Financial Data and Key Metrics Changes - Sales decreased by 4.1% to $288.9 million in the second quarter, primarily due to the closure of 145 underperforming stores, partially offset by a 1.1% increase in comparable store sales from continuing locations [16][22] - Adjusted diluted earnings per share increased to $0.21 from $0.17 in the prior year [18][19] - Gross margin expanded by 40 basis points to 35.7%, driven by lower occupancy and material costs, despite higher technician labor costs due to wage inflation [13][16] Business Line Data and Key Metrics Changes - Comparable store sales growth was reported for three consecutive quarters, with a 1.1% increase in the second quarter [12][16] - Tire units sold were down mid-single digits, but the company believes it outperformed the industry [16][51] Market Data and Key Metrics Changes - Preliminary October comparable store sales were down 2%, indicating some softness in consumer demand [13][14] - The company expects to deliver positive comparable store sales in fiscal 2026, despite recent market challenges [22] Company Strategy and Development Direction - The company is focusing on four key areas for performance improvement: customer acquisition, store experience, merchandising productivity, and real estate disposition [4][5] - A new marketing leader has been hired to enhance marketing strategies and execution [7] - The company is developing an updated tire assortment strategy to drive incremental sales and mitigate tariff risks [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted recent softness in consumer demand but remains optimistic about achieving positive comparable store sales for the fiscal year [14][30] - The company is confident in its ability to manage cost inflation and tariff-related price adjustments while maintaining solid margins [11][22] Other Important Information - The company generated $30 million in cash from operations during the first half of fiscal 2026 and maintained a strong financial position with net bank debt of $50 million [21][22] - The real estate disposition process from closed stores is expected to generate positive cash flow, with $5.5 million received from lease exits and property sales [11][12] Q&A Session Summary Question: Can you discuss the contribution of price versus car counts in comparable sales? - In the quarter, traffic was down mid-single digits while ticket prices were up mid-single digits, resulting in a net increase of 1% in overall comparable sales [28][30] Question: What are the expectations for gross margins moving forward? - Gross margins increased by 40 basis points in the quarter, driven by higher comp sales and benefits from store closures, with expectations for flat gross margins year-over-year [39][40] Question: How is the company managing consumer pressures and trade downs? - The lower-income consumer is feeling pressure, but the company believes its services are essential and will capture market share across economic levels [43] Question: What is the outlook for tire sales in the upcoming peak season? - The company is encouraged by its relative outperformance in tire sales and believes that marketing and merchandising initiatives will support sales during the peak season [51][58] Question: How does the company view its dividend safety? - The company believes it can fund its dividend alongside capital allocation priorities, maintaining a conservative balance sheet while generating strong cash flow [70][71]