Adam Hauser – Vice President, Investor Relations Chris Homeister – Chief Executive Officer Kirk Geadelmann – Chief Financial Officer.

Peter Benedict – Baird Daniel Moore – CJS Securities Peter Keith – Piper Jaffray John Baugh – Stifel Anthony Chukumba – Loop Capital Markets Joe Feldman – Telsey Advisory Group.

Good day, ladies and gentlemen, and welcome to the Tile Shop Holdings Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Adam Hauser, Vice President, Investor Relations, please begin..

Thank you, operator. Good morning to everyone on the call, and welcome to the Tile Shop’s third quarter earnings call. Following our prepared remarks, the call will be open for analysts’ questions. Questions will be limited to analysts and we would appreciate if participants would limit themselves to one question with one follow-up.

As a reminder, 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, estimate, target and any other similar words may be used to identify forward-looking statements. 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 the Tile Shop’s 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.

Today’s presentations may also include certain non-GAAP measurements. Please see the Company’s earnings release for a reconciliation of those non-GAAP financial measures, also available on the Investor Relations section of our website at investors.tileshop.com. With that, let me now turn the call over to our Chief Executive Officer, Mr.

Chris Homeister..

Thanks, Adam. Good morning, everyone, and thank you for joining us today. I’m here with Kirk Geadelmann, our CFO, and we appreciate you joining us this morning as we report our results from the third quarter of 2017.

As we previously announced with our October 2 press release, our results announced this morning for the third quarter were below our expectations. Both the sales and gross margin fell short of our plans, which led to a shortfall in our earnings per share. A combination of factors led to this outcome.

First, competitive activity was further tightened from recent quarters as well as the third quarter of 2016.

Across the variety of competitors we observed, some or all of the following items with respect to the flooring category, increased advertising, increased prominence given to lower-priced products and longer and more aggressive promotional windows.

The second factor during the quarter were continued changes to consumer demand in the category, where, overall, we are seeing increased demand for opening price point offerings.

Although we have enhanced our assortment with these products across many categories, and our performance in these areas has been solid, we have more work to do, which will be completed in upcoming quarters. Third, during the quarter, we began a significant product transition in our stores.

These included reflowing the store to expand certain categories that are aggressively growing, in-selling new merchandising pictures that are required to showcase larger format tiles that continue to be in demand and preparing for the arrival of over 400 new products answering the assortment.

The significance and duration of this work was substantial and caused some disruption to our product presentation during the quarter. We believe all of these factors put pressure on our in-store traffic and conversion rates. In response, we increased our promotional activity, competitive pricing and advertising during the quarter.

When we increased these items, we achieved better results in both sales and gross profit dollars. In fact, we were pleased with the level of growth we observed over several promotions, including various strong growth during our Labor Day event, a key secondary holiday where there’s strong consumer demand in the flooring category.

It’s also important to note that our gross margin wasn’t substantially lower when we increased our promotional activity and competitive pricing. Unfortunately, the periods of growth during the quarter were mostly offset by declines when our actions were less aggressive.

Although we sought to achieve the best results possible, given the factors that play during the quarter, the net result of our efforts fell short of our expectations. Despite our overall results that were disappointing, there were several positives to highlight in the quarter.

Sales associate turnover was down over 20% from the prior-year period, continuing our consistent progress on improving this important metric, and average store manager tenure continues to trend at approximately the highest level in over four years.

Our measure of customer service levels continue to maintain very high scores, increasing versus the prior-year period. We had a strong increase in our average order value. We had strong growth offsetting installation products, which is also a key driver in negative product mix on the gross margin line, but led to incremental gross profit dollars.

In addition, we experienced strong demand for our faux wood and marble categories. Our execution of new store openings had continued success. We opened four stores during the third quarter, and we are on track to complete 15 store openings this year.

Our capital expenditures for new stores continue to average less than $1 million per opening, and two stores completed their first year of operations in a quarter with over $2 million of first-year sales.

We paid down $5 million of debt in the quarter, bringing our bank debt to its lowest level in five years at approximately $14 million, leading to net debt of nearly zero at quarter-end.

Our Design Studio tool that offers customers the opportunity design their own room with our products that we launched last year continues to aggressively grow, and it’s used by both segments of our customer base.

Our inventory levels continue to be managed well with inventory growth of less than 7%, with 12% more stores and one additional DC from the prior-year period. I would now like to discuss the actions we are taking to improve our business results.

During the fourth quarter, we will complete our product transition, bringing over 400 new products into the assortment. These products represent a mix of opening price point offerings, unique and exclusive Tile Shop SKUs and products to appeal to regional preferences.

Upon the completion of the product transition in Q4 and having new merchandising pictures in place, our stores are now prepared to have a consistent flow of new product launches throughout all of 2018. The continued evolution of our store will seek to create strong, good, better, best options for customers across all key categories.

While we desire to be relevant on price, especially on certain comparable SKUs, our primary focus for growing our business will continue to be providing our customers the broadest product assortment, delivering unmatched service levels and offering unique and exclusive products.

Industry-leading assortment and product presentation, combined with superior customer experience, is how the Tile Shop will continue to win customers, both professional and retail. We remain focused on retail talent development, growing our Pro customer segment and strongly executing continued store growth.

Going forward, we’ll place our highest emphasis on our key points of differentiation and offering a high-touch customer experience.

We are optimistic that focusing in these areas and leveraging our strengths presents a tremendous opportunity for profitable growth in a highly fragmented and growing flooring industry that exceeds $40 billion [17:04] in annual sales. Let me now turn the call over to Kirk for further discussion on the quarter..

Thank you, Chris. This morning, we reported net sales of $84.4 million for the third quarter of 2017, which represents an increase of $5.9 million or 7.5% over sales of $78.6 million in the same quarter of last year. Comparable store sales growth was 1.1% in the quarter.

This was the result of a solid increase in average order value, mostly offset by modest declines in traffic and conversion rate during the quarter, driven by the items that Chris just explained in depth.

Although the backdrop for home investment and remodeling remains healthy, it’s worth noting that existing home sales growth has decelerated substantially this year to approximately 1% to date. Similar to 2014, the weakness of this macro metric seems to weigh more heavily on our business than others.

In addition, industry data that suggest first-time homebuyers are increasing their spending on home renovation projects at a faster rate. This group has not historically represented our core customer.

However, we believe we can serve all customers, including first-time homebuyers, at a high level, and the actions we are taking to improve our business should enable us to be competitive in this macroeconomic consumer and industry environment. Gross profit increased $1.5 million in the third quarter or 2.7% over last year.

Gross margin of 67.1% was down from 70.2% for Q3 of last year. Approximately two-thirds of the margin decline was a result of increased promotional and pricing activity in response to the competitive environment and increased demand for opening price point products.

As already discussed, our actions were intended to deliver the most gross profit dollars possible given the various dynamics of the quarter. In aggregate, we were pleased with our growth results for sales and gross profit dollars when our actions were more aggressive. However, the overall results were not satisfactory.

And therefore, we have to continue to make refinements to our assortment, pricing and approach on promotions. The remainder of the gross margin decline was primarily a result of strong sales of installation and setting materials, which carry a lower gross margin profile.

The acceleration of sales on these products was a goal of ours and will continue to be. The sale strength was driven by new product launches and product improvements. We are pleased that they delivered incremental gross profit dollars during the quarter, but the mixed impact of the strength in sales was approximately 100 basis points.

Our selling, general and administrative costs for the quarter were $52.3 million as compared to $47.4 million in the third quarter of last year. Third quarter 2017 SG&A included approximately $436,000 of special charges related to litigation expenses.

We concluded the third quarter with 134 stores, a 12% increase versus the conclusion of last year’s third quarter when our store count was 120. Total SG&A expense at non-comp stores, including pre-opening expenses, was approximately $4 million in the third quarter.

The remaining SG&A growth was driven primarily by increased advertising expenses and previously announced work to identify and prioritize growth and expansion opportunities across a variety of areas. Adjusted EBITDA was $12.6 million in the third quarter. Adjusted EBITDA margin was 15%.

The non-GAAP net income presentation in the earnings release adjusts our GAAP quarterly results by eliminating special charges, and then applies the tax rate to the result. This presentation results to non-GAAP net income for the quarter of approximately $2.7 million.

The current year non-GAAP net income translates into a basic and fully diluted Q3 earnings per share of $0.05. Turning to our balance sheet. As of September 30, we ended the quarter with $12.4 million of cash and $13.9 million of long-term debt.

On the strength of positive free cash flow, we paid down over $5 million of debt during the quarter and achieved our goal of reaching approximately zero net debt by Q3 of 2017, with the quarter concluding at $1.5 million of net debt.

We believe we are well positioned to make any necessary investments to support our long-term organic growth strategy and return any excess cash to shareholders via our quarterly dividend. We will continue to target a lease-adjusted leverage ratio of between two and three.

As we’ve discussed, it is in this range that we optimize our weighted average cost of capital.

We are pleased with our quarter-end inventory of $70.9 million, which represented less than 7% growth from last year during a quarter that missed our sales plan, but still experienced 12% store growth and includes one additional distribution center location.

Capital expenditures were approximately $8 million in the quarter, primarily related to new store openings, store remodel and merchandising activity and various IT investments. As Chris mentioned, we continue to be pleased with the productivity of our new stores, both in terms of initial capital investment and revenue performance.

Given the dynamic consumer retail environment and the significant activity underway to improve our business performance, we are suspending guidance.

We are focused on positioning our business for improvement by taking action across a variety of areas to ensure we are serving all of our customers at the highest level, with the ultimate goal being the creation of long-term shareholder value. With that, operator, we will now turn the call over for questions..

[Operator Instructions] The first question will come from Peter Benedict of Baird. Your line is open..

Hi, guys. Thanks. So first question around kind of the sales, the deceleration. Last two quarters, you’re running around a 1% comp. Prior to that, for a couple of years, you guys were mid-single digit plus.

Can you talk a little bit about where the deceleration maybe was concentrated? Was there any regional or market concentration that stood out? Was there any category that stood out or Pro versus DIY? Or did kind of the whole business kind of come back – come down together? That’s my first question..

Hi, good morning, Peter, this is Chris..

Hi, Chris..

So pertaining to sales deceleration, we do not see any particular region have an outsized negative performance on our overall company performance. So I would look at the regional differences as being relatively the same across the company.

We had regions that were very successful and high single-digit comp, and then we also had regions that fell below the overall company comp as well.

Pertaining to product categorizations, I would look at we had strong sales, as Kirk mentioned and I mentioned as well, in our installation and setting materials, I’m very pleased with that, which caused a drag on our overall gross margin rate.

And then we saw outsized performance certainly on our main products, porcelain in particular, and weakness, some slight weakness on our natural stone category..

Okay, that’s helpful. And then maybe just on the Pro versus the DIY, Chris, and then on the margin, if you would comment on that. But then shifting my second question is really around the gross margin.

Can you talk a little bit about the margin complexion across those three categories? The installation setting, has that – have those margins changed at all the last several years if that used to be a higher margin category? Now it’s lower.

How do the margins compare across the three categories? And then is the 66% to 67% – I mean, I know you guys aren’t giving guidance, but should we be thinking about that as kind of a new normal for where your gross margin sits, given where the demand’s coming to the business? Thank you..

Good morning, Peter. I’ll take a shot at that. As you know, across our tile assortment, we’ve enjoyed pretty consistent margins over the years. We’ve always talked about our installation and setting materials as typically having lower margins. Obviously, as Chris mentioned, the growth of that category, we were very pleased with in the quarter.

It’s important for our business, and it’s important for our Pro customers. So we’re happy with that, but it did create some negative mixed pressure.

I think the other thing to call out is, as we’ve done some things in the quarter to take some action on some of the trends we saw with traffic and conversion rate, and did have some success with some of the actions, we’ve identified some opportunities for improvement.

One of those opportunities is making sure that we have strong, good, better, best assortment across all of our key categories. So that’s another opportunity for improvement, and we’ll be working on that going forward..

Thank you. The next question will come from Daniel Moore of CJS Securities. Your line is open..

Good morning, thanks for the color. Just wanted to – any changes? I know you’re not giving guidance, obviously. But for 20 – as you think about 2018, any changes to the thought process in growing the store base at double-digit rates, given the changes in the competitive landscape in your term? And then a quick follow-up..

Hi Daniel, this is Chris. So certainly, as we talked about our prepared remarks this morning, we still feel, obviously, organic growth is a very important part of our overall growth. As I mentioned, as well as Kirk, the overall new store performance that we’ve had across the chain in 2017 has been very positive for us.

We continue to open stores for less than $1 million, and our overall performance as across the stores has been quite good. So we look at 2018, we’ll certainly talk more about this in our Q4 call in early 2018, but we certainly expect to be growing new stores.

But I won’t comment on the exact percentage, but new stores are certainly part of our growth plan as we go into next year..

Very helpful.

And as a corollary or a follow-up, given the decline in the share price, have your priorities for investing free cash flow changed at all as you rank-order buybacks versus new store openings, et cetera?.

So Daniel, this is Chris again. So the – as we look at capital structure, obviously, we’re quite pleased about achieving our goal of being essentially a debt-free company in Q3 of this year, very pleased of that accomplishment from our standpoint, where we began five years ago.

As you know, we now serve our quarterly dividend on February 14 of this year, and we continued that, obviously, with our announcement this morning.

So as we look at our capital allocation going forward, we’re certainly looking at the overall pace and performance of our business and looking at overall flexibility for our company to invest in our customer experience, investing in our stores and remodels, and then looking at the overall structure pertaining to how we actually look at deploying excess free cash flow after that point in time.

So at this point in time, we have no further announcements on that front, but we are quite pleased with our financial flexibility and overall balance sheet strength..

Got it. Appreciate the color. I’ll jump back in queue..

Thank you. The next question is from Peter Keith of Piper Jaffray. Your line is open..

Hi, thank you. Good morning. So I was wondering if you could just reflect back on the year-to-date in what is otherwise seems to be pretty healthy industry environment.

And maybe what has changed with the consumer demand trends towards opening price point? And for that matter, maybe what’s changed on the competitive backdrop in what’s otherwise, as you know, is still a highly fragmented marketplace?.

Hi, good morning, Peter. This is Chris. So I think the biggest thing that we’ve noted, Peter, is certainly an increased presence of multiple players from an advertising standpoint, talking about opening price point on a more aggressive standpoint, and then also discussing things in a longer promotional window.

I think that’s probably been the largest competitive change that we’ve seen at this point in time. We’ve certainly reacted and we thought was an appropriate way during the quarter.

And as we exit Q3 with an approximately 2% comp and a margin rate that’s for the year at 69.1%, we feel that we’ve done the things necessary in order to maximize the overall profit dollars of the company.

Certainly, as we move forward into Q4 and beyond, we feel that we have opportunities to continue to augment and complement our assortment with opening price point items, but also focusing on exclusive products at the Tile Shop and talking about our aggressive assortment as one of our key points of differentiation.

So while we seek to be relevant and sharp on price, we’ll continue to hold true to our value proposition of delivering a great customer experience, while being sharp on price and having a customer experience, what we feel is unmatched in the industry..

Okay. Maybe, Chris, just a follow-up on that. You and I have discussed the dynamic of both Home Depot and Lowe’s doing national TV advertising for the category, which is pretty unique, but that started this year. Of course, they do advertise low-price points at the end of their commercials.

So has that perhaps sort of elevated awareness of pricing that’s available to the consumer?.

Well, I think it’s certainly noteworthy that big-box companies have elected to advertise in the category. I don’t think there’s any question that having large national ad campaigns on price points is certainly a headwind for any company.

But we feel that we are modifying some of the approaches pertaining to our promotional strategy as well as having products in our assortment that will be able to compete with any player out there, including the big-box players.

So I think, for us, we’ve got to be sharp where it’s – where there is a compatible product, that’s easily shoppable from an online standpoint or a comparability standpoint.

But then, again, anchor back to what has made the Tile Shop incredibly successful over our 30-plus years of being in the business, and that’s customer service, excellent shopping experience, breadth of assortment and being able to really guide that customer into products that allow them to really have a distinguished remodeled home or a new home as they go forward.

So there’s the modifications, obviously, to our business that we’re going to be making, and we’ll plan having that executed in the fourth quarter.

But it’s important to note for everyone on the call that we’re going to continue to be anchored to what’s made us successful, while making some slight modifications to our go-to-market strategy and promotional strategy..

Okay, thank you. And actually, I want to ask one other question unrelated here. So just with the product transitions, introducing new product is not a new theme to you guys, and you’ve done it pretty seamlessly in the past.

So what changed this year that led to so many out of stocks during the stores and in September, and it seems like there will continue to be some out of stocks in the coming weeks?.

So I would view your question maybe a little bit differently, Peter. So we made the conscious decision to go ahead and reflow the store to expand categories in the store that we’re aggressively growing, and also some categories that had fallen out of favor from a consumer and Pro demand standpoint.

I view our in-stock levels between this year and last year being relatively the same.

I look at the number of SKUs of what you talk about depending to as we discontinue some SKUs and make room for the 400-plus stores that are going into the marketplace, we felt that was an appropriate step that we wanted to take, and also that we needed to retrofit our merchandising fixtures in order to accommodate larger format tiles that are coming more into vogue and certainly being demanded more from a consumer standpoint.

So the what I’ll call SKU in, SKU out transitions or minor resets that we’ve done in the past needed to be enhanced significantly in order for us to position the company for long-term growth, both the types of products, but also the size of products that’ll be coming into the assortment..

Okay. Thanks very much, guys..

Thank you. The next question is from John Baugh of Stifel. Your line is open..

Thank you for taking my questions this morning. I guess, I was wondering if we could start on what the gross margin percentage plan is with the new product assortment? Obviously, you’ve got to make assumptions about what the mix of sales will be.

Assuming for the moment, I guess, that you don’t have to be overly promotional, I’m just curious, as you change the mix to a greater assortment of lower price, is there a 100, 200 kind of systemic permanent decline in gross margin going forward?.

Hi, good morning, John. This is Chris. So historically, there hasn’t been materially a difference to gross margin profiles between what we would classify as opening price point or market priced product at the low end of the range.

What we did in the quarter is, as we saw more OPP demand in the market, we took existing SKUs and ticked their margin profile down more significant than if we had another SKU in the assortment that was at a lower average weighted cost.

I don’t feel that the substantial – that there will be substantial differences once the new assort – the new price or the new products and SKUs joining assortments in the fourth quarter.

And I feel that the benefits of these products that have on the pricing impression, price relevance, traffic and conversion are going to be more than offset any gross margin decline that we have from the company standpoint..

Thank you for that. And then you said the inventories were only up 7%, and that’s good. I’m just curious, is the inventory composition what you want? Or will there be some transition here in the next quarter to move out some old product to make for new and some additional pressure maybe from that..

No, John. I don’t really feel that’s – I want to look at the composition of inventory being off. I think we managed it well within the quarter. I think there’s certainly items that we wish we would have had more of because they sold incredibly well within the quarter.

In particular, our faux wood and our marble look products continue to have great success, as well as our subway tiles at any dimension and any color as well as many of our mosaic pieces. So I don’t view an inventory clearance event being in the offing.

If anything, I think we have an opportunity to continue to increase our in-stock levels, and then we’re also going to be going deeper in our new product introduction quantity as well because we feel strongly that they will be top sellers for us.

And we obviously want to begin positioning those SKUs to have great sales, and we’ve bought deeper on our initial buys and some of those inventory positions as well..

Okay. And my final question is on the installation and install increasing, is that – what does that tell us? Your business with Pros was good? I assume when people come in to buy, whomever it is, consumers or Pros, that material are also buying ceramic or stone.

So what – or because I can’t imagine they just come in to buy a setting material from the Tile Shop, or perhaps I’m wrong.

Any color there?.

Well, we had several new products join the assortment, and they had significant success, outside success that surprised us. And – but if they cross a headwind, because they do sell at a lower gross margin rate than our typical tile assortment.

In general, we’re pleased that we’re offering products that have a market demand and interest, and it also brings a new technological – technology to the installation of tile that we – again, from our standpoint, we want to be the leading-edge from our assortment, both on tile selection, but also on the installation and setting materials as well.

So the best products in the industry are available out of the company, and we certainly saw the benefits of that with our Pro customer in particular in the quarter..

Thank you and good luck..

Thanks, John..

Thank you. The next question is from Anthony Chukumba of Loop Capital Markets. Your line is open..

Good morning and thanks for taking the questions. I guess, my first question, it looks like about, call it, 10%, 11% of your store base is in Florida and Texas.

Was there any negative impact from the hurricanes? And on a related question, are you expecting any sort of pickup from cleanup efforts?.

Good morning, Anthony. This is Chris. So the hurricane impacts in Texas and Florida and, to a certain degree, Atlanta and the Carolinas, did not have a meaningful impact to our business. As we spoke over the last several quarters, Houston has been a market entry into – for the Tile Shop this year.

We opened few stores in the quarter in Houston, and we’ll open several more in the early part of the year. So those stores that closed during, obviously, for several weeks, neither had any damage, and we expect certainly the timing of going into Houston certainly will be advantageous for us over the course of time as that community recovers.

Florida, we had substantial and lengthy closures in our broader Florida markets in Tampa, Orlando and Jacksonville. But I would not classify their underperformance, which certainly they did in the quarter, as a meaningful difference in our performance as a company in our overall company results..

Okay, that’s helpful. And then just one follow-up.

What is your comparable store sales leverage point? Like what comps do you need to leverage your SG&A?.

Good morning, Anthony, well, I mean, we’re obviously in a growth mode over the last several years. And we’ve – over the last couple of years, obviously, we’ve had some pretty good success.

And as we’re adding occupancy, both rents and depreciation and other things for new stores, and this year, of course, we’re on target to open about 15 stores, the comp growth that we get from our mature stores essentially funds that. Obviously, in this scenario, year-to-date, our comp growth has been a little bit lower than we had originally planned.

So we’re not getting the type of leverage that we’ve enjoyed the last couple of years, but we have a – we’re taking a number of actions to hopefully get back to where we’ve been historically. And that would put us in a good position to lever some of that additional occupancy expense that we’re adding into the base..

Got it, that’s helpful. Thank you..

Thank you..

Thank you. And the final question and will from Joe Feldman of Telsey Advisory Group. Your line is now open..

Great, thanks for taking the questions, guys. I wanted to follow up. You mentioned, I think, in the prepared remarks some of the issues in the store. You’re moving around or adding new fixtures and moving some things around. I was curious just if you could share like the kind of toll that had in terms of maybe the cost to do that.

And presumably, this is across the entire chain, but any more color you could give would be great..

Hi, good morning, Joe, so the comps was not material, certainly not something that we’ve called out. We – it’s something that we planned for in our G&A in the course of the quarter.

Certainly, the impact pertaining to offsetting a new planogram, especially in a larger format store, so some of our larger stores, given the fact that they have outsized assortments and in merchandise and pictures that needed to be reconfigured or torn down and replaced with something that would allow us to showcase our products in a different way, and also just to accommodate the size of products that’s coming in from a large-format standpoint.

So the – whenever a store does a merchandising reset and reflow of any sort certainly can have an impact on product presentation, but also focus away from the selling and taking care of customers in the way that we want to on a consistent basis. So we felt it was important-enough factor that we wanted to call out this morning.

And we feel that the long-term benefits associated with the reflow of store and the introduction of new products will out – certainly have outsized gains in Q4 and has really positioned ourselves for 2018, which will revert back to one classifies a more traditional reset of products that are coming in and out.

But you need to reflow and remerchandise the store a bit in order to accommodate some of the changes that are quickly happening within our industry..

Got it, thanks. And then the follow-up I have for you. With regard to some of the new product that’s being brought in, how do you guys communicate the quality of what you’re bringing in, I guess, better than the customer? Meaning I know everybody can get the look of a subway tile, right, but some are better than others.

And presumably, you guys have always benchmarked on the quality side.

So how do you get that message out? And what are your efforts to do that?.

So I’d look at certainly the in-store merchandise materials that will come along with the products themselves will certainly be an important part of our customer outreach.

The training that we have within our stores about the process, which they are told about the products, how we’ve sourced it, the care in which that we’re actually bringing into the United States.

And then we’re also doing a consumer outreach of weekly e-mails of new products that are launching for our customers as well and talking about not just the quality, but also the uniqueness of those products that are coming into the assortment, and how we feel that it will be a – that they’re certainly on trend and also an important part of our overall differentiator as a company of having unique sizes and product types and also textures that continues to flow at our value proposition..

Got it, thank you. Good luck with this quarter, guys..

Thanks, Joe..

Thank you. There are no further questions. I’ll turn the call back over to Adam Hauser for closing remarks..

Thank you to everyone for joining us today on the call. We’ll speak with many of you soon. Have a great week..

Thank you. Ladies and gentlemen, this concludes today’s conference. You may now disconnect. Good day, everyone..