The Brand House Collective, Inc

And thank you for participating in today's conference call to discuss the Brand House Collective's financial results for the second quarter ended August 2nd, 2025. Joining us today are CEO Amy Sullivan and CFO Andrea Courtois and the company's external director of investor relations, Caitlin Churchill. Following their remarks, we'll 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 the Brandt House Collective's actual results in future periods to differ materially from the forecasted results. Those risks and uncertainties are more fully described in the company'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 Kirkland.com. Now I'll turn the call over to the Brandt House Collective CEO, Amy Sullivan. Amy?

Good morning, and thank you for joining us today. We're at the beginning of a new chapter as we accelerate our transformation through our partnership with Bed Bath & Beyond. Our first store is open in Brentwood. Additional store conversions are already underway. and the early results validate the strength of the brand to chart a new path forward. Second quarter did bring unexpected challenges, but it also clarified our direction and strengthened our conviction in the future of each brand. Before Andrea reviews the results in detail, I'll share the key factors that shaped the quarter and the progress fueling our path to future growth. As noted in our press release, the second quarter was impacted by two significant events. First, the disruption at our Jackson, Tennessee distribution center following the tornado in late May, and second, the strategic and ongoing liquidation of select inventory as we optimize our category mix and prepare stores for Bed, Bath & Beyond conversions. Together, these two events were the dominant drivers of the year-over-year decline in profitability and created significant pressure on our top line, particularly in our e-commerce channel. Looking ahead, we do expect continued liquidation of non-go-forward inventory as we accelerate store conversions. This is a necessary step, unlocking liquidity by turning inventory into cash and redeploying that capital into the assortments that our customers expect in Bed Bath & Beyond Home. Our actions are deliberate, and our capital is being deployed where it matters most, to accelerate store conversions and strengthen our foundation for growth. Last month, we opened our first Bed, Bath & Beyond home store in Brentwood, Tennessee, and the response has been incredible. National media coverage generated more than 250 million impressions, amplifying the excitement customers showed from the moment the doors opened. Sales continue to exceed our expectations, driven by increases in traffic and average tickets. This new format honors the legacy of Bed Bath & Beyond as a house of brands with more than 30 trusted national brand names throughout bedroom, bathroom, and kitchen, alongside seasonally relevant home decor and furnishings through our Kirkland's Home brand. We are seeing significant growth in traffic and, more importantly, new customer growth. and that momentum gives us the confidence to accelerate our store conversions. The results make it clear. The Bed Bath & Beyond name is a powerful asset, and the nameplate change is proving to be a high-return growth engine, driving performance for the brand itself while amplifying sales across our Kirkland's Home branded products. We will continue to leverage the Kirkland's Home legacy by bringing the best of its assortments into our Bed Bath & Beyond Home Stores, giving customers curated solutions for every corner of their home. Brentwood is just the beginning. In fact, our next grand opening is this Saturday, September 20th, in Spring Hill, Tennessee. Over the next six weeks, four more locations in the greater Nashville market will convert to Bed Bath & Beyond Home, providing us with a range of store sizes and formats, that allow us to fine-tune our assortment and capital allocation strategy to ensure we have the correct formula for every store in our fleet. Over the next 24 months, we plan to convert all Kirkland's Home stores into Bed Bath & Beyond stores to capture this momentum and scale for long-term growth. By leveraging our existing infrastructure in stores, supply chain, and product development, we're able to execute this as a capital light transformation. Each conversion is expected to cost less than $100,000 in CapEx per store, which allows us to scale quickly, stay efficient, and maximize return on capital. As we've discussed before, our vision extends across more than Bed Bath & Beyond Home to the broader portfolio of Bed Bath & Beyond brands, including Bye Bye Baby and Overstock. Both strategies are still in development, and I'm incredibly excited about the opportunity ahead for Bye Bye Baby, which will be the next omnichannel initiative we build from the ground up, with our first new store expected in 2026. As announced yesterday, we are also in the early stages of planning an expansion of Kirkland's Home into the wholesale market, which would bring our designs to independent retailers nationwide. In addition to creating a new growth channel, wholesale could add scale, improve supply chain efficiency, and strengthen the unit economics of our products. We could not be more excited for this next chapter. Our partnership with Bed Bath & Beyond is the cornerstone of this transformation, and Marcus and I share a strong omnichannel vision for how these brands grow. That shared conviction gives us the confidence to accelerate conversions and unlock the momentum we're already seeing. Let me now introduce Andrea, who joined us in late July with more than two decades of financial expertise in planning, analysis, and inventory management. She has already established herself as a key partner in our transformation and will play a critical role in driving our long-term growth and success.