Financial Data and Key Metrics Changes - The company reported first quarter net revenue of $35.7 million, down from $47.9 million in the same period last year, reflecting the impact of 19 fewer retail locations [13][14] - Gross profit margin improved to 27.2%, up from 25.8% year-over-year, indicating a 140 basis point improvement primarily due to increased proprietary brand penetration [14][15] - The net loss for the first quarter was $9.4 million, or negative $0.16 per share, compared to a net loss of $8.8 million, or negative $0.14 per share, in the prior year [17] Business Line Data and Key Metrics Changes - Net sales in the cultivation and gardening segment were $30.9 million, down from $43.1 million year-over-year [13] - Proprietary brand sales accounted for 32% of cultivation and gardening sales, up from 22.6% in the previous year, reflecting strong growth in proprietary products [14][8] - The storage solutions segment remained flat year-over-year at $4.8 million in revenue, facing some margin pressure [10] Market Data and Key Metrics Changes - The company experienced softness in durables and consumable demand due to regulatory and tariff concerns, particularly noted in March [6] - The company anticipates revenue in excess of $40 million for the second quarter of 2025, while withdrawing full-year guidance due to macroeconomic uncertainties [12][18] Company Strategy and Development Direction - The company is transitioning from a legacy retail model to a more agile fulfillment-centric model, repurposing former stores into regional fulfillment centers [7] - The launch of the GrowGen Pro portal aims to migrate more commercial transactions from brick-and-mortar stores to a digital platform, enhancing operational efficiencies [9] - The focus is on transforming GrowGen into a high-margin product-centric commercial business powered by a digital platform and a simplified physical footprint [13] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing volatility in the market due to tariff-related uncertainties but expressed confidence in the company's ability to return to profitability [11][19] - The company is actively managing costs and exploring tuck-in acquisitions aligned with its brand portfolio, maintaining a strong liquidity position with $52.6 million in cash and no debt [10][18] - Management emphasized the importance of proprietary brand penetration and servicing commercial customers as key to future growth [30] Other Important Information - The company incurred approximately $1.1 million in restructuring costs during the first quarter, impacting operating expenses [16] - The company is evaluating the closure of an additional 10 stores to streamline operations and strengthen margin performance [12] Q&A Session Summary Question: Insights on tariffs and proprietary products - Management indicated that less than 10% of proprietary brands come from China, with efforts to diversify sourcing and negotiate pricing with vendors [24][25] Question: Potential for store closures - Management expects store closures to be spread out, primarily aligned with lease expirations, as consumer traffic has decreased significantly [29][30] Question: Incremental distribution opportunities for proprietary brands - Management highlighted efforts to expand distribution outside the U.S. and work with large stores for distribution, despite store closures [35][36] Question: Consumer pressures and market conditions - Management noted significant weakness in the cannabis industry, particularly in durable goods, while consumables remain strong [48][49] Question: Capital position and future acquisitions - Management emphasized the importance of maintaining capital on the balance sheet while actively seeking acquisitions that are accretive to shareholders [55][56]