Financial Data and Key Metrics Changes - Company reported Q2 2025 sales of $181 million, a 1.3% increase year-over-year, with comparable store sales down 2.3% [3][18] - Gross margin improved to 60.8% from 60.4%, reflecting product selection and merchandising mix [18] - Pre-tax profits decreased to $4.3 million, with an operating margin of 2.4%, down from $6.5 million and 3.6% in Q2 2024 [3][18] - Earnings per share (EPS) for the quarter was $0.16, compared to $0.27 in the same quarter last year [3][18] Business Line Data and Key Metrics Changes - Total written sales increased by 0.4%, while design and special order business saw a mid-single-digit decline due to tariff impacts [4][9] - Average ticket size decreased slightly to just under $3,400, while designer average ticket grew approximately 5% to over $7,600 [4][9] - Upholstery and bedroom categories outperformed with low to mid-single-digit positive sales, while dining room and decor categories experienced high single-digit declines [9] Market Data and Key Metrics Changes - Traffic remained positive in the mid-single digits compared to the same period last year, with a notable increase during the Memorial Day event [4][6] - Organic traffic increased by 15.6% following the implementation of Adobe's Edge delivery service [7] - Web sales grew by 8.4% for the quarter, attributed to improved digital marketing strategies [7] Company Strategy and Development Direction - Company aims to return to positive same-store sales and is focused on enhancing customer experience through new point of purchase and tagging programs [10][12] - Plans to open five new stores annually, with two new stores in Houston and one relocation in Daytona Beach planned for 2025 [12][14] - Company is actively managing supply chain challenges and tariff uncertainties while maintaining gross margin guidance [11][15] Management's Comments on Operating Environment and Future Outlook - Management noted a struggling housing market with high interest rates and inflation concerns but highlighted consumer resilience [4][15] - Confidence in maintaining gross margin guidance despite potential tariff impacts, with proactive vendor communication [11][22] - Management expressed optimism about gradual improvement in sales trends and plans to invest more in marketing strategies [37][48] Other Important Information - Selling, general, and administrative expenses increased by 4.1% to $107.3 million, representing 59.3% of sales [19] - Company has no funded debt and ended the quarter with $107.4 million in cash and cash equivalents [20][21] - Anticipated capital expenditures for 2025 remain at $24 million, focusing on new store openings and IT investments [23] Q&A Session Summary Question: Can you speak to the cadence of your written sales throughout the quarter and any notable regional differences? - Written business was down around 2% in April, up almost 1% in May, and up around 2.5% in June, with no significant regional differences noted [26] Question: Can you quantify the impact of suspending special orders from China on same-store business? - Management acknowledged the impact on design business but could not quantify the exact effect [27][28] Question: Have you taken any pricing actions regarding tariffs, and what are your expectations? - Pricing adjustments were made in May, and management is prepared to adjust pricing based on final tariff outcomes [29][30] Question: What marketing strategies do you believe will be most impactful in driving same-store sales? - New pricing strategy and successful marketing campaigns, including extended promotions, are expected to drive traffic and conversion rates [35][36] Question: How do you view the promotional environment across the industry? - Management feels confident in their promotional strategies and plans to increase marketing investments while maintaining brand integrity [40][42] Question: What is the outlook for store openings and the real estate environment? - Store openings have been pushed to 2026, but management remains optimistic about finding suitable locations and maintaining reasonable rents [49][51]