Tile Shop(TTSH) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales for Q3 2020 were $81.5 million, a decrease of 5.2% year-over-year, with comparable store sales down 6.5% due to reduced traffic [15][16] - Gross profit was$ 55.3 million, reflecting a 6.5% decrease compared to the same quarter last year, with a gross margin of 67.9%, which is 90 basis points lower than Q3 2019 [16] - Net income for the quarter was $1.9 million, with fully diluted earnings per share at$ 0.04, and adjusted EBITDA was $11.1 million, representing a 400 basis point improvement in adjusted EBITDA margin to 13.7% [18] Business Line Data and Key Metrics Changes - The company focused on retail execution, setting goals for various metrics including discounting and sales productivity, with ongoing monitoring and training to improve performance [5] - The Pro loyalty program was highlighted as a key initiative to incentivize professional customers, which includes tile setters and contractors [6] Market Data and Key Metrics Changes - The company faced challenges due to COVID-19, which adversely impacted traffic and sales, particularly in the first quarter of 2020 [9][10] - Product shortages from supply chain disruptions contributed to lower sales levels in Q3 2020 compared to the previous year [15][16] Company Strategy and Development Direction - The company established three strategic priorities for 2020: focus on retail execution, enhance the Pro loyalty program, and disciplined expense management [5][7] - Efforts to reduce expenses led to a$ 7.4 million reduction in SG&A expenses in Q3 2020 compared to the same quarter last year [7][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges from the COVID-19 pandemic, emphasizing safety as a top priority and the need for rigorous cleaning processes [12] - The company is committed to maintaining a conservative approach to expenses while navigating the pandemic's impact on operations [10][11] Other Important Information - The company ended Q3 2020 with 142 stores, an increase from 140 stores at the end of Q3 2019, although plans to open a new store in 2020 have been postponed to 2021 [18] - Inventory levels decreased by approximately $6.1 million from the second quarter, reflecting a strategic reduction in inventory [19] Q&A Session Summary Question: What are the company's plans regarding store openings? - The company has postponed the opening of a new store planned for 2020 to 2021 [18]