Financial Performance - Net sales for Q1 were $393 million, a decrease of 16% compared to the prior year [9] - Gross profit margin expanded to 61.2%, up 250 basis points from last year, driven by operational efficiencies and product mix [9] - Adjusted EBITDA for the quarter was $22 million, a decrease of $15 million from the prior year, with an adjusted EBITDA margin of 5.6%, down 230 basis points [11] - Operating expenses excluding restructuring costs totaled $237 million, a $23 million or 9% improvement over last year [10] Business Lines and Market Data - Positive consumer response to the Climate Series beds helped expand Average Revenue per Unit (ARU) by approximately 4% versus last year [9] - The company is closely monitoring tariffs and estimates an unmitigated impact of approximately $30 million for 2025, with $17 million potentially offset through supplier partnerships [12][13] Company Strategy and Industry Competition - The company is focused on stabilizing the business and enhancing shareholder returns through operational efficiencies and cost reductions [5][18] - A new executive leadership structure has been implemented to streamline decision-making and improve organizational efficiency [22][24] - The company plans to reduce annualized costs by $80 million to $100 million compared to the 2025 cost structure [14][29] Management Commentary on Operating Environment and Future Outlook - Management acknowledges challenges in the current consumer environment but is committed to creating a stable business that can perform under various market conditions [8][41] - The company is not providing full guidance due to the rapidly evolving macroeconomic environment, including consumer sentiment [14] - Management emphasizes a customer-centric approach, leveraging data to better understand customer needs and improve product offerings [20][21] Other Important Information - The company is evaluating its supply chain, distribution strategy, and product selection to create a flexible cost structure for future growth [30] - A focus on marketing efficiency is emphasized, with plans to lower marketing spend as a percentage of revenue while increasing productivity [25][37] Q&A Session Summary Question: What are the low hanging fruit for improvement? - Management identified opportunities in marketing efficiency, organizational structure changes, and leveraging past innovations to meet current customer needs [34][36] Question: Can you provide any color on quarter to date demand? - Management noted a challenging environment with declining consumer confidence impacting spending, but emphasized efforts to rightsizing the organization [40][41] Question: What are the biggest opportunities to strengthen the brand? - Management sees opportunities in leveraging new technologies for effective marketing and optimizing existing partnerships to maximize benefits [49][50] Question: Is there an increased appetite to explore wholesale distribution? - Management stated that everything is on the table and they are open to exploring various strategic options [54] Question: How do you think about the level of promotion necessary in the short and long term? - Management indicated a well-oiled promotional machine and a focus on balancing pricing strategies while managing tariff impacts [78][80] Question: How are you thinking about store openings versus closures? - Management confirmed maintaining the current strategy of store openings and closures while reviewing the overall strategy and operations [81]