Financial Data and Key Metrics Changes - Q3 net sales were $343 million, down 19.6% year-over-year, reflecting challenges in the product portfolio and reduced marketing investments [11][12] - Gross profit margin was 59.9%, down 93 basis points year-over-year but up 82 basis points from Q2 [12] - Adjusted EBITDA was $13.3 million, down $14.4 million from the previous year, driven by lower net sales and gross profit margin compression [14] - Full-year net sales are now expected to be approximately $1.4 billion, with an adjusted EBITDA of approximately $70 million and negative free cash flow of approximately $50 million [15] Business Line Data and Key Metrics Changes - Significant reductions in operating expenses, excluding restructuring and non-recurring costs, by $115 million since the beginning of 2023, with expectations to exceed the $130 million cost-out target [9][10] - Operating expenses for Q3 were $204 million, an 18% decline from 2024 [12] Market Data and Key Metrics Changes - The competitive environment became more aggressive during the Labor Day period, impacting top-line performance [5][9] - Marketing efficiency improved, with cost per acquisition declining 6% versus the prior year, but traffic to stores and the website needs to increase [12] Company Strategy and Development Direction - The company is focused on a comprehensive turnaround strategy, including cost reductions, product evolution, and marketing efficiency improvements [3][9] - Plans to revamp the product offering to better serve consumer priorities of comfort, durability, and total value, with new product initiatives expected to launch in early 2026 [16][48] - The company is exploring new distribution channels, including partnerships and digital expansion, while optimizing its store footprint [6][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges current performance is below expectations but remains confident in the actions being taken to stabilize demand trends [15] - The company anticipates that the competitive environment will remain intense, but it is prepared to invest in marketing to drive future growth [39][40] Other Important Information - The company secured an amendment and extension of its bank agreement through 2027, providing financial flexibility to focus on growth initiatives [4][10] - Total marketing spend in 2026 is expected to be slightly up compared to 2025, while still reducing operating expenses [7] Q&A Session Summary Question: What is the cash part of the restructuring for all of 2025? - The cash charges include contract termination costs and employee severance costs, with guidance not provided for 2026 [19][20] Question: What are the biggest strategic changes to improve sales? - The company is focusing on refining its product offering and improving marketing efficiency to drive traffic and conversion [39][40] Question: What is the timing for new product introductions? - New products are expected to be introduced in early 2026, focusing on providing value at accessible price points while maintaining premium quality [48][63] Question: How did the competitive advertising impact sales? - The company experienced a 32% decrease in media spend, which limited its ability to compete effectively during high-demand periods like Labor Day [39][66] Question: What is the new debt structure and interest rate? - The new debt agreement includes scaled covenants and adjusted interest rates, details of which will be available in the 8-K filing [69]