The Brand House Collective, Inc

Good morning, everyone, and thank you for participating in today's conference call to discuss Kirkland's financial results for the fourth quarter and fiscal year ended February 1st, 2025. Joining us today are Kirkland's home CEO, Amy Sullivan, EVP and CFO, Mike Madden, and the company's external director of investor relations, Caitlin Churchill. Following their remarks, will we open the call for your questions? Before we go further, I would like to turn the call over to Ms. Churchill as she reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Caitlin, please go ahead.

Thank you. Except for historical information discussed during this conference call, The statements made by company management are forward-looking and made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Kirkland's actual results in future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in Kirkland's filings with the Securities and Exchange Commission. A webcast replay will also be available via the link provided in today's press release, as well as on the company's website at kirklands.com. Now, I'll turn the call over to Kirkland's CEO, Amy Sullivan. Amy?

Thank you, Caitlin, and good morning, everyone. Over the past year and a half, we have been intently focused on transforming our Kirkland's Home brand through reengaging our core customer, refocusing our product assortment, and strengthening our omnichannel capabilities, we have seen a significant reactivation of lapsed customers and have delivered positive brick-and-mortar comparable sales growth for five consecutive quarters. In addition, we significantly improved adjusted EBITDA with a fiscal 2024 results reflecting a $6 million year-over-year EBITDA improvement. Perhaps most importantly, this year also marked the beginning of our strategic partnership with Beyond. This partnership not only helped recapitalize our balance sheet, but also opened new avenues for growth, enabling us to further reimagine our future as a retail house of brands, leveraging our expertise in merchandising, supply chain, and store operations. We believe these brands need an omnichannel strategy to meet the customer whenever and wherever she wants to shop. And while we intend to reimagine the physical retail experience for each brand, we recognize the challenges in the current consumer and operating environment. Therefore, we are shifting our priorities to deliver value to our customers through an aggressive but capital-like store conversion strategy leveraging Bed Bath & Beyond Home and Overstock. As announced this morning, we are in active discussions to finalize a $5 million term loan expansion with Beyond that we expect to close next week, which will be used for general working capital purposes and to support our store conversion strategy. First, let's discuss the introduction of and our vision for Bed Bath & Beyond Home stores. We see this as a sister brand to Kirkland's Home allowing us to maximize the current contribution of our existing home decor and furnishings inventory while taking advantage of the iconic Bed Bath & Beyond brand name through simple storefront conversions without capital intensive remodels. These locations will have a differentiated assortment from our current Kirkland's Home stores as we expand bedroom and bathroom and reduce lower turning categories such as wall and lighting. We expect these stores to deliver more consistent foot traffic and improved inventory turns, driving increased store productivity compared to our current Kirkland's Home locations. Bed Bath & Beyond Home blends the category expertise we have in-house with the power of the iconic name and is well positioned to compete at a national level as we deliver style and value for every corner of her home. Next, we see tremendous opportunity in the Overstock name as a true off-price brand filled with a treasure hunt of deals from our family of friends, excess inventory from our best vendor partners, and a more profitable solution for liquidating returns. We tested a similar concept in Kirkland's home stores called The Attic, and given the incremental lift we saw, we believe a fully dedicated Overstock store should deliver at least two times the revenue of a current Kirkland's Home store, driven by an increase in average tickets. Following the initial real estate review we completed earlier this year, we have now expanded that review as we begin to roadmap a multi-brand national real estate strategy. Through deep analysis of historical store performance, current consumer demographic, and the evolving competitive landscape, we see significant opportunity to accelerate store conversions in the markets we believe will yield the greatest results. We have identified a Nashville location as the first of many Bed Bath & Beyond home conversions, as well as four initial locations for the Overstock brand. Overall, we remain committed to maximizing the progress we have made in our best Kirkland's home stores. And while timing of opening our initial pilot of the traditional Bed Bath & Beyond True Blue store and Bye Bye Baby store in Nashville may be slightly pushed due to the reprioritization of strategies at the moment, we are continuing to work closely with our design partner, JLL, as we set the vision for these brands. We believe these pilots, along with our Capital Light, Bed Bath & Beyond Home, and Overstock store conversions, allow us to leverage our store base to drive profitable growth for each brand. Shifting to our e-commerce channel, while we saw improvements in conversion rates and an increase in transaction count and units sold in 2024, this was not enough to offset the overall revenue decline largely driven by declines in our higher ticket dropship business. As we shared in February, we are intently focused on improving the profitability of our e-commerce channel. We are taking an aggressive approach to skew rationalization and optimizing our inventory allocation to take advantage of buy online, pick up in store across our store fleet. While early in our optimization, we have begun to see significant year-over-year margin improvement in our direct-to-consumer orders and are beginning the same process in our dropship business. Our mandate to deliver profitability may result in revenue declines in this channel initially, but e-commerce is an important part of our omnichannel vision. It is our largest store and will be part of the connective tissue driving buy online, pick up in store to both Kirkland's Home and FedVap and Beyond Home. Before I turn the call over to Mike, let me touch on how we are navigating the current tariff situation. While we have reduced our sourcing exposure to China from over 90% just a few years ago to approximately 70% in 2024, we are actively working through a number of strategies to help mitigate the impact the current tariff policy has on our business. Our merchandising and sourcing teams are actively engaged in cost negotiations, resourcing opportunities, and strategic price increases. Assuming that current tariffs are tempered in the near term and through the efforts we have underway with the support of our long-term vendor partners, I believe in our ability to navigate these headwinds. The current environment notwithstanding, we have a golden opportunity alongside our partners at Beyond to leverage these iconic brands to drive profitable growth. With that, I'll turn the call over to Mike to review our fourth quarter financial results and current views on performance to date in more detail.