Bob's Discount Furniture, Inc.

Greetings and welcome to Bob's Discount Furniture 2026 Third Quarter Earnings Conference Call. At this time, we kindly request that all participants remain in a listen-only mode. A question and answer session will follow the formal prepared remarks. As a reminder, this conference call is being webcast live and recorded for replay. I will now turn the call over to Eddie Plank, Vice President, Investor Relations and Strategy. Eddie, please go ahead.

Good morning, everyone, and thank you for joining us to discuss our third quarter 2026 financial results. On the call with me today are Bill Barton, President and Chief Executive Officer, and Carl Lukach, Executive Vice President and Chief Financial Officer. After Bill and Carl have made their formal remarks, we'll open the call to questions. As a reminder, the language on forward-looking statements included in the earnings release also applies to the comments made during the call. The release can be found on the website at ir.mybobs.com along with a reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. I'll now turn the call over to Bill.

Thanks, Eddie. Good morning, everyone, and thank you for joining us today to discuss our third quarter earnings. Before I get into our results, I want to thank our outstanding team members across the company. Their commitment to serving customers Our strong third quarter performance reinforces a simple but important point. Our differentiated business model continues to resonate with customers. Demand remained healthy as we continued to gain market share, reflecting the strength of our value proposition, the relevance of our assortment, and the disciplined execution across our omni-channel model. We generated strong profitability growth and continued to see solid performance from our new stores as we expanded our presence into the Southeast to Nashville, Tennessee, an exciting new market for Bob's. In addition, broader furniture demand trends appeared to stabilize during the quarter, providing a more balanced industry backdrop. Turning to our third quarter performance, total net sales increased 10%, driven by new store expansion and comparable sales growth of 3.8%. We opened a record 11 new stores during the quarter, bringing our total to 20 year-to-date. Strong sales and disciplined execution more than offset gross margin headwinds this quarter, allowing us to deliver solid net profitability. For the quarter, adjusted EBITDA grew 18%, with a margin of 11.1%, Importantly, we achieved these results despite an inflationary cost environment in certain areas of the business, particularly fuel. Starting with demand, comparable sales accelerated to 3.8% in Q3, despite lapping a strong double-digit comparison last year. We saw healthy engagement across stores and digital channels, along with continued trade-up into our premium assortments. Collectively, our better and best tiers represent the majority of total sales, a mix that supports higher average order values and profitability, while still giving customers exceptional value across our assortment. Comparable sales also benefited from a portion of our 2025 store cohort entering the comp base and outperforming our expectations. Our laser focus on delivering the best customer experience continues to resonate. Customer feedback remains strong, supported by high satisfaction scores, exceptional service from our store teams, and fast fulfillment, with many customers receiving orders in as little as three days. With a meaningful portion of our customers shopping across both stores and digital channels, the customer journey is increasingly omnichannel. These customers are growing faster than our single-channel customer base and spending nearly 20% more per order than average, underscoring the value of our integrated shopping experience. With that as the backdrop, let me highlight several drivers behind the quarter. I'll start with real estate and development, where we open new stores across both greenfield and infield markets, including Charlotte, St. Louis and our exciting entry into Nashville. At Bob's, we often say we don't simply just open stores, we develop markets. Our Tennessee launch demonstrates the power of that approach. Over Labor Day weekend, we simultaneously grand opened our first four stores in the Nashville market, supported by a marketing and operational effort designed to establish Bob's as a destination from day one. While it's still early, we're very pleased with the customer response and initial productivity we're seeing across the market. Nashville builds on the positive performance we've seen in the Carolinas and further validates the portability of the Bob's model. More broadly, our 2025 and 2026 store cohorts, including the stores we opened in the Carolinas earlier this year, are generally performing ahead of our initial expectations, and competitive closures are creating additional opportunities to take locations and share in attractive markets. Looking to 2027, we continue to target 10% unit growth with strong visibility into a pipeline that includes our next major Southeast market, Atlanta. Our Macon, Georgia distribution center also remains on track to open in the spring of 2027, supporting the next phase of expansion and giving us added confidence in the infrastructure behind our growth plans. Marketing played an important role in our Nashville entry. Our approach was informed by a market entry playbook we've developed and refined through recent expansion into markets like North Carolina, where we've invested in understanding customer preferences, shopping behaviors, and how customers engage with our brand both online and in store. We apply those insights in Nashville, tailoring our strategy to the local market while leveraging the strengths of the Bob's brand. Our goal was to build awareness quickly, create local relevance, and establish a strong share of voice. To support our four Labor Day weekend openings, we hosted live music and community events, welcomed the Tennessee Titans new head coach, featured our NASCAR show car, and made a meaningful donation to the Dollywood Foundation. These efforts helped establish an immediate presence in the market in a way that was both high energy and locally connected. That same focus on relevance carries through to merchandising. Our merchants have strengthened the product architecture across good, better, and best products. creating clearer differentiation and more compelling reasons to trade up within Bob's. In Q3, strengthened living room, motion, and recliners helped offset relatively softer performance in mattresses. And we saw outsized mix shift into our best offering, led by living room and dining. The result is a healthier sales mix that supports AOV, helps offset cost pressures, and reinforces the breadth of value across our assortment. We also took selective price action in certain categories in Q3 to help preserve our margins. Even still, our prices remained at least 10% below our competitors' lowest promoted prices on average, maintaining our advantage in a highly promotional market. That balance is important. We are expanding choice across price points, styles, and features while protecting the everyday value that defines Bob's. and continuing to invest in sophisticated analytics that help us optimize pricing decisions across local, regional and national markets without compromising our value position. Finally, we remain encouraged by the breadth of engagement across income cohorts. We have seen continued strength from higher income households above $100,000, which account for a growing share of our customers and currently represent over 45% of our total customer base. Importantly, we have also seen lower-income customers increase their AOV and continue to trade into our premium assortment. That gives us confidence that our value proposition continues to resonate even with a more price-sensitive consumer. Moving to Omnichannel, our capabilities are strengthening the way we serve our customers across channels. More customers are using Omnicart to start, continue, and end their shopping journey because of the flexibility and seamless connection it provides across our physical and digital channels. In Q3, those Omnicart transactions were a meaningful contributor to e-commerce growth, as many customers begin their purchase in-store and completed it online. Total third quarter e-commerce sales increased approximately 28% year-over-year, with penetration rising roughly 250 basis points to 17.6% of total sales, the highest level we've seen to date. Importantly, we do not view e-commerce penetration as a goal in and of itself. Our focus is on meeting customers wherever they are in their purchase journey. That flexibility is an important part of our comp story and a good example of how our stores and digital capabilities complement one another. It is also why we continue to invest in a more unified view of our customer and apply those insights across merchandising, marketing, service and capital allocation decisions. Operationally, we continue to make progress on the elements that most directly affect the customer experience. In-stock availability remains strong with approximately 80% of deliveries occurring in under two weeks. We also made progress reducing freight storage costs while continuing to manage fuel and driver related cost pressures with discipline and flexibility. Across these areas, our goal is straightforward. Improve efficiency, support profitability, and preserve the service levels customers expect from Bob's. In addition, AI is becoming an increasingly important enabler of both growth and efficiency across Bob's. First, we're using AI to drive sales through the customer journey by improving how we engage customers and personalize the shopping experience in both stores and online, helping to enhance the customer experience. Second, we're applying AI to reduce costs through better delivery scheduling, smarter purchasing, and greater supply chain efficiencies, including packing and container optimization. Third, we're enhancing corporate productivity with AI-enabled forecasting and analytic tools that support faster insights, better decisions, and a leaner, more efficient organization. While we're still in the early innings, we're encouraged by the opportunities we see to improve both growth and profitability over time. We're also encouraged by the early traction following the transition to Synchrony as our new primary financing partner. While the rollout is still in its early stages, we continue to expect the partnership to support stronger approval rates, higher average order values, and a gradual return of financing penetration towards historic levels of approximately 50%. compared to our current level of roughly 40%. Taken together, these initiatives reflect how we are running the business, improving customer experience, investing behind the areas that can drive growth, and finding efficiencies that support profitability over time. That balance is central to our long-term model. We're focused on building a larger, stronger, and more profitable Bob's by expanding the store base, growing comparable sales, and using scale, operating discipline and execution to drive margin expansion over time. In the near term, we remain clear-eyed about the fuel cost backdrop. Our teams are addressing the expense pressures we can influence while staying focused on the customer promise that differentiates Bob's. We've navigated a range of economic cycles over our history, and that experience gives us confidence in our ability to manage the current situation. Carl will cover the cost environment and our mitigation plans in more detail. But from a merchandising perspective, we are working closely with vendor partners, sharpening sourcing decisions, and optimizing the assortment to protect profitability without compromising quality, style, or value. As we look to the balance of the year, we're encouraged by the trends we're seeing across the business and the continued resilience of our customers. Our performance year-to-date reinforces our confidence in the direction of the business and opportunities ahead. We're gaining share, our merchandising initiatives are working, our newest markets are performing well, and our omnichannel capabilities are strengthening the customer journey. We continue to see a long runway for profitable growth as we bring Bob's to more customers and keep executing the fundamentals. With that, I'll turn the call over to Carl to review our financial results and outlook in more detail. Carl?