The Brand House Collective, Inc. Q3 FY2024 earnings call

• Strategic partnership with Beyond allowed debt retirement, balance sheet strengthening, and growth positioning, including revitalizing Bed Bath & Beyond brand.
• Fourth consecutive quarter of positive comparable store sales growth of 1.6% despite hurricanes.
• Progress on Kirkland's Home strategic initiatives: re-engaging core customers with 39% lapsed customer reactivation, refocusing product assortment with newness in decor categories but softness in furniture/wall decor, and strengthening omnichannel capabilities with e-commerce improvements and leveraging Beyond's e-commerce expertise for replatforming.
• Plan to open initial Bed Bath & Beyond neighborhood stores in 2025, expected to generate at least two times the revenue of current Kirkland's Home stores.

Net sales for the third quarter were $114.4 million versus $116.4 million in the prior year quarter. Comparable store sales increased 1.6% for the fourth consecutive quarter, driven by positive traffic and conversion despite hurricanes. E-commerce sales declined 14.9% compared to the prior year period, accounting for 24% of total sales in the quarter (down from 28% prior year). Gross profit margin increased to 28.1% of sales, up from 26.3% in the prior year quarter. Merchandise categories like holiday, gift, textiles, floral, and fragrance saw increases, while furniture, mirrors, wall decor, art, and lamps experienced declines. Geographically, sales performance lagged in Florida, Georgia, and North Carolina due to storms but was strong in Texas and other Southeast areas.

• Fiscal calendar shift impacts: 2024 has 52 weeks vs 53 last year, negatively impacting Q4 by ~$3 million. Cautiously optimistic about November-December sales based on 2019 comparison.
• Promotional environment expected to continue in Q4, with margin pressure from summer freight rates, but actions to control shipments limit impact.
• Continues to control operating expenses tightly, confident in achieving positive adjusted EBITDA for the year, with potential acceleration of margin and growth targets through partnership with Beyond.

• Known and unknown risks affecting forward-looking statements as outlined in SEC filings.
• Impact of hurricanes Helene and Milton on comparable sales performance.
• Intensified promotional environment affecting merchandise margin.
• Challenges in e-commerce performance and inventory/freight management.

Q: Jeremy Hamblin asks about magnitude of November results and e-commerce vs retail store sales split.

A: Amy Sullivan notes Q4 is a 9-week holiday season with calendar shift, and Mike Madden mentions more momentum in store business continuing into Q4.

Q: Jeremy Hamblin inquires about Beyond partnership impact on e-commerce, marketing budget, and costs.

A: Amy Sullivan discusses evaluating technology and RFP process with Beyond for replatforming, and Mike Madden mentions store investment with additional capital from Beyond, with costs neutral when considering debt and benefits.

Q: Jeremy Hamblin asks about investment in kickstarting partnerships next year.

A: Mike Madden mentions store investment with $8 million from shareholder meeting on Dec 23rd providing flexibility.

Q: Jeremy Hamblin asks about promotional environment and competitor promos.

A: Amy Sullivan says they control promotional consistency, with better reg price selling in seasonally relevant decor and focus on value-engineered product in high ticket categories.