Financial Data and Key Metrics Changes - The company reported a diluted earnings per share increase of 11.5% to $0.58 compared to $0.52 in the same period last year, reaching the high end of expectations [5] - Sales for the quarter rose by 7.1% to $1,214 million, with comparable store sales increasing by 0.4%, marking the first quarterly increase since 2022 [5][15] - Gross profit rose by 8.5% compared to the same period last year, driven by a 7.1% increase in sales and a 60 basis points improvement in the gross margin rate, which rose to 43.9% [26][29] Business Line Data and Key Metrics Changes - Connected Customer sales rose by 2% year over year, now accounting for approximately 19% of sales, with strong growth in weekly active users and conversions [18] - The design services segment delivered strong sequential and year-over-year sales growth, significantly outpacing the company average [18] - Spartan Surfaces saw sales rise approximately 7% year over year, with June marking the strongest month in the company's history [22] Market Data and Key Metrics Changes - Store sales in the West Division outperformed the company for the quarter and year to date [15] - The second quarter benefit to comparable store sales from Hurricane Helene and Milton was approximately 40 basis points compared to 100 basis points in the first quarter [15] - Existing home sales fell 2.7% in June to a seasonally adjusted annual rate of 3,930,000 units, marking the lowest level in nine months [32] Company Strategy and Development Direction - The company plans to open 20 new warehouse format stores in fiscal 2025, with a disciplined and agile growth strategy [7][8] - The company is focused on mitigating the impact of tariffs through vendor negotiations and product diversification [10][11] - The company aims to maintain pricing gaps and reinforce its everyday low price message while enhancing its product assortment [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the resilience of the U.S. consumer, supported by a solid labor market, but acknowledged challenges in discretionary spending due to elevated mortgage rates [31][32] - The company does not expect significant changes in consumer behavior or housing activity for the remainder of 2025 [33] - Management highlighted the importance of internal initiatives to drive sales and improve in-store productivity amid a challenging macro environment [66][68] Other Important Information - The company ended the quarter with $876.9 million in unrestricted liquidity, consisting of $176.9 million in cash and cash equivalents [30] - The effective tax rate increased to 21.8% from 19.8% in the same period last year, primarily due to a decrease in excess tax benefits related to stock-based compensation [29] Q&A Session Summary Question: How much of the ticket increase was tariff-induced versus trade-up to better products? - Management indicated that much of the average ticket increase came from product mix, particularly in wood, with minor price changes affecting the ticket [41][44] Question: How does the company view pricing throughout the year given inventory cycles? - Management stated that modest price increases are expected in the back half of the year, with a focus on managing tariffs through SKU adjustments and vendor negotiations [45][46] Question: What is the outlook for fiscal 2026? - Management noted it is too early to react to 2026 estimates, emphasizing the need for improvement in existing home sales and the impact of new store maturation [52][54] Question: How does the company approach creating shareholder value in a challenging environment? - Management highlighted ongoing investments in in-store experiences and commercial opportunities to drive growth, even if existing home sales remain subdued [65][66] Question: How is the company performing across different income demographics? - Management indicated that the company attracts a wide range of income levels and is revisiting its studio strategy to appeal to higher-income consumers [88][90]