are currently under review by the Supreme Court, is about 40%, and the remainder is Section 301 tariffs. I would say all in, we're still seeing a headwind.
Speaker #6: So we'll see a little bit more of a benefit from price increases moving forward. With that said, there will still be some more headwinds.
Speaker #6: We mentioned the Section 232 tariffs that came into play mid-October, so we hadn't really experienced a full largest. That's about 40% of our overall tariff exposure is there.
Speaker #6: And then the IEPA tariffs, which are currently under review by the Supreme Court, it's about 40%. And the remainder is Section 301 tariffs. I would say, all in, we're still seeing a headwind.
Speaker #6: We don't disclose the actual percentage of the headwind overall, but I think the steps we've taken will help mitigate a significant amount of that. Plus, our current structure of being 75% in North America does help mitigate it naturally.
Matt McNulty: We don't disclose the actual percentage of the headwind overall, but I think the steps we've taken will help mitigate a significant amount of that, plus our current structure of being 75% in North America does help mitigate it naturally that way.
We don't disclose the actual percentage of the headwind overall, but I think the steps we've taken will help mitigate a significant amount of that, plus our current structure of being 75% in North America does help mitigate it naturally that way.
Speaker #6: way. Yes, Christina.
Farooq Kathwari: Yes, Christina, and also, of course, I mean, we are not counting on it, but the US Supreme Court has still not decided on the validity of the IEEPA tariffs. It's, you know, it's possible that it goes away, and which will, will re- and it-- that will impact 40% of our exposure, if, if they take it down completely, with an annual savings of approximately $8 million. But again, as I said, we are hoping that happens, but our plans are to keep them on the side while making all changes so that we can-- are able to maintain strong margins.
Farooq Kathwari: Yes, Christina, and also, of course, I mean, we are not counting on it, but the US Supreme Court has still not decided on the validity of the IEEPA tariffs. It's, you know, it's possible that it goes away, and which will, will re- and it-- that will impact 40% of our exposure, if, if they take it down completely, with an annual savings of approximately $8 million. But again, as I said, we are hoping that happens, but our plans are to keep them on the side while making all changes so that we can-- are able to maintain strong margins.
Speaker #4: And also, of course, we are not counting on it, but the US Supreme Court has still not decided on the validity of the IEEPA tariffs.
Speaker #4: And it's possible that it goes away, and that will impact 40% of our exposure if they take it down completely.
Speaker #4: With an annual savings of approximately 8 million. But again, as I said, we are hoping that happens, but our plans are to keep them on the side while making all changes so that we are able to maintain strong margins.
Speaker #7: Thank you for that color. I had a question on the January trend relative to the
Cristina Fernandez: ...Thank you for that color. I had a question on the January trend relative to Q2. I get, you know, what would you attribute it? Do you think it's marketing? Promotion seemed pretty similar to last year. What would you attribute the improved trend?
Cristina Fernandez: ...Thank you for that color. I had a question on the January trend relative to Q2. I get, you know, what would you attribute it? Do you think it's marketing? Promotion seemed pretty similar to last year. What would you attribute the improved trend?
Speaker #1: to the second The . What would you guess attribute it ? Do you think it's marketing ? Promotions seem pretty similar to last year .
Speaker #1: Promotions seem pretty much the same as last year. What would you attribute to what improved the trend?
Farooq Kathwari: I think the most important one is that the consumers came back. I think in the last quarter, with all the uncertainty, government shutdowns, all people were scared. People were not coming in. What we've seen in January, people are coming back. Now, the good news is, because of our structure, because of our interior design network, and we have most likely the strongest interior design network, they have maintained good contacts with their clients. And what we've seen is our traffic has increased. People are coming back. Again, you know, there's still some concerns, but the concerns we had in the last quarter about all the uncertainty in the marketplace, that created issues. We see in January, you know, the government shutdown was not there. There's somewhat of a better consumer attitude.
Farooq Kathwari: I think the most important one is that the consumers came back. I think in the last quarter, with all the uncertainty, government shutdowns, all people were scared. People were not coming in. What we've seen in January, people are coming back. Now, the good news is, because of our structure, because of our interior design network, and we have most likely the strongest interior design network, they have maintained good contacts with their clients. And what we've seen is our traffic has increased. People are coming back. Again, you know, there's still some concerns, but the concerns we had in the last quarter about all the uncertainty in the marketplace, that created issues. We see in January, you know, the government shutdown was not there. There's somewhat of a better consumer attitude.
Speaker #1: ? think the
Speaker #2: most important one is that the I consumers came think in I the back . last quarter , with all the uncertainty , shutdowns , all people were scared .
Speaker #2: People were not coming in . What we have seen in January , are coming back . Now , the good news is our because of structure , because of our interior design network , and we have most likely the the strongest interior design network , they have maintained good contacts with their clients .
Speaker #2: And what we've seen is our traffic has increased . People are coming back again . You know , there's there's still some concerns , but the concerns we had in the last quarter about all the uncertainty in the marketplace that created issues we see in January .
Speaker #2: You know , the government shutdown was not there somewhat of a consumer attitude . people So also , the people our designers worked with clients .
Farooq Kathwari: So, people, also, the people, our designers, worked with clients, and as in last quarter, the ones who did not close, they are closing the business now.
So, people, also, the people, our designers, worked with clients, and as in last quarter, the ones who did not close, they are closing the business now.
Speaker #2: And as in last quarter, the ones who did not close, they are closing the business now.
Cristina Fernandez: And the last question I had was on marketing, the 25% increase. I mean, do you expect that level to continue as we move through the year? And where are you mostly seeing the benefit of this marketing? Is it better traffic? Is it new customer acquisition? How are you measuring the efficiency of that marketing spend?
Cristina Fernandez: And the last question I had was on marketing, the 25% increase. I mean, do you expect that level to continue as we move through the year? And where are you mostly seeing the benefit of this marketing? Is it better traffic? Is it new customer acquisition? How are you measuring the efficiency of that marketing spend?
Speaker #1: And the last question I had was on marketing. The 25% increase—I mean, do you expect that level to continue as we move through the end of the year and we're seeing the benefit of marketing?
Speaker #1: Is it better traffic? Is it new customer acquisition? How are you measuring the marketing that you spend?
Farooq Kathwari: Yeah, that's a very important issue. Now, if we knew that the government shutdown and all of those were going to take place, we would not have increased our marketing by 25%. That's what we did. But the reason it is mostly on digital marketing; this is the digital marketing is where clients today... You know, it used to be that our designers had to spend a tremendous amount of time working with the clients physically. Today, consumers and our clients and our designers are able to work virtually with the amount of technology that we have. So all this was to help bring more people through our virtual tech advertising, and also help them close business, and that we'll continue to do.
Farooq Kathwari: Yeah, that's a very important issue. Now, if we knew that the government shutdown and all of those were going to take place, we would not have increased our marketing by 25%. That's what we did. But the reason it is mostly on digital marketing; this is the digital marketing is where clients today... You know, it used to be that our designers had to spend a tremendous amount of time working with the clients physically. Today, consumers and our clients and our designers are able to work virtually with the amount of technology that we have. So all this was to help bring more people through our virtual tech advertising, and also help them close business, and that we'll continue to do.
Speaker #2: Yeah , that's a very important issue . Now , if we knew that the government shut of down and all those were going to take place , we would not have increased our marketing by 25% .
Speaker #2: That's what we did . But the reason it is mostly on digital marketing , this is the digital marketing is where clients know , it today , you used to be that that our designers had to spend a tremendous amount of time working with the clients physically .
Speaker #2: Today , consumers and our clients and our designers are able to work virtually with our with the amount of technology that we have .
Speaker #2: So all this was to help bring more people through our virtual . Advertising . And also help them close business . And that will continue to do .
Farooq Kathwari: But having said this, we are going to reduce some of our advertising expense in some other mediums. Look at 10 years back, we spent a lot of money on national advertising, zero. Then we, in the last year or so, we spent a fair amount of money on sending magazines, digital magazines, and print magazines. So one of the things we looked at was the impact of our digital magazine, where we're spending close to, I think close to $18 million a month. We decided that we'll take it down to $9 to 10 million and still make an impact, and especially spending this more money on the digital marketing will help us. So those are the areas where we are looking at.
But having said this, we are going to reduce some of our advertising expense in some other mediums. Look at 10 years back, we spent a lot of money on national advertising, zero. Then we, in the last year or so, we spent a fair amount of money on sending magazines, digital magazines, and print magazines. So one of the things we looked at was the impact of our digital magazine, where we're spending close to, I think close to $18 million a month. We decided that we'll take it down to $9 to 10 million and still make an impact, and especially spending this more money on the digital marketing will help us. So those are the areas where we are looking at.
Speaker #2: But having said this , we are . Going to reduce some of our advertising expense in some other mediums . Look . Ten years back , we spent a lot of money on national advertising .
Speaker #2: Zero . we in Then the last year or so , we spent a fair amount of money on sending magazines , digital magazines and print So one of the things magazines .
Speaker #2: We looked at was the impact of our digital magazine, spending close—where we were to, I think, close to a month.
Speaker #2: 18 million a We decided that we'll take it down to nine to 9 or 10 million and still make an impact . And spending this more money on the digital especially marketing will help us .
Speaker #2: those are So the areas where we are looking at .
Cristina Fernandez: Thank you.
Cristina Fernandez: Thank you.
Farooq Kathwari: All right.
Farooq Kathwari: All right.
Speaker #1: Thank you . .
Speaker #2: All right .
Operator: Thank you. And with that, there are no further questions at this time. I'd like to turn the floor back over to Farooq Kathwari for any closing remarks.
Operator: Thank you. And with that, there are no further questions at this time. I'd like to turn the floor back over to Farooq Kathwari for any closing remarks.
Speaker #3: Thank you. And with that, there are no further questions at this time. I would like to turn the floor back over to Farooq Kathwari for any closing remarks.
Farooq Kathwari: Well, thank you for joining. I would, I, I would say that, that we are stronger today. We have spent a fair amount of time. First, you know, as you know, every, every week I get about 40 reports. They don't all report to me, but they have to write on five things. First is talent. What have they done to improve talent? The good news is we've got strong talent. We have less people, but strong talent. And as I said, our headcount today is about 30% less than what was only five or six years back. Now, that is due to high talent, and it's also due to technology. So we're going to continue to have technology a tremendously important. Second, third thing is marketing. And marketing, again, is tremendously important, but the means of marketing are constantly changing.
Farooq Kathwari: Well, thank you for joining. I would, I, I would say that, that we are stronger today. We have spent a fair amount of time. First, you know, as you know, every, every week I get about 40 reports. They don't all report to me, but they have to write on five things. First is talent. What have they done to improve talent? The good news is we've got strong talent. We have less people, but strong talent. And as I said, our headcount today is about 30% less than what was only five or six years back. Now, that is due to high talent, and it's also due to technology. So we're going to continue to have technology a tremendously important. Second, third thing is marketing. And marketing, again, is tremendously important, but the means of marketing are constantly changing.
Speaker #2: Well , thank you for joining . I would , I would , I would say that that we are stronger today . We have spent a fair amount of time .
Speaker #2: First we've got I you know , as you know , every , week I every get about 40 reports . They to all report me , but they have to write on five things .
Speaker #2: First is talent . What have talent ? news The good is we've they done talent . strong We have less people , but strong talent .
Speaker #2: And as I said, our headcount today is about 30% less than what it was only five or six years back. Now, that is due to high talent, and it's also due to technology.
Speaker #2: So we're going to continue to have technology a tremendously important second . Third thing is marketing . And marketing again , is tremendously important .
Speaker #2: But the means of marketing are constantly changing . And this also reflected what we did last quarter in terms of spending more money on digital mediums .
Farooq Kathwari: And this also reflected what we did last quarter in terms of spending more money on digital media. We'll continue to do that. And service is critical. That's our fourth tremendously important area, and the services provided by interior designers, services provided by our logistics teams. As I said, that we today deliver our products at one price nationally to our consumer with service. And then finally, social responsibility is tremendously important, and we'll continue to do that. So thanks very much for joining, and look forward to our continued discussions next quarter.
And this also reflected what we did last quarter in terms of spending more money on digital media. We'll continue to do that. And service is critical. That's our fourth tremendously important area, and the services provided by interior designers, services provided by our logistics teams. As I said, that we today deliver our products at one price nationally to our consumer with service. And then finally, social responsibility is tremendously important, and we'll continue to do that. So thanks very much for joining, and look forward to our continued discussions next quarter.
Speaker #2: We'll continue to do that . And service is critical . That's our fourth tremendous , important area . And the services provided by interior designers , services provided by our logistic teams .
Speaker #2: As I said that we today deliver our products at one price nationally to a consumer with with service . And then finally social responsibility is tremendously important .
Speaker #2: And we'll continue to do So thanks that . very much for and joining look forward to our continued discussions next quarter .
Operator: Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Operator: Thank you. And with that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Speaker #3: Thank you . And with that , ladies and gentlemen , this does conclude today's teleconference . We thank you for your participation . You may disconnect your lines at this time and have a wonderful day
