La-Z-Boy Incorporated

Greetings and welcome to the Lazy Boy Incorporated Fiscal 2026 First Quarter Conference Call. At this time, all participants are on a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Mark Becks, Director of Investor Relations and Corporate Development at Lazy Boy Incorporated. Sir, you may begin.

Thank you, Ali. Good morning, everyone. And thanks for joining us to discuss our fiscal 2026 first quarter. Joining me on today's call are Melinda Whittington, Lazy Boy Incorporated's board chair, president, and chief executive officer, and Taylor Lubke, Lazy Boy's SVP and CFO. Melinda will open and close the call, and Taylor will speak to segment performance and the financials midway through. After our prepared remarks, we will open the line for questions. Flies will accompany this presentation, and you may view them through our webcast link, which will be available for one year. And a telephone replay of the call will be available for one week beginning this afternoon. I would like to remind you that some statements made in today's call include forward-looking statements about Lazy Boy's future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors, as well as other key information detailed in our SEC filing. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website, and it includes reconciliations of certain adjusted measures, which are also included as an appendix at the end of our conference call slide deck. With that, I will now turn the call over to Melinda.

Thanks, Mark. Good morning, everyone. Yesterday, following the close of market, we reported our July-ended first quarter results. During the quarter, we delivered sales growth in both our retail and wholesale segments, as well as margin expansion in wholesale. And we accomplished significant Century Vision strategic milestones even despite continued industry headwinds. Highlights for our first quarter included, in our retail segment, delivered sales increased 2% and written sales increased 5%. We opened two new company-owned Lazy Boy furniture galleries, bringing our total to 13 new company-owned stores over the last 12 months. And we announced a 15-store acquisition in the growing southeast region of the United States, which is expected to close late in October and will be the largest independent Lazy Boy Furniture Gallery's acquisition in our company's history. In our wholesale segment, delivered sales grew 1%, led by growth in our core North American Lazy Boy wholesale business. On top of this, we successfully transitioned to our new Arizona Distribution Center, the first of three centralized hubs that will provide the foundation to our multi-year distribution transformation. We also delivered strong operating cash flow of $36 million for the quarter. And finally, we continued to maintain a strong balance sheet with $319 million in cash and no external debt. And we updated our revolver to more favorable terms. Consolidated sales for the quarter were $492 million, down slightly from the prior year. While we delivered growth in our retail and wholesale segments against an increasingly challenged consumer and macroeconomic environment, those challenges did affect store traffic and related same-store sales in our retail segment. And our Joybird business delivered sales for the first quarter were down 20%, consistent with the drop in written sales Joybird experienced in our fourth quarter. The combination of slower same-store sales plus investment in new store expansions, which take a couple of years to get to going profitability, pressured our total company adjusted operating margin for the quarter, which came in at 4.8%. As we look forward, We continue to be optimistic about our ability to grow sales and outperform the industry while driving strong margins, and we are actively adjusting our near-term operations to prudently navigate the current environment. Total written sales for our company-owned retail segment increased 5% versus last year's first quarter, driven by new and acquired store growth, which more than offset a 4% written same-store sales decrease. Both total and same-store written sales trends sequentially improved versus our fourth quarter. Joybird written sales decreased 14% in the quarter versus a year ago, with trends improving throughout the quarter and with continued stronger performance in physical stores than online. Industry traffic remains depressed, with housing transactions continuing to be near 30-year lows and exacerbated by increasingly challenged consumer. Industry data for the quarter continues to be volatile and mixed, with retail public company peers reporting same-store sales ranging from down low to mid-single digits, while broader industry data, as defined by the U.S. Census Bureau, shows recently downwardly revised figures, but still in the positive mid-single digit range. Even as we navigate the current consumer choppiness, We continue to advance our century vision strategy to deliver long-term shareholder value. In our ongoing drive to increase our direct-to-consumer business, where we control the entire consumer experience, we were thrilled to announce the upcoming acquisition of a 15-store Lazy Boy Furniture Galleries network in the southeast region of the United States. This network currently drives roughly $80 million in annual sales, which will add an incremental $40 million in sales to the company on a consolidated basis. And we see continued growth opportunity for that region. Further, during the quarter, we opened two net new stores with 15 total planned for the year, mostly company-owned, and making this one of the most significant retail expansion years in our company's history. At the end of the quarter, Our retail footprint included 205 company-owned furniture galleries, 56% of our entire 368 store network, which includes independently-owned stores. And there is continued opportunity to expand our retail store footprint as part of our century vision. We're also pleased during this past quarter to open our 14th Joybird store just last week in Mission Viejo, California. as we prudently expand the Joybird physical store footprint with up to four stores planned in this fiscal. Demonstrating our consumer-recognized strength in retail, we were recently named by Newsweek as one of America's best retailers in 2025 and ranking number one in the furniture category for the first time in our history. This recognition based on quantitative data gathered from independent surveys is a testament to our talented and dedicated team and our continued focus on further strengthening our product offerings, our customer service, and our in-store experience. Our refined channel strategy and wholesale is also seeing continued momentum as we expand our brand reach with compatible strategic partners to delight and inspire more consumers. We recently added another strategic regional partner in Farmer's Furniture, an approximately 250-store retailer in the Southeast, giving consumers greater access to the Lazy Boy brand in some more rural markets we haven't served in the past. With our refined channel strategy, we continue to add new distribution as well as grow our brand with existing partners to ensure Lazy Boy is accessible to more consumers. And another core pillar of our Century Vision growth strategy is to expand brand reach. Here, we also made progress during the quarter with our brand campaign update, which we again officially launched on National Lazy Day, August 10th. And we also recently introduced our reinvigorated Lazy Boy brand identity, rooted in our heritage of comfort and craftsmanship, The new identity reflects a more modern brand and represents an important step in our journey to evolve with our consumer, further increase brand relevance, and reach a broader audience. Within our Century Vision pillar to drive supply chain agility, as we noted last quarter, we are in the first quarter of a multi-year project to transform our distribution network and home delivery program. We're designing and building an even more effective network for our business today and in the future, delivering an even better consumer experience while strengthening our operations, improving margins, and further enhancing the agility of our vertically integrated supply chain. This transformation will reduce our distribution footprint from a total of 15 large distribution centers to three centralized hubs, supported by small format cross-docs across the country, located close to our customers and our consumers. And it will drive an estimated 30% reduction in total square footage across our network. It will also reduce mileage of inventory traveled across our network by approximately 20%. Further, the program will enable improved inventory productivity and working capital levels, will enable us to reach a broader consumer base, doubling our delivery radius from 75 to 150 miles and decreasing our reliance on third-party providers, and increase the agility of our supply chain to more optimally serve our current store footprint with flexibility for added growth in the future, all while improving an already strong consumer experience. During the quarter, we successfully completed the opening of our new Arizona distribution hub, the first of these three centralized hubs. And we are excited about the early progress of this transformation, which is an important driver toward our broader objective of double-digit margins in our wholesale segment over the long term. We continue to drive long-term value creation through our Century Vision Strategy across the enterprise. And we are strengthening our core business of branded, customized upholstery in North American markets to ensure that our company is structured to deliver on long-term value creation, while also prudently responding in the near term to an increasingly challenged consumer environment. In addition, we are actively evaluating all alternatives to address financial pressure from non-core parts of our enterprise. Our guiding principles will remain the same. We will do the right thing for our consumers by delivering comfort and customization with quality. We will be nimble to responding to the dynamic environment and leverage our iconic brand, vertically integrated business model, and robust balance sheet to further strengthen our foundation and disproportionately benefit when an industry rebound occurs. And now, let me turn the call over to Taylor to review the financial results in more detail.

Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and adjusted basis. We believe the adjusted presentation better reflects underlying operating trends and performance of the business. Adjusted results exclude items which are detailed in our press release and in the tables in the appendix section of our conference call slides. On a consolidated basis, fiscal 2026 first quarter sales decreased 1% to $492 million versus the prior year as growth in retail and wholesale segments was offset by a decline in Joybird sales. Consolidated gap operating income was $22 million and adjusted operating income was $23 million. Consolidated gap operating margin was 4.5% and adjusted operating margin was 4.8% with margin expansion on our wholesale segment more than offset by retail margin compression due to fixed cost-due leverage and investment in new store openings. As a reminder, our first quarter is generally the lowest sales and margin quarter in the fiscal year due to seasonally lower industry sales and our annual week-long plant shutdown. Diluted earnings per share totaled 44 cents on a gap basis and 47 cents on an adjusted basis. As I move to the segment discussion, my comments from here will focus on our adjusted reporting unless specifically stated otherwise. Starting with the retail segment for the first quarter, delivered sales were $207 million, up 2% over the prior year's first quarter, driven primarily by new and acquired stores. Retail adjusted operating margin was 6.3% versus 10.3% due to deleverage in same-store sales and investment in new store openings. For our wholesale segment, delivered sales for the quarter increased 1% to $353 million, driven by growth in our core North America Lazy Boy wholesale business and case goods business, which more than offset the continued impact of a significant customer transition in our international wholesale business that began in the second quarter of fiscal 2025. Adjusted operating margin for the wholesale segment was 7.5% versus 6.9%, driven by lower warranty and marketing expenses, along with continued gross margin expansion in our core North America Lazy Boy wholesale business, partially offset by the margin impact of the significant customer transition in the international wholesale business. As a reminder, approximately 90% of our upholstered units sold in North America are produced in the United States, with our USMCA compliant Mexican operations, supporting most of the balance, as well as much of our cut and sew operations. As such, we have been able to navigate the current trade and tariff situation through strategic inventory moves, sourcing adjustments, vendor diversification, and nominal pricing actions. For Joybird, reported in Corporate & Other, delivered sales were $28 million, down 20% versus the prior year quarter, with store performance stronger than the online business. Joybird operating loss increased versus the prior year due to lower delivered volume. To note, we have seen some improvement in consumer trends through the first months of the fiscal year and will continue to prudently manage this business. Moving on to our consolidated adjusted gross margin and SG&A performance for fiscal 2026 first quarter. Consolidated adjusted gross margin for the entire company decreased 30 basis points versus the prior year first quarter. The decrease in gross margin was primarily driven by an increase in supply chain costs in our distribution and manufacturing operations and promotional activity on case goods, products, and accessories, partially offset by lower input costs. Adjusted SG&A as a percent of sales for the quarter increased by 150 basis points compared with last year due to fixed cost deleverage in our retail comparable stores, as well as investment in new stores, partially offset by lower warranty and marketing costs. Our effective tax rate on a gap basis for the first quarter was largely unchanged at 25% versus 25.5% in the first quarter of fiscal 2025. Turning to liquidity, we ended the quarter with $319 million in cash and no externally funded debt. We generated a strong $36 million in cash from operating activities in the first quarter with disciplined management of working capital. We invested $18 million in capital expenditures during the quarter, primarily related to Lazy Boy Furniture Gallery's new stores and remodels and manufacturing-related investments. We continue to believe that the best use of our cash is prudently reinvesting back into the business. As such, we are committed to investments in new stores, acquisitions, and our distribution transformation to profitably grow our core business. As a note, last month we extended the maturity date of our five-year $200 million unsecured revolving credit facility to 2030. The amended facility increased the accordion feature to $125 million from $100 million. It also allows for more favorable terms, including the removal of the SOFR credit spread adjustment and additional covenant flexibility. We have no borrowing against the facility. Regarding cash return to shareholders for the quarter, we returned $22 million to shareholders through dividends and share repurchases, including $9 million paid in dividends. We repurchased 300,000 shares in the quarter, which leaves 3.4 million shares available under our existing share repurchase authorization. We continue to view share repurchases in our dividend as an attractive use of our cash and positive return to shareholders. In fiscal 2025, capital allocation was tilted to shareholders. Looking to fiscal 2026, We expect capital allocation to be more weighted to investments in the business through capital expenditures and acquisitions, particularly given the strategic upcoming acquisition of a 15-store network at the end of October. This will be our largest independent Lazy Boy Furniture Gallery's acquisition in our company's history and will enable full access to multiple large and growing markets in Florida, Georgia, and Tennessee. On top, it is already a well-run and profitable network and will pave the way for additional new store expansion. As a result, this investment will be at the high end of our historical four to six time EBITDA range for independent Lazy Boy Furniture Gallery's acquisitions. We will continue to return capital to shareholders with our quarterly dividend and annual dividend increase subject to regular board approval. And given the transformational investments back into the business in fiscal 2026, we expect minimal share purchases for the balance of the year. Longer term, our capital allocation target remains consistent to reinvest 50% of operating cash flow back into the business and return 50% to shareholders and share purchases and dividends. Before turning the call back to Melinda, let me highlight several important items for fiscal 2026 and our second quarter. Assuming no significant changes to an increasingly challenged consumer environment or trade and tariff policies, we are planning prudently to expect fiscal second quarter sales be in the range of 510 to 530 million, and adjusted operating margin to be in the range of 4.5 to 6%. On our distribution transformation project, over time, we expect 50 to 75 basis points of wholesale margin improvement. Looking at the cadence, we expect a modest drag on adjusted operating margins to continue for the first two years as a result of transition inefficiencies, with savings beginning to flow through in year three and at a going rate as we exit year four. We will continue to invest in our Century Vision growth strategy and expect to open approximately 15 new company-owned and independent Lazy Boy furniture gallery stores during the year, of which the majority are company-owned, as well as three to four new Joybird stores. We continue to expect our tax rate for the full year to be in the range of 26 to 27%. We anticipate adjustments for purchase accounting charges for the year, to be in the range of $0.01 to $0.02 per share. And lastly, we expect capital expenditures to be in the range of $90 to $100 million for fiscal 2026, consistent with prior guidance as we invest to strengthen the company for the future, consistent with our century vision strategy. This includes investments in our Lazy Boy furniture galleries for new stores and remodels, our multi-year project to transform our distribution network and home delivery program, and continued manufacturing-related investments. And with that, I will turn the call back to Melinda.

Thanks, Taylor. We're leveraging our 98 years of experience and our Fortress balance sheet to navigate a challenging and volatile environment. And we're doubling down on driving our core businesses to serve our consumers with the comfort and quality they expect from Lazy Boy Incorporated. At the same time, we will continue to strategically grow and improve our business, and drive long-term shareholder value. I'd like to again thank our entire team of more than 10,000 employees around the world for their continued dedication to our mission of driving the transformational power of comfort to more homes. I am truly excited for the opportunities still ahead. And now I'll turn the call back to Mark.

Thank you, Melinda. We will begin the question and answer period now. Please review the instructions for getting into the queue to ask questions.

Thank you, sir. Ladies and gentlemen, at this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is coming from Brad Thomas with KeyBank Capital Markets. Your line is live.

Hey, good morning, everyone. This is Taylor Zitkon for Brad this morning. Melinda, maybe just to start, investors tend to focus on the earnings outlook, but I think one thing, and you mentioned in your script, is that you saw a sequential improvement in trends during this quarter. So can you provide us some additional color to what you saw during the trends? And secondly, in the past, you provided some early comments on what you're seeing quarter to date. So any thoughts on maybe how August is trending?

Yeah, we definitely saw some sequential traffic improvement through our first quarter, and that has continued into early August. It's step-by-step, and we're managing prudently through that. Too early to call that a trend. As you know, the holidays are big for our industry, and so we're optimistic about Labor Day and with our ability to execute in-store and deliver a great consumer experience. We're focused on making sure our marketing investments are driving traffic to the store. But at the same time, we know consumer fundamentals are challenged right now. That's been true for our industry for a while, and I see that growing with an increasingly pressured consumer. So we're sort of navigating prudently as we go forward, but no doubt we have seen some level of continued trend increase on traffic overall.

Okay, that's great. And maybe just on the margin performance, it sounds like some of the newer stores are putting some pressure here on the retail segment. So I guess how should we think about the ramp of those stores to maturity and as it relates to margins in the quarters ahead?

Yeah, so as Melinda had mentioned in prepared remarks, we've stood up 13 new stores over the last 12 months, which we're incredibly excited about, which is exactly part of our strategy to expand Lazy Boy Brand Reach. With that being said on a kind of a cadence of a new store, you know, we see in year one they are a drag on profitability with improvement into year two and kind of like a going rate into year three of a neutral to accretive margin to the segment. So, you know, as we continue to expand, it'll continue to be some pressure on the margin, but that is expected. I mean, the biggest and largest impact, at least quarter one, was traffic and the consumer being a little bit more challenged than expected, which had deleveraged impacts on the total segment.

Gotcha. And I guess one more before I turn it over. Melinda, can you kind of just speak to what you're hearing from your wholesale customers? In some of our checks, we've heard some of the industry being hesitant to order products just given the uncertainty in tariffs and pricing. I presume that Lazy Boy would benefit in this type of environment given its North America supply chain. So what are you hearing from those customers?

Yeah, as we noted, we did see growth in our wholesale business for the quarter. And again, those trends have continued early into this next quarter. I think to your point, there's a level of hesitancy just around where the consumer is going to go. And so that's secondary when that pushes through on our B2B side of things. As you note, the fact that, you know, we are, you know, the vast majority of our product is manufactured here in North America, so we're not as impacted by tariffs. That plays well for us in being able to supply those consumers as we go through. And so, you know, we're navigating to play with particularly, you know, with those strategic customers, the long-term players like the Slumberlands of the world to some of our newest, like the farmers that we just mentioned opening up. to make sure that we're providing them a strong, steady supply of product at the right price point for their consumers. And, you know, that business has been steady for us.

Great. Thanks so much. I'll pass it along. Thanks, Taylor.

Thank you. Our next question is coming from Anthony Lebiejinski with Sidoti. Your line is live.

Thank you. Good morning, everyone, and thanks for taking the questions. So first, just curious, in your North American business, did you guys see any notable geographic differences in traffic and sales, or was it more or less consistent across the board?

Nobody. Big differences, I guess, across North America, I'd just call out that on the Canada side of things, with the 25% retaliatory tariff, of course, our product that we sell in Canada is primarily manufactured in the U.S. with a little bit of Mexico. And so with that pricing going through, we've seen an offsetting elasticity on units. So that business is holding steady, but down on units and offset by pricing. But around the U.S., no big geographic shifts.

Gotcha. Okay. And Melinda, you spoke about this a little bit this morning and also mentioned in your press release that you're evaluating alternatives to address financial pressure from non-core parts of the business. Can you expand on that as to what you're looking for to do exactly?

Absolutely. So, you know, over the time that we have had our Century Vision strategy now for, you know, for four years, we've been very clear that we see our biggest opportunity around our Lazy Boy brand, both an expanding reach across all channels and and then expanding our own company-owned retail and our direct-to-consumer business. We really see our strength as a vertically integrated retailer where we're owning that entire consumer experience all the way from early attraction to the brand to delivery into the consumer's home. So there is no doubt that is our primary focus and has been. It's also important to have some green shoots, and we've talked about the fact that businesses like Joybird our fully integrated direct-to-consumer businesses, and we see that as a business we can continue to invest in and expand. And then we've talked about businesses like our case goods, our international business that have been challenged over time, particularly in the last several quarters. And so we're working to make sure we're improving performance there, right-sizing those businesses, and evaluating options for what makes sense for those as we go forward.

Gotcha. Okay. Yeah. Thanks for that in terms. And then also, you know, given the uneven or choppy demand that you guys are seeing as well as others in the industry, how are you thinking about the pace of new store openings and your distribution and home delivery transformation? Are you looking to perhaps slow that down if this type of trend continues or you're kind of fully set on the current timeline?

I think it's important that we play offense, even in challenging times. And because of the strength of our financial position, our balance sheet, our cash, we're in the enviable position to be able to do that. Now, to your point, Anthony, we'll continue to monitor. You know, it's been sort of unprecedented times now, four years running for a variety of situations. So we'll monitor that and we'll be prudent. But at this stage, we are committed to our strategy.

Gotcha. Okay. And my last question is, you mentioned higher promotional activity in case goods, which is a, as you pointed out just now, it's a smaller piece of your business. So, near term, are you still seeing pressure there as far as promotional activity? How should we think about that?

It was really more transitory in quarter one, particularly across both our retail and wholesale segments. In retail, we were just looking to work through, call it some non-performing inventories so that we can re-merchandise our stores with the optimal product assortment, particularly as we head into the key furniture buying season, holiday season. And then on our actual case goods business, always we have a good, healthy routine of continuing to try to work through non-productive inventory, and we were able to work through some of that in quarter one. which is typically a lower demand season for furniture, so a good time to just work through things I value. All right.

Well, thank you very much, and best of luck.

Thanks, Anthony. Thanks, Anthony.

Thank you. Our next question is coming from Bobby Griffin of Raymond James. Your line is live.

Good morning, everybody. Thanks for taking the questions. I guess, Melinda, first to start, can we maybe just help me understand better kind of the cadence of the written business during the quarter? I think we started out with a good Memorial day, or I think the, you know, we were mentioning you were pleased with the results on the last call and then kind of during the quarter, you guys updated towards the low end of the guide. So is the right way to think like may trends are pretty good than things softened in June and July and then approved in August is trying to understand kind of how it played sequentially. Um, you know, versus when we spoke last?

Yeah, so, you know, if I look at, to your point, if I go Q4 to Q1 and then into August, we have seen, you know, a bit of improvement in traffic trends that played broadly into written. We haven't, relative to the last time we spoke, Bobby, we just didn't see that come through quite as significantly as we would have expected, and particularly on those those same store sales for our retail side between a softer consumer than maybe we had hoped, investment in new stores, and then as Taylor just alluded to, really also investing in some discounting to re-merchandise our floors. The combination of those three just came through a little bit more harshly than we had anticipated, which impacted the margins versus the last time we put guidance out there.

Okay. And is that, was that the bigger difference? Was that the big difference on like, you know, the EBIT margins this quarter coming in basically 70 bps below the low end when you guys kind of in, in, I guess, uh, mid July pointed towards the low end. Did you accelerate some of the discounting or pull forward some of those, uh, one time hits to just get it done this quarter?

I don't know if I would say it was a pull forward other than we wanted to re merchandise and work through and it was working. So we just continued it cause it's right for the businesses, particularly as we get into the bigger season. And that, in combination with the consumer, as we exit the quarter, just, you know, being a little bit more choppy and uneven, and then perhaps our expectations contributes to the loss coming a little bit lower than what we put out there.

Okay. And then, Taylor, when you kind of gave the – you talked a little bit about the opportunity on the supply chain rework and then mixed with, like, it's going to take some investment. So is the right way for us when we kind of want to tune these models up? Let's just assume we stay in this similar consumer environment for, call it, the next six or 12 months. Should we think we have – further margin pressure to go before the benefits start to flow through or, you know, any way to help us kind of think a little bit maybe? I know you guys don't want to get into long-term guidance, but just kind of how this plays out in terms of the investment side versus the ultimate improvements that can come from the rework supply chain.

Yeah, so I would say we just kicked this off in this last quarter. So, quarter one was our first big step in with the Arizona relocation to the new centralized So, you know, as I mentioned, in the first two years, we will see a modest drag on adjusted margins just due to transition inefficiencies as we're standing up new sites while operating legacy sites. It's manageable, but it's there. And then into year three, we'll start seeing some savings. Then we'll see the biggest impact and the biggest meaningful margin expansion as we're in an exit year four, which is that 50 to 75 basis points expansion for the segments.

And that shows up in retail segment margins, EBIT margins, or wholesale?

Wholesale.

Both. Okay, wholesale. And I guess lastly, for me, just on the store, the new store productivity, you know, obviously industry is choppy, volatile, different ways to characterize it. Are you guys pleased with the ramp-up period? I think you called out, you know, it's an initial drag in the first year, which makes sense, but then you get kind of up to in line in year two or three. Is that in line with historical standards, or do you think there's opportunities to make that a little quicker? Like how are you viewing the new store productivity on some of these newer stores?

I think, you know, the two to three years to get to going productivity is the rule of thumb we've had historically, and that continues today. Now, there is no doubt, particularly, as we say, with a choppy consumer, that it's important across all of our stores. We are maximizing everything we're doing to make the most of that installed base, which is, you know, with a challenged consumer, is a little bit more challenging. But we're honing everything we're doing there. We continue to get better every day with what we're doing in retail, and we will continue to make progress there.

Okay. I appreciate the people here at the festival. Thanks for the time.

Thanks, Bobby. Thanks, Bobby.

Thank you, ladies and gentlemen. As we have no further questions in queue at this time, I would like to turn the call back over to Mr. Mark Becks for any closing remarks.

Thanks, Ali. Melinda, Taylor, and I will be in our offices for the rest of the day to take any follow-up questions. Thanks, and have a great day.

Thank you, ladies and gentlemen. This does conclude today's call, and you may disconnect your lines at this time. And we thank you for your participation.