Brad Cohen - IR Robert Rucker - CEO and President Chris Homeister - COO Timothy Clayton - CFO and SVP Kirk Geadelmann - CFO.

Jon Berg - Piper Jaffray Peter Benedict - Robert W. Baird & Co. Seth Sigman - Credit Suisse Daniel Moore - CJS Securities Anthony Rusedski - Sidoti & Company Joseph Feldman - Telsey Advisory Group.

Greetings and welcome to The Tile Shop Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Brad Cohen, of ICR. Thank you. Please begin..

Thank you, operator. Good afternoon, everyone. Thank you for joining us for the Tile Shop's second quarter 2014 earnings conference call.

Let me remind you that certain statements made during the call today may constitute forward-looking statements made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended.

Words such as, but not limited to, plan, expect, anticipate, believe, goal estimate, potential, may, will, might, could, target and any other similar words to identify forward-looking statements may be made.

Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the earnings press release issued today and in Tile Shop's latest filings with the Securities and Exchange Commission.

The forward-looking statements made today are as of the date of this call and the company does not undertake any obligation to update these forward-looking statements. Also during the call today, the company may be discussing adjusted EBITDA or EBITDA, which are non-GAAP financial measures.

Please see the company's earnings release issued for a reconciliation of those non-GAAP financial measures to net income, the most directly comparable GAAP measure. If you do not have a copy of today's press release, you may obtain one by linking through the Investor Relations’ page on the company's website at www.tileshop.com.

With that, I will turn the call over to Tile Shop's Chief Executive Officer, Mr. Bob Rucker.

Bob?.

Good afternoon. Today I’m joined by Chris Homeister, our COO; Tim Clayton, our CFO, and Kirk Geadelmann, who will transition into the CFO role in early August. This afternoon, we announced the second quarter 2014 results.

Given some of the macroeconomic headwinds and industry comparison points, we were encouraged by delivering a slight increase in comparable store sales during the second quarter. And we’re very pleased with our two-year comp growth of 15%. The quarter finished with total revenue of $66.7 million, an increase of 14.7% from last year.

The second quarter as well as the first half of the year has been impacted by macroeconomic factors weakening more than we anticipated when the year began.

The very strong year-over-year growth of existing home sales that took place throughout the first three quarters of 2013 certainly played a key role in strong increases to customer traffic through our stores, which we capitalized on, driving double-digit comparable store sales growth for out the entire year.

In contrast, 2014 has seen year-over-year declines in existing home sales each month. This year has also experienced a meaningful thus slowdown in the growth of home values and an uptick in consumer pricing, additional factors that could be slowing remodeling activity. Many retail segments have recently noted this challenging environment.

During the second quarter, we took additional steps in our drive to become the only national chain in the tile industry, opening five stores, all of which were located in new Tile Shop markets. And since the end of June, we have added two additional locations, bringing our total current store count to 100, with locations in 30 states.

Our new store investments have historically proven to generate high returns and we will continually focus on driving long-term profitability. From a product perspective, I have made trips recently with our global sourcing team to visit both established and new vendors.

A key outcome of these visits has been new product development, as well as identifying opportunities for improved production timelines on key items. Additionally, I’m happy to report that we have continued to add key talent to our sourcing team during the quarter.

I would also like to again welcome Kirk Geadelmann to The Tile Shop as CFO beginning August 12. Kirk is a respected financial leader and has prior experience in the retail industry and in working with our COO and auditors will allow for a quick and effective transition.

We’re excited that he has agreed to join The Tile Shop and are confident that he will be a strong addition to our Executive team. While Kirk is here with us today, he will have greater perspective and insight to share on our Q3 call, rather than today.

On behalf of the company and Board of Directors, we want to thank Tim Clayton for all of his contributions during the past two years, including our successful transition to a public reporting company. Tim has been an integral part of our team during a critical time of growth and we wish him continued success for his future endeavors.

The Tile Shop continues to make progress and remains committed to providing our customers with the highest quality natural stone, ceramic, and glass tile products. We’re excited about the opportunities to further strengthen our position in the industry and extend our reach across the country as we progress throughout the remainder of 2014 and beyond.

I would now like to turn the call over to Chris Homeister, for further discussion of results and key initiatives.

Chris?.

Thanks Bob. Let me start by providing some additional perspective on our sales in the quarter.

Although the positive 0.3% comparable store sales growth did not meet our original expectations for the quarter, it did represent a sequential improvement of nearly three percentage points from the first quarter, and importantly, all of our largest and most well-established markets delivered sequential improvement from Q1.

We believe our two year comp growth of 15% in the quarter was accelerated from Q1 two-year growth of 8%, indicates the strength of our model when you combine the contrasting macro environments of 2013 in 2014. When we mention the contrasting environment between this year and last, one of the key metrics of our business is existing home sales.

For those of you that don't follow this metric closely, the quarterly growth rate in 2013 was between 10 and 13 percentage points through the third quarter before falling to slight growth in Q4. In 2014, each month through May saw declines of 5% to 7% before improving to a 2% decline in June.

Although many factors contribute to the growth profile of our industry, this is an important one that has not been favorable thus far in 2014. Moving onto some of our key operating metrics, we’re pleased to report that gross margin was 70% for the second straight quarter.

We believe the slight modifications to our sales commission structure that we implemented earlier in the year has allowed us to establish a more consistent and stable rate, which was a key focus area for the operating teams and store leadership in 2014. Our inventory position improved again during the quarter as well.

We finished Q2 with basic sequential design of $2.4 million and a year-over-year decline of $3.4 million, despite growing our sales by 15%. Consistent with our normal course of business, the second half of the year will see a modest build in inventory levels, but we still expect our inventory levels in 2014 to be lower than 2013 ending inventory.

We’re excited about new products that have recently entered our assortment or will in the future. We’re focused on building our product offerings in key growth areas of our business, such as glass tile, faux wood and larger format floor tile, many of which will only be found in The Tile Shop due to our integrated sourcing strategy.

Our website was relaunched in the second quarter as well. The initial changes are primarily to look and feel, as well as improvements to our mobile capabilities.

In the next few months, we’ll be adding many new functional enhancements that will be beneficial to our customers and sales teams, as the web continues to be an important touch point with our customers as they begin to research their project.

We plan to open an additional eight stores throughout the remainder of 2014, totaling 20 new store locations this year, ending the year with approximately 108 stores.

Beyond the CFO change that Bob previously mentioned, we improved our organizational talent and capabilities with the addition of two key members during the quarter that I wanted to highlight here today.

We hired a marketing and ecommerce leader to lead our overall company brand and messaging strategy, promotional planning, expanding our digital media reach and accelerating our ecommerce growth.

This leader joins us with a very strong background in retail marketing, ecommerce, and providing sales organizations with capabilities to advance their market position.

We also added a new sourcing professional in China to work with our key vendors, identifying and driving potential sourcing opportunities and managing new and existing vendor relationships on a localized basis. This leader has extensive prior experience with major U.S. companies that source heavily from China.

During the course of the quarter, I've had the opportunity to visit over 40 of stores and interact with our sales staff to discuss how we can better serve our customers, reviewing new products and discussing our future marketing strategies.

One observation that I have seen throughout the chain is that home contractors continue to be backed up with projects they were not able to get to earlier in the year and tiered tiling during projects that have been delayed. We fully expect that many of these home projects will begin by consumers by the end of the year.

Although we feel we are performing well in a difficult sort of industry, given our first half results and tempered outlook for the second half, our full year expectations for sales and EPS have been adjusted lower.

Our teams are delivering against gross margin and spending dollars we set forth at the outset of the year and the reductions to our previous revenue expectation recessed the earnings per share that we can deliver for the year.

We are pleased the operational changes and organizational talent additions that we have made thus far this year and feel we are very well positioned as we continue our geographical expansion. And with that let me now pass the call to Tim..

Revenues will range between $263 million and $273 million; comparable store sales growth will be flat to low single-digit increase; new store revenue will be slightly lower than our traditional first year levels; earnings per share will range between $0.30 and $0.35 per share assuming approximately 70% gross profit margin and effective tax rate of 40% and 51.7 million fully diluted shares outstanding.

We will open 20 new stores during the year. And of the 20 new stores 14 will be in new markets and six in existing markets. CapEx is expected to range between $36 million to $40 million. Our expectation for depreciation and amortization remains at $20 million to $22 million and stock based compensation remains $5.6 million to $5.9 million.

Finally, as I sign-off, I would just like to thank the entire management team, store managers, sales associates and my staff for all of their efforts and support over the past two years.

I will continue to be a very interested observer as Tile Shop enjoys the return on the substantial investments that have been made over the past two years to grow the business. And with that operator, let's open the call up for questions. .

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Thank you. Our first question comes from the line of Peter Keith with Piper Jaffray. Please proceed with your question..

Great. Thank you. This is actually Jon on for Peter, and thanks for taking our questions. And Tim we would like to wish you well with your next venture. .

Thanks, Jon. .

Yeah. For our first question, I just want to take a look at your new store productivity, by our calculation, you know, it looks like we saw a decline this quarter. And I guess, we are just wondering if there was any way to give us some type of comfort that your new stores are coming out of the ground as you expected, ex the macroeconomic environment.

And also do you have any changed your thinking around new store maturity at this time?.

Well, I will start, and may be Chris wants to jump in. I would say that, no. This is a -- the new stores are impacted in this environment by the economic factors that are effecting all the stores, if you will. And we have seen that across a verity of retail sectors. We are obviously not alone in this -- in this situation.

But it does have an impact this year on the stores that have been opened in the last 12 months, if you will. And so we are expecting those stores in the first year to be slightly less than $1.8 million kind of number.

But we don’t expect that to be changing at all on a long-term basis for our stores, and nor do expect the maturity curve to be different going forward as well.

In fact, you know, we would probably expect the stores that are opening slightly lower this year to bounce back stronger next year given the favorable comp that they would be enjoying going forward. .

Okay. And I guess, you gave us a really helpful commentary with the winter weather in Q1.

And I guess for my follow-up, I am just wondering if you can talk a little bit about what you are seeing regionally in Q2 high level versus what you saw in Q1, and really has that comp gap completely closed at this point?.

Jon, this is Chris. A little bit further color on regional performance, so our Southern stores continued to perform well. It’s still our strongest comp region across the country. But sequentially, the Midwest and East Coast performed better versus South. So we have seen it normalize across the country.

We have certainly seen the weather impacts subside and abate across the country as well. And I would look at the entire chain performing as we would expect based upon their vintage and age of the store as we have planned for, assets, some of the macro issues that we found throughout the course of the quarter. .

Okay. Great. Thanks. And if I can just squeeze one more quick one.

As far as looking at your comp store sales, have you seen the composition between taken in transactions really change at all from Q1 or are they kind of even, any commentary you can give us there?.

Jon, this is Chris. I would only offer one thing on that front. I mean, we look at the size of the transaction still being relatively stable across the board. There is no question that from a traffic standpoint that we have seen some declines across the country in a magnitude of different areas.

So, there is no question that, as I mentioned in my prepared remarks that contractors that we are seeing come into the store are being delayed by other projects that they are completing based upon on jobs that they were not to be able to complete during the winter and early spring timeframe and that certainly impacted us as far as a total traffic within our store chain..

Okay. Great. Thanks a lot guys and good luck in the second half. .

Thanks, Jon..

Thank you. Our next question comes from the line of Peter Benedict with Robert Baird. Please proceed with your question. .

Yeah, hey, guys, thanks, and Tim also good luck on the new venture. First question is on the competitive environment today, just curious what you guys are seeing on that front, obviously after a very strong year last year that invites new entrants or people to get more aggressive.

Have you seen anything different this year versus last year to take out kind of macroeconomic differences, anything on the competitive front whether it would be from home centers, other specialty guys, what are your stores associates telling you about who they are competing with. Thank you..

Peter, this is Chris.

I would say on competitive side, I don’t think we have talked about this at length as well, in the first quarter as well, is that there is no question that we continue to compete with a broad and wide array of competitors across the country which obviously includes the home centers, but also the regional players, as well as local house distributors and local retailers that have been embedded within the retail, within that particular locale for decades on it.

When we come into a particular locale, it’s a competitive environment. We certainly have a reputation for having excellence from a customer service standpoint and unprecedented assortment and breadth of assortment and we feel -- obviously our return policy and pricing is right there with anyone.

So from my standpoint and visiting stores across the country, I would not view the competitive environment different from the time that I have been with the company. It’s certainly robust and dynamic in many regards and that certainly includes both within the store brick and mortar as well as online.

So, I don’t -- from my personal perspective I don’t view it as any different from what I have seen across my time with organization. But it certainly continues to be dynamic and robust in everywhere. .

Okay. Thanks for that Chris. And then just my follow-up would be on SG&A. You talked a little bit about some of the new hires you guys just added.

Can you talk about your ability to kind of flex the SG&A -- what leverage you have to flex the SG&A if the sales environment continues to be tough? And then as we think longer term, let's think out towards like 2015 if the existing home sales do grow 6% to 7%, is that an environment where guys think you would be hopping, call it, in the 6% to 7% range.

And if that were the case would you be leveraging SG&A next year as opposed to if you are leveraging as you are doing right now. Thank you. .

Well, let me start with that, Peter. This is Tim. The increase in SG&A that we have seen is really driven by the increase in our stores and investment and expanding out the footprint. And we continue to think that's an outstanding investment for the company given the longer term, the long term returns that those stores have.

If you look at our, as I -- I think I mentioned, the growth in SG&A is almost directly proportional to the number of new stores we have, looking at rent, occupancy, depreciation and compensation in those stores.

So, you know, there is probably not a substantial amount of levers from that standpoint in terms of reducing and flexing, there are some things you can do on the margin to address that SG&A growth.

We continue to think and continue to believe that the investment in the stores that we are making especially in the markets that we are moving into are going to prove to be very valuable investments in the future and well worthy the investments that we are making today..

Okay. That's fair.

Tim, I guess the last question on that would be, do you think 20 stores is the level we should be thinking about longer term as we look out beyond this year? Is that a good number or do you think it goes up or down?.

Peter, this is Chris. I mean, certainly we don’t have any further guidance to talk about pertaining to 2015. Certainly, we are committed to 20 stores for this year. I think as you have noted in our release that it’s been fairly equal -- from equal distribution standpoint across the board with five in first quarter, five in second.

We have opened two within this quarter. Certainly, on our way to a very equalize distribution of 20 stores within the chain.

I guess, if we look at 2015 and certainly we will talk further about rest of the year as year goes on, we would look at a verity of different factors of new store performance as well as the macroeconomic environment we find ourselves in, as well.

I can certainly state in the call though that, you know, the range certainly will not be any larger than 20. And I think we will continue to look at where our best use of capital is best applied as we go into 2015. .

That's helpful, Chris. Thanks a lot guys. .

Thanks Peter. .

Thank you. Our next question comes from the line of Seth Sigman with Credit Suisse. Please proceed with your question. .

Okay. Thank you. Hey, guys, so the guidance for flat to low single-digit comps for the full year, seems to imply a little bit of improvement in the second half.

Is that fair to assume that Q3 is off to maybe a little bit better start than you than where you were tracking in the second quarter? And just any other color on how to think about Q3 versus Q4 comps?.

Well, Seth, I think you are right. I think, obviously, if you look at the six-month numbers, we are slightly negative for the six months kind of year-to-date. So for sure that kind of comp guidance would anticipate a better performance in the second half of the year.

I think we have chatted, you know, about a number of factors that we think are our and have affected the first half of the year. I think in a number of those cases we have indicated the weather effected things that are start to coming back obviously third and fourth quarter, as well as improving some of the macro environments.

And frankly, there are some easier comps as we get later in the year. All of those things I think imply an improvement towards later in the year that makes us feel comfortable about that revised guidance. .

Okay. And then you have kind of discussed the delay in certain projects and certain spending.

I mean, can you just elaborate on that? Are you seeing the traffic come into the store, but just not executing on the transaction, or could you just explain what you are seeing there?.

Well, I think there is a couple of things. One of the things that we have heard and Chris could probably expand on this given his recent trips out to talk a lot of the different stores.

But a lot of the things we are hearing is that the contracts are backup, the installers just can't get to the projects quite yet, all that has had kind of a trickle-on effect, if you will, with delaying out these projects.

Now we get to the summer months, kids at home, it's much more of an interest to maybe wait till that kind of after schools starts pre-holiday season to get these projects implemented. .

Okay. And just a question on pricing, I know you guys have made some changes in pricing over the last couple of quarters. What was the net effective that in terms of the ticket? Did it effectively bring down the ticket a little bit more, did it sharpen the pricing? Just wondering how that impacted you guys. .

Seth, this is Chris. There is a couple of things going on. One, certainly, on discounting. When you're discounting your product less, I think your sales -- your ticket actually goes up. So, we have had that impact certainly and that's proven itself across the board.

We have certainly been sharper on price points where we thought that we needed to have an opening pricing point on a commodity SKU, such as the white subway tile, to be competitive with local, regional and national players across the board. So, I don’t view it the combination of the two.

I don’t view it having any tremendous impact positive or negative on ticket size based upon our pricing actions. .

Okay. So net effective is pretty neutral. .

Yes..

Got it. All right. Thanks guys. .

Thanks, Seth..

Thank you. Our next question comes from the line of Daniel Moore with CJS Securities. Please proceed with your question. .

Good afternoon. .

Hey, Dan. .

Can you give a sense of the comps as they trended monthly through the quarter and what you are seeing so far in July?.

Well, Dan, this is Chris. On the April, May, June, we will just provide a bit more color. So April was a positive month for us. I am not going to go into any detail on any of that. May was negative and June was positive, equating obviously to the 0.3. I think Tim already touched upon the outlook for the rest of the year.

It was certainly a bit choppy as we came out of the weather impacted areas. And it was a bit difficult from our standpoint of forecasting some of the demand that was happening across the chain as the impacts of the weather abated throughout the course of the chain. So, hopefully that's helpful to you. .

Okay. You have recently remodeled several stores in Minnesota and other Midwest markets. How many are you -- have you or in the middle of remodeling? And how many of sort of the older legacy stores do you plan to remodel in the next six to 12 months. .

We have discussed this in the past. We touched approximately 20 stores per year. We're more than midway through that point at this point in time.

We would like to have all of our remodels done through -- simply to take advantage of the traffic that we within the stores in a fall timeframe as people look to take care of projects that they want to get done before the holiday period. So that continues to be an excellent investment for us.

The remodels that we have on older stores continues to have a higher rate of return based upon new parts that we bring into the market and also creating marketing events around the stores while it continues to be refreshed with new products coming from all different parts of the world..

Okay. So nothing unusual….

No..

At least an unusual spike there, great. How much did the change in comp structure impact the comp store sales, if at all....

We don’t feel any negative impact pertaining to comp store sales or total sales across the board. The comp plan modifications that we had earlier in the year have, we feel that have been immaterial from the standpoint of sales growth.

As we mentioned on the phone call, we do feel that it has had a material impact on stabilizing the gross margin rate and having both gross margin and sales -- total sales as being a two key components for the sales associate to look at when are actually closing that sale.

We knew as a net positive to the company for sure and feel it's been well received within our sales organization. .

Very good. And maybe one last one. You mentioned still $20 million of liquidity availability.

If comps don’t improve, how comfortable are you in your current liquidity? I guess, what kind of environment and what options might you consider exploring to enhance flexibility to continue to grow if comps don’t pick up over maybe a slightly longer period?.

Well, Dan, I guess, I'm not maybe quite sure what you are asking there. But we are comfortable where we are with our liquidity and the availability and our relationship with our bankers, everything is -- there's absolutely not issues there from that standpoint. And given where our plan is and even that provides us complete comfort under that facility.

We could always -- I mean, I hate to go down on what if type of thing, obviously, we open 20 stores a year and that’s where we spend most of our cash. So that would be an easy lever if we need liquidity, but we don’t see that happening.

In fact, we think we will be generating meaningful excess cash next year over and above what's needed to fund our CapEx program..

Just wanted to hear the reminder. Never hurts. Tim, thank you for all your help. Now, that’s all for today..

Thanks Dan..

Thank you. (Operator Instructions) Thank you. Our next question comes from the line of Anthony Rusedski of Sidoti & Company. Please proceed with your question..

Good afternoon.

I was hoping that you could perhaps share some comments on the performance of some of your smaller stores like Lincoln Park, for example?.

Sure. Anthony, this is Chris. The -- we talked about Lincoln Park in the past. It opened on March 24th of this year, continues to have high traffic volume as well as right on track pertaining to its performance as an urban store. We certainly will continue to have other smaller footprint stores across the chain.

We view this as an opportunity for us to have reduced capital expenditures. The sales volume will be just as robust, especially in markets where we are in a capacity and looking at from our standpoint of having justification strategy within certain markets.

So, you will see another small format store coming into the Chicagoland area as well, not an urban setting, with more of an suburban area. And so you can look at that as a positive of how we look at store footprint as an opportunity for us as we go forward in our store build outs as a model that we are very, very pleased with so far..

Okay. And as far as your -- performance of your new stores, I think, Tim early had mentioned that this year it's -- as far as your new stores likely will do bit less than $1.8 million for sales in the first year.

As far as the expected full contribution, is there any comment you can share with us?.

With respect to our first year stores?.

New stores. First year stores, yes..

Well -- I mean, I guess, Anthony I think we've -- if you look at our kind of normal maturity curve, first year stores on average would be about 10% EBITDA margin for the full year on a normalized kind of basis.

So, the only guidance I would give you, if our expectation is for them to be slightly lower this year than that would be slightly lower as well. .

Okay. Just checking on that. And also as far as the year-over-year gross margin decline, is it similar factors as the first quarter of this year..

Yeah. Because, I think the year-over-year decline was, I think, maybe 50 points or something like that -- 40-50 basis points and it’s a variety of things that go into that. It's some cost increases, mix shift, its Durant. It’s a number of factors none of which really very significant. .

Got it. Okay. And how many store leases have you signed for next year, just curious..

Well, I -- frankly I don’t -- we have to I think check into that. I'm not sure we are getting into a disclosure at this stage of kind of the commitments that we entering into for next year. So….

Okay. And my last question, just wanted to clarify something. In your press release showing last year's results for the second quarter, the press release from today shows for the second quarter of 2013, 53.259 million shares. As I go back to the press release from last July 30th, you’re showing a diluted share count of roughly 51.7 million shares.

So did something happen -- I know you had the warrant outstanding, but that's kind of last year's discussion, business district is wanted to clarify what's the share count that we should be looking at?.

Well, the share count that you have in the current year is probably the most representative because it doesn't have all the noise that we had in the numbers from last year, which was not only the warrants that were significantly exercised or were redeemed between the second and third quarter, but we also had a -- some wart repurchases and share repurchases late in the second quarter of last year, as well.

So, I think last year there was an attempt to get a normalized type of presentation for the EPS numbers so that we could take that nice out of it, and the numbers in the schedule this year tie exactly into what our weighted average diluted share count was in our gap presentation..

Okay. All right, thanks..

Thank you. Our last question comes from the line of Joe Feldman with Telsey Advisory Group. Please proceed with your question..

Hi, guys, good afternoon.

I want to ask a couple questions, but one was getting back to the -- sort of the macro picture in housing, and I guess as you guys have looked at the different data, how much -- and I know you're talking about existing home sales been the big driver, but how much did just home values come into this? Like people reinvesting, like you mentioned in the call, the remodeling, versus like somebody moves or buys a new house, not necessarily a brand-new build, but an existing home? Do you know what I mean -- I'm trying to get a sense to that.

I thought we were a little more project-oriented than just reliant on turnover..

Well, absolutely Joe and in fact, if you -- in my prepared comments, I think I called out two things. The first is we talked about existing homes and in that commentary indicated that we've -- the company is primarily remodel-oriented company, and that meaningful movement in existing home sales can provide a nice kind of upside to that core business.

But to your point, and also talked about the core business, the remodeling business being affected meaningfully by the value of a person's home. And that does have a, I think, psychological impact, and then actual impact on their interest in doing some remodeling project.

If the value of the home is going up, there's much more interest in doing that kind of investment in your home. And as I think I talked about -- if you look at those numbers last year, the growth in home values last year were up double-digits for the first three quarters of the year.

So, it was a meaningful spike in kind of the improvement of individual home values, and that has moderated since that point to a more stable 3% to 4% increase in values going forward, but it definitely had, I think, an effect of last year's remodeling activity..

Okay, that's helpful. And then just one other unrelated question.

I wanted to ask you about -- so the new website and some of the mobile enhancements, can you talk about -- I guess does it change the way you plan to market with consumers or is it just easier functionality for that consumer to interact? I guess how the new marketing guy will interact with this, and what the goal is to drive through the website?.

So, hi, Joe, this is Chris. The marketing woman will drive -- she will have responsibility for absolutely all of marketing and ecommerce.

We’re looking -- we'll certainly look at the web as not a typical to any other omni-channel retailer out there, that the web is important commerce tool, but it’s also an important element for us to -- you cannot -- to the power shop to pay customer -- and given the fact that we’re in so many new markets for The Tile Shop is new to that particular consumer, it’s our first opportunity to really wow them with inspiration that we feel we certainly have within our store, but also to have them and give them an understanding of the aspiration that we have in the visualization of the vignettes, but also the broad breadth of the product that we have as well.

We’ll certainly look at the web as a continued enhancement of our ecommerce strategy and ecommerce revenue.

We certainly expected to continue to grow over the course of time, and enhancement that we have from a website standpoint around stability, displaying images and screwed 1080p resolution, the mobile site enhancements of having a great response on a 9.5 tablet for a 4.7 screen or 5.8 screen.

Those are all important elements that we didn’t have before from a scalability standpoint.

As we go forward and as I've mentioned in the past, having the shift to store capabilities, having the ability for us to speak dynamically to the customer based upon where they live and their distance to a particular store, I think a really important aspects that will narrow the gap that I think that we have right now versus some of our competitors, and also where we haven't opportunity to leapfrog about how we can actual to market, given the fact that we do have 100 stores and also I think a very robust website now that we can lever well into the future.

So, I view it as an opportunity to showcase products, introduce the brand, but then also to invite ecommerce, especially in States where we’re still out not in, which is obviously still 20 States at this point in time..

Got it. Thank you for the update, and good luck with this quarter guys..

All right. Thank you..

Thanks Joe..

Thank you. I’d now like to turn the floor back over to management for closing remarks..

Thank you for joining us this afternoon. Have a good evening..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation..