Bob's Discount Furniture Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
March 17, 2026

Key Takeaways

  • Positive Sentiment: FY2025 results: Total net sales rose 16.8%, comparable sales were +7.7%, and adjusted EBITDA increased 24.1% with a ~10.2% adjusted EBITDA margin.
  • Positive Sentiment: Completed the IPO and used proceeds to prepay the $350M term loan, leaving a long‑term debt‑free balance sheet with roughly $178M of total liquidity.
  • Positive Sentiment: Store growth momentum: ended 2025 with 209 stores (+20), plans ~20 new stores in 2026 and a stated path to >500 stores by 2035, with average store payback of ~2 years.
  • Negative Sentiment: Severe winter storms drove an estimated ~340bps headwind to comps in Jan–Feb; Q1 guidance is modest (1.0–1.5% comps) and Q1 EBITDA margin is expected around ~6% (vs 7% LY), with only a partial recapture assumed in the company’s outlook.
  • Positive Sentiment: Omnichannel and merchandising tailwinds: the Omni Cart feature meaningfully boosted conversion and AOV, and a planned migration to Synchrony as primary financing partner could increase financed penetration and average order value.
AI Generated. May Contain Errors.
Earnings Conference Call
Bob's Discount Furniture Q4 2025
00:00 / 00:00

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Operator

Thank you, and good afternoon, everyone. Welcome to Bob's Discount Furniture 2025 fourth quarter and full-year earnings conference call. At this time, we kindly request that all participants remain in listen-only mode. A question and answer session will follow the formal prepared remarks. As a reminder, this conference call is being webcast live and recorded for replay. On the call today are Bill Barton, President and Chief Executive Officer, and Carl Lukach, Executive Vice President and Chief Financial Officer. Before we start, I'd like to remind everyone that the language on forward-looking statements included in the earnings release also applies to the comments made during the call. The release can be found on the website at ir.mybobs.com, along with reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Let me now turn the call over to Bill Barton.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Thank you, operator. Good afternoon, and thank you for joining us today for our fourth quarter and full fiscal year 2025 earnings call. It's an historic moment for the Bob's team to present our first earnings call as a public company following our successful IPO last month. At Bob's, we believe that everyone deserves a home they love. This core belief goes back to our founding and the important role we play in providing high-quality, stylish furniture at everyday low prices. At the center of our flywheel and in everything we do is value without compromise. This promise is what has propelled us to become a coast-to-coast high-growth retailer with over 200 showrooms across 26 states. We are powered by the dedication and hard work of our nearly 6,000 team members who live our values of honesty, integrity, transparency, and fun every day.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

The Bob's way represents a culture that sets us apart. Our guest experience specialists present a welcoming, low-pressure sales environment that differentiates the customer experience. Our team members build careers at Bob's, evidenced by an average store manager tenure of over seven years, coupled with a strong track record of internal promotion. Our customer satisfaction ratings exceeding 90% are a testament to our compelling store and online experience. In addition to our curated assortment and differentiated value proposition. I want to thank each of our team members for getting Bob's to where we are today and for their continued commitment that will propel us into the future. Before I dive into what makes Bob's so unique, I want to briefly touch on highlights from our full-year performance. 2025 was a strong year as we continued to gain market share and successfully navigated ongoing macro uncertainty.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

For the full-year, total net sales increased 16.8%, driven by new store expansion and comparable sales growth of 7.7%. Adjusted EBITDA grew 24.1%. Our performance is reflective of both our structural advantages and continued strong execution, healthy new store economics, and an enhanced omnichannel experience supported by investments and initiatives that are still in the early stages of yielding results. At Bob's, providing value to our customers is at the center of our flywheel, supported by distinct cost advantages as we scale. These strategic advantages are what makes Bob's so differentiated in the marketplace. Our first advantage is our merchandising strategy, which centers on a narrow and deep curated assortment supporting our everyday low price model.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We estimate that on average, our pricing is about 10% below our value-oriented furniture competitors' lowest promoted prices, which we believe equates to roughly 20%-25% below their listed prices. Our curated assortment allows us to leverage our scale coupled with deep vendor relationships to provide both quality and style and to maintain our price leadership. This strategy enables strong in-stock positions with 87% of our inventory available for delivery in as little as three days. Our second strategy advantage is our omnichannel capability, which is a key differentiator at Bob's. Furniture is inherently an omnichannel purchase, and we are uniquely positioned to meet customers wherever they are in the shopping journey, whether online or in store. Our retail footprint spans coast to coast and offers significant white space opportunity, supported by a proven and portable model highlighted by a warm and friendly shopping environment.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Our stores feature free snacks and coffee available in our cafes and knowledgeable sales associates equipped with digital and AI-driven technology to enhance the selling experience. In addition, during 2023, we completed a digital transformation that optimized our website and enables customers to transact seamlessly wherever they prefer. In 2025, we began to see the financial benefit of a newly launched feature we call Omni Cart, a digital cart that travels with the customer between stores and online. Today, if you find something you love in a Bob store but are not ready to complete the purchase, an associate can create a digital cart and email it to you. You can complete the transaction online, come back into the store, or get on the phone with us.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We are committed to executing a frictionless experience wherever the customer prefers to transact, including the same prices across channels, the same product, and the same delivery experience. Our Omni Cart penetration was a meaningful driver of 2025 sales performance. Positively impacting conversion, and we expect to see continued contributions from this initiative over time. Our third strategic advantage is driving brand awareness through marketing leverage and compelling messaging. Our marketing strategy is proven and resonates with our customers. As we've scaled the business across more markets, we've increased national aided brand awareness to 45%, growing consistently each year and leaving room for continued expansion. As a point of reference, in our top 10 DMAs, our aided brand awareness averages approximately 70%. These three advantages, everyday low price, seamless omnichannel experience, and growing brand awareness, work together to attract a broad customer base.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Our differentiated voice resonates broadly across multiple cohorts. We attract customers throughout all life stages and income levels, including higher income, value-seeking households. In 2025, we saw a meaningful increase in new customers earning over $150,000, underscoring the broad appeal of our value proposition. We also see a strong balance across age cohorts, which makes sense given that consumers often purchase furniture at major life milestones, whether setting up their first home, growing a family, or entering retirement and downsizing. Looking ahead, we are focused on three primary strategies to drive our long-term growth, growing our store base across new and existing markets, driving comparable sales, and leveraging our scale and density to drive efficiency and margin expansion. Let me walk you through how we're executing on each of these priorities. First, store growth.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We continue to execute on a disciplined expansion strategy built around our proven portable store model that delivers strong cash-on-cash returns and an average payback period of approximately two years. We ended 2025 with 209 stores, adding 20 new locations, which represented 11% growth. During 2025, we entered two new markets, including our first entry into the Southeast region in North Carolina. By the end of the fourth quarter, we opened six stores in North Carolina, and performance to date has exceeded our expectations. We anticipate opening an additional four stores in North Carolina in 2026 as we continue to densify this important market for us, which is representative of how we grow. We do not just open stores, we develop markets.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We spend time studying pricing and competition, conducting focus groups, evaluating cluster-based real estate opportunities, and building a market-specific approach to driving brand awareness. As we look ahead, we will apply a similar playbook from our successful North Carolina openings as we enter new markets in 2026 and beyond. We have strong pipeline visibility with plans to open approximately 20 new stores in 2026, and we see clear and actionable path to more than 500 stores by 2035, representing almost 2.5 times our current footprint. Turning next to our plans to drive comparable sales growth. We believe that three foundational elements drive sustainable comp store sales, driving qualified traffic, increasing conversion, and growing average order value. Let's start with traffic.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We think about driving traffic to our stores and our website through a comprehensive strategy that revolves around investing in and leveraging our robust customer data platform to broaden our customer reach. For example, our deep customer insights allow us to efficiently identify and segment customer cohorts that have a high propensity to purchase from Bob's and to provide targeted product recommendations to drive repeat purchases. In 2025, we saw outsized performance in higher income cohorts, and we see opportunity to continue driving incremental sales through additional consumer cohorts within age, household income, and regional targeting. Our marketing approach is highly digital and tailored to the communities that we serve. By combining data-driven precision with creative community-focused messaging, we're not just driving traffic, we're building lasting customer relationships that fuel sustainable growth. Turning to conversion. We've made multiple investments in recent years in our in-store technology.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Tools such as AI-driven workforce scheduling systems, manager check-in tools, and real-time conversion dashboards support our associates so they can provide a consistently excellent Bob's experience for the customer, including selling with the support of the Omni Cart that I mentioned earlier. Next, increasing average order value. As an everyday low price leader, we don't drive comparable sales with price increases. Rather, AOV growth is supported by offering additional features and benefits to our merchandise that can drive average ticket and create a compelling proposition to trade into our better and best categories. In addition, we're excited about our store clustering initiatives, where we're emphasizing specific assortments by region. We are piloting this initiative in some of our more urban store locations around New York City, where we emphasize products for smaller space living.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

This allows us to more efficiently align inventory with customer demand and showcase products that resonate in these markets while leveraging our existing supply chain and inventory planning capabilities. We're in the very early innings of this initiative, but we believe this could be a meaningful unlock for us. We also believe that offering our customers more constructive financing options could be a meaningful opportunity for us to drive higher average order value. Historically, our financing mix represented approximately 50% of overall purchases, but for 2025 it was 42%. We're in the process of transitioning to a new primary financing partner, and we believe we have an opportunity to increase that mix. Lastly, let me touch on how we plan to leverage our scale and expand margins. As we densify, we will continue to leverage distinct cost advantages across merchandising, supply chain, marketing, and fixed costs.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Our purchasing power with vendors, combined with our sophisticated supply chain network, provides a foundation for margin expansion while consistently reinvesting value back into our customers. As discussed today, and with many who we have met with through the IPO process, Bob's is a unique and differentiated model. While at face value, the business seems simple, executing at scale is complex and takes a strong team to deliver. I could not be more proud of our teams and the broad-based support that we have across the organization. Our internal employee survey positions Bob's within the top 5% of consumer retailing peer organizations. Looking ahead, despite ongoing macro uncertainty and near-term disruptions from winter storms, Bob's has a long history of navigating successfully in various market conditions, and I'm confident in our ability to continue to do so. I'm energized by the tremendous opportunity still in front of us.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We will continue to gain market share through disciplined and prudent execution of our playbook. We have a clear and actionable path forward, supported by strong unit economics, a proven portable business model that works across diverse markets, best in class omnichannel capabilities that meet customers where they want to shop, a differentiated merchandising strategy that delivers innovation, value, and quality, and an exceptional team that executes with consistency and passion. With that, let me turn the call over to Carl to review our financial results and outlook in more detail. Carl?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Thank you, Bill. Echoing Bill's remarks, I am incredibly proud of what our team has accomplished to reach this milestone as a newly public company. We have been preparing for this moment with discipline and focus, and we now have the teams, systems, and strategies in place to successfully lead Bob's into this next chapter of growth. We had a strong fiscal year 2025, particularly during a volatile macroeconomic, where we leveraged our investments in tools and capabilities to fuel top line growth and gain market share. For the year, we delivered 16.8% sales growth, supported by new store openings and comparable sales growth of 7.7%. This performance helped to drive 24.1% year-over-year growth in adjusted EBITDA and resulted in a healthy adjusted EBITDA margin of 10.2%, despite navigating a volatile tariff environment.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

For the fourth quarter, net revenue increased 8.2% to $648.8 million, driven by new store openings and comparable sales growth. We opened three locations in the fourth quarter, and we ended the year with a total of 20 new stores and an ending store count of 209 locations. As Bill touched on, we entered two new markets in 2025, North Carolina and Vermont, and are very pleased with the performance we have seen in these locations as well as more broadly across our new store cohorts. Adjusted comparable sales during the quarter increased 2.8%. This performance includes an estimated timing shift of deliveries between the third and fourth quarter last year that negatively impacted the fourth quarter comp by about 180 basis points due to a network disruption in 2024.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Our comparable sales performance was primarily driven by growth in conversion and higher average order values in our retail channel, as well as increased e-commerce traffic. For the year, our 7.7% comp was primarily driven by our multi-year investments to drive conversion. While we lapped the initial impact in the fourth quarter, these foundational improvements will continue to support performance over time. Fourth quarter gross margins increased 20 basis points to 45.7%, compared to 45.5% in the prior year. The year-over-year increase in our gross margin rate was driven by more normalized freight costs compared to higher costs last year. This increase was partially offset by product mix shifts. During the fourth quarter, while we experienced higher cost associated with tariffs, we were able to largely offset the impact through vendor credits and targeted pricing actions.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

SG&A as a percentage of net revenue increased approximately 30 basis points compared to the prior year. If we adjust for the fourth quarter timing shift of deliveries last year, the SG&A rate would have been flat for the quarter. In total, net income grew over 6% to $41 million, compared to $38.6 million last year, and adjusted EBITDA increased 4.9% to $76.5 million. Turning to the balance sheet, by the end of the fourth quarter, we held approximately $53 million of cash on hand and maintained total liquidity of nearly $178 million. Inventories increased approximately 15.3% compared to the prior year, primarily driven by store growth and increases in comparable sales. We are comfortable with the level and composition of inventory.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Total capital expenditures for the year were approximately $83 million, driven by investments associated with new store growth. In February, we successfully completed our initial public offering, resulting in $302 million of net primary proceeds. These proceeds, together with cash on hand and other available liquidity, were used to prepay all of our $350 million term loan, resulting in a long-term debt-free balance sheet. Now turning to our outlook. As Bill mentioned, we had a strong start to the year, with comparable sales growth in the first few weeks of the quarter running modestly ahead of our low single-digit algorithm. However, that was followed by significant snowfall and prolonged cold weather that materially impacted store traffic and sales across most of our footprint.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

We are no strangers to winter weather, yet this year was exceptional as Winter Storm Fern and the February blizzard struck on weekends, which typically generate more than double our weekday sales, resulting in five times more operational hour losses than last year. Taken together, we estimate that weather represented an approximate 340 basis points headwind to comparable sales growth in January and February. Encouragingly, as we've moved into March, traffic has rebounded and our recent sales trends have benefited from a partial recapture of lost sales from the weather impacted weeks. Therefore, we expect the first quarter to deliver comparable sales growth of approximately 1.0%-1.5%.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

For the first quarter, we also expect EBITDA margins to be around 6% compared to 7% last year, driven by flow through of the expected comparable sales performance as well as opportunistic marketing spend. As a reminder, the first quarter is typically our lowest EBITDA margin quarter, driven by lower sales volume. As we look to the remainder of the year, we continue to anticipate top line performance in line with our long term algorithm. For the full-year, we expect net revenue of $2.6 billion-$2.625 billion, supported by comparable sales growth of 1.5%-2.5%.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

As I mentioned in March, we expect to realize a partial recovery from the lost weather-related sales, and the midpoint of our comparable sales growth range assumes no additional recovery beyond the first quarter and no additional benefits from the macro environment with respect to the housing market or consumer health. Turning to profitability, we expect adjusted net income between $121 million and $129 million and adjusted EBITDA between $255 million and $265 million. At the midpoint, our outlook implies an adjusted EBITDA margin of around 10%, driven by an expectation of relatively flat gross margin performance year-over-year and slight operating expense deleverage to invest in our 2026 greenfield store growth and the associated marketing expense.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

In addition, our outlook incorporates pre-opening costs of $23 million-$24 million, reflecting the potential strategic acceleration of a handful of store openings into early 2027, and a 53rd week impact, which we expect to contribute approximately $40 million in net revenue and $5 million in adjusted EBITDA. Turning to CapEx, we plan to spend approximately $110 million-$115 million of net capital expenditures focused on store growth and supporting infrastructure, including a new distribution center in Atlanta that is expected to open in 2027, with the majority of that associated capital to occur this year. We expect to open approximately 20 stores in 2026 or 10% store growth. Our 2026 cohort includes new greenfield markets in South Carolina and Tennessee. In addition to continuing our expansion in North Carolina, where we saw strong reception last year.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Our pipeline also includes a handful of single store market locations in the Midwest. As a reminder, greenfield and single store market locations typically require investment in marketing and supply chain in the first year, which is fully factored into our expectations. In the first quarter of 2026, we opened a new regional fulfillment center in the Midwest to support continued expansion in this region. Finally, to be helpful with modeling, we expect a full-year tax rate of around 27% and full-year share count of approximately 137 million. We expect to generate positive free cash flow for the year with the first half of the year, including consistent borrowings under our revolver to support the full repayment of our long term debt.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

We expect to incur net interest expense of approximately $8 million, of which $5 million is expected to be incurred in the first quarter, compared to $7 million in full-year 2025. This excludes the one-time impact of debt extinguishment costs. In closing, we continue to have high confidence in our ability to deliver on 2026 and our long-term financial targets and the execution of our significant white space potential. Our long-term financial model expects to drive approximately 9% revenue growth, supported by 10% unit growth and low single-digit comparable sales growth, yielding approximately 10%-12% EBITDA growth. With our proven strategies, exceptional team and clear roadmap, we are well positioned to execute on our 2026 objectives and drive sustained value creation over time. With that, let me hand it back over to Bill for closing remarks.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

In closing, Bob's is a brand that can win in all seasons. Despite ongoing macroeconomic uncertainty, we remain confident in our ability to continue to grow and take market share. We're energized by the tremendous white space in front of us and are encouraged with the performance of our new store program. We remain focused on executing our strategic initiatives while preserving the Bob's culture that differentiates us in the marketplace. At Bob's, our commitment to honesty, integrity, transparency, and fun isn't just a philosophy, it's the Bob's way, and it's a proven formula for sustained growth and shareholder value. When you build a business that puts people first, you don't just build loyalty, you outperform the industry. It's how we consistently deliver attractive returns and why we're positioned to capture the significant opportunity ahead. Looking forward, our ambition is clear.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We're targeting 10%+ unit growth annually with a path to 500+ stores by 2035, which is more than double our footprint today. As we grow, we're committed to the Bob's way in every market while strengthening our advantages as a business through disciplined execution, best-in-class unit economics, and operational excellence. What started as a better way to buy furniture is now a better way to build a business, and we're just getting started. I couldn't be more excited about what lies ahead as we continue to transform how America shops for furniture. Thank you to our incredible team, our loyal customers, and now our shareholders who believe in the Bob's way. With that, I would like to open the floor to questions. Operator?

Operator

Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question is from Christopher Horvers with JPMorgan. Christopher, is your line on mute?

Christopher Horvers
Christopher Horvers
Senior Analyst at JPMorgan

Thanks. Good evening, guys. My first question is, if you look at the fiscal year outlook, the high end of your sales and EBITDA dollar outlook is in line with where the Street had modeled you, but you've widened the low end, so you know, $255 million in EBITDA at the low end. To what extent is that wider range simply due to something that changed in your first quarter outlook because of the storms versus a change in 2Q and going forward?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure, Chris. It's all in the first quarter and related to the weather-related impact. Just to level set on the weather, it was significant, prolonged, concentrated in the first quarter, and 80% of our regions were impacted, including the West Coast. The guide there, the midpoint of the guide really does assume that the first quarter impact flows through to the full-year and the remaining quarters are in line with our long-term algorithm.

Christopher Horvers
Christopher Horvers
Senior Analyst at JPMorgan

Then as you think about the nature of your category, it's very much a considered purchase. I'm not sure if you've seen in the past when you have weather events like this, obviously with a very East Coast-oriented footprint, you do see weather impacts. Is it something where you typically recapture nearly 100% of that demand, i.e., this 1%-1.5%? Why wouldn't, you know, we carry over into the second quarter considering if you're thinking about getting a sofa prior, unless something changes, you would still shop for it just down the road. Or are you trying to take into account some of the macro uncertainty given what's going on geopolitically?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Hey, Chris, this is Bill. Look, you know, we've been, as you know, we've been around a long time. We've seen these kind of impacts before. In our experience and what we believe we're experiencing today, the weather impact, you know, we will deliver all the sales that were made, and there's usually a partial amount of the demand that we don't recover. It's not a 100% recovery from the lost demand, but a high percentage of it. We think we're seeing that now, and we believe that we'll see all that impact in the first quarter.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Hey, Chris, let me add to that, just in terms of the rebound of traffic that we saw in March. Really the demand this month includes that partial recapture. As a result, we're running a bit higher than the algo in March so far. Really confident in the demand we're seeing. The directional guide for Q1, the 1%-1.5%, that's really from a delivered perspective. The demand is certainly there, and we have two weeks till the end of the quarter to deliver the demand that we have seen. There's a couple big delivery days coming up as we get to the end of the quarter, so that represents the range that we've provided.

Christopher Horvers
Christopher Horvers
Senior Analyst at JPMorgan

Just to make sure I understand that the 340 basis points in January and February, if you were planning growth of about 2%, that would imply that you were down about 1 point in those two months and therefore the recapture would suggest that March is obviously, you know, running something in the, say, 3.5%-4% range.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

The March performance is running above the algo. Again, that's a result of this partial recapture that we're seeing right now.

Christopher Horvers
Christopher Horvers
Senior Analyst at JPMorgan

Got it. Thanks so much.

Operator

Thank you. Our next question is from Michael Lasser with UBS.

Michael Lasser
Michael Lasser
Equity Research Analyst of Hardlines, Broadlines, and Food Retail at UBS

Good evening. Thank you so much for taking my question. The market's probably gonna look at this situation and say that was a very significant weather event, but to what degree is there cushion in Bob's outlook for the second half of the year if some other exogenous variable were to happen to materialize, especially as you get into a period where you're going to have tougher comparisons. What factors would you point to say this was a one-off event, and we still feel highly confident in the outlook for the back half of the year? Thank you very much.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Hey, Michael, this is Bill. Great question. Look, first off on the weather event in the first quarter. You know, we are no stranger to weather events in the first quarter of the year. You know, we mentioned that, you know, this year this has been an extreme outcome. Our planning would have anticipated a normal kind of weather event year, which we've seen in prior years. This time we saw five times the amount of operating hour losses due to weather that we saw last year. It was a pretty extreme event. The planning had called for, you know, a normal weather event, kind of Q1.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Having said that, as we go forward into Q2 through Q4, I have a high confidence that our plans, you know, build in adequate visibility to the kind of events that we would expect in the normal course of business. Now, having said that, there's a lot of things going on in the macro that we certainly can't anticipate, but I feel very confident watching the momentum that we've had in the first quarter going into the second, third and fourth quarters that we'll be able to deliver against those.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

I'll jump in with two quick-

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah, you go.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Two quick things. The first is the midpoint of the range we assumed really underscores all the comp driving initiatives that Bill mentioned in his remarks. The high end of the range would be any potential tailwinds that we would see, whether that's, you know, competitive dislocations, anything in housing the consumer. The low end would be any other headwinds that would be from the consumer end. That's where we look at the range. The midpoint really is our confidence in the execution of the plan we have today. Then the second point I'll mention, just in terms of the weather impact, we feel very confident that the impact we saw in Q1 was weather.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

We've done detailed analytics to look on a day-by-day basis, to really analyze what the weather impacted days compared to non-weather impacted days were. That gives us confidence that Q1 was truly a weather dislocation.

Michael Lasser
Michael Lasser
Equity Research Analyst of Hardlines, Broadlines, and Food Retail at UBS

Understood. To borrow my friend Bill's just comment from now, there's a lot going on in the world. Can you give us a sense of what has changed in your profitability outlook for this year today versus since the beginning of the year? It sounds like you might have pushed a little bit more towards marketing for demand generation. Obviously, there's been a lot of moving pieces with respect to the tariffs. Now finally, some of these fuel related headwinds that could impact things like delivery and freight costs. How have you factored in all of those moving pieces into your outlook? Thank you very much.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Michael, this is Bill again. Look, there's a lot of things going on, as you mentioned, and, you know, we've been around a long time, so we have essentially a playbook for every one of these types of events. You know, on the oil price situation, you know, it wasn't that long ago that we all had to deal with increased, you know, freight costs and fuel costs. We feel very good that we have a playbook in place. You know, we're a large player. We've got great relationships with both our ocean freight and delivery partners. So we're feeling very confident on being able to deal with whatever fuel shocks come our way. You know, we contract a long way out.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

In fact, we're right now entering into our contract negotiations for next year with the ocean freight carriers, so we're feeling pretty good about that. Speaking to marketing, I think you asked a question about marketing. In the first quarter, you know, we took some opportunity to invest in some marketing opportunities specific to competitive dislocation where it made sense to get our name out there, as well as take advantage of other opportunities that come up. You know, we plan our marketing obviously ahead of time with our, you know, our methodology that we've developed over many years. At the same time, we're very agile. When we see an opportunity in the market to lean in, we took advantage of that.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We spent a very little amount on marketing post the weather event just to get some of that traffic back in, but most of it was to take advantage of new market opportunities that presented themselves in the first quarter.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Michael, just to wrap up on what's included in the guide. From a tariff perspective, it's really current landscape, so we're not baking in any potential benefit or refund. We're not baking in any change in policy. It's consistent with how we've operated last year. From a fuel perspective, the Q1 directional guide does include a little bit of surcharge related to current fuel prices, but for the remainder of the year, it assumes this normalizes beginning in Q2. The only thing that I'd add that did change a bit in profitability outlook, from a pipeline perspective, we do from time to time see opportunities to accelerate our store pipeline, and we are looking at potential acceleration of some of our 2027 locations that would go to the earlier part of 2027 versus the midpoint.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

That would put some of the pre-opening expense and capital expense charges into 2026, and that's reflected now in the guide.

Michael Lasser
Michael Lasser
Equity Research Analyst of Hardlines, Broadlines, and Food Retail at UBS

Thank you very much, and good luck.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Thanks, Michael.

Operator

Our next question is from Simeon Gutman with Morgan Stanley.

Simeon Gutman
Simeon Gutman
Managing Director and Senior Retail Analyst at Morgan Stanley

Hey, Bill. Hey, Carl. Hey, first to start, just to paraphrase something that I think Carl said. You expect to comp positive in all quarters of the year, and the benefit or the recapture from weather is imputed into your first quarter guide, and you're making no assumption for that it rolls over to the second quarter. Is there still a possibility you still see some in the second quarter as well?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

You know, you're correct in your assumption that we are forecasting positive quarters for the rest of the year. The partial recapture assumed in the guide is really that it's complete by March. That's what we've seen typically historically as Bill was describing. When we've seen events like this before, we have a pretty good sense as to the duration and the level of partial recapture. Right now, the guide assumes that there's no further recapture into the second quarter or beyond.

Simeon Gutman
Simeon Gutman
Managing Director and Senior Retail Analyst at Morgan Stanley

Okay. Then the follow-up, you said it about every market effectively, including California, but, you know, maybe give another chance here. Maybe you're being overly cautious about this, but were there any markets that didn't experience that double whammy weekend, you know, where sales are much higher? Are there any places where you can point to underlying trends. I understand you don't want to extrapolate for the rest of the country. I would assume things were more steady, but if there's any markets that you can speak to, it would be a good opportunity.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

You know, it's really tricky. 80% is our estimate of the regions that were impacted. The way that we looked at sizing this was truly on a day-by-day basis and comparing weather impacted days versus non-weather impacted days. If I was to point to any region specifically, it would be our recent new entry into the Southeast and sort of the continued momentum we're seeing there in some of our non-comp locations, specifically in North Carolina.

Simeon Gutman
Simeon Gutman
Managing Director and Senior Retail Analyst at Morgan Stanley

That's helpful. Just to close the loop on those locations, would you say there's been any sensitivity to, like, recent economic shocks or it's too early to say?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. No. Well, so far, no. In fact, we've seen an increase in the customer cohorts across all income demos, Simeon. Encouragingly, the over $150,000 income demos have grown faster than the others. They've all grown this year, but the more affluent ones have grown faster. Their buying behavior shifted up from a focus on good to more of our better or mid-tier pricing, which is very encouraging. All the behaviors we're seeing across the cohorts are very encouraging. Absent the weather impact that, when you peel that away, we really like the underlying momentum across all the cohorts.

Simeon Gutman
Simeon Gutman
Managing Director and Senior Retail Analyst at Morgan Stanley

Okay, thanks. Good luck.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yep. Yeah, thanks, Simeon.

Operator

Our next question is from Oliver Wintermantel with Evercore ISI.

Oliver Wintermantel
Oliver Wintermantel
Managing Director at Evercore ISI

Thanks, guys. I had a question regarding the comp guidance throughout the year. If we assume that we're staying in the low single digits for second, third and fourth quarter, as you mentioned. It looks like the two-year comp would be, you know, would go, you know, to a double digit, given the second quarter and third quarter were already double digits in 2025. If you could maybe just talk a little about the two-year comp and how you're gonna lap these double digits comps in the second and third quarter. What's the driver? Is it conversion? Is it traffic? Some information there would be helpful. Thanks.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Oliver, thanks. Ah, great question. Thank you for that. Yeah, look, I think, you know, as we discussed during the IPO roadshow, the big step up in our comp performance last year was because of systemic initiatives that we've been working on for a couple of years that really created a step change up in performance in our stores that continued throughout the year and into this year. We're operating at a whole nother level. Comping on top of that feels pretty good to us. In fact, if you think about this first quarter and the guide that we've given, it's in fact a positive comp on top of a positive comp last year as well.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We have high confidence that all the initiatives put in place that were performing last year are continuing to, and that we'll be able to have positive comps on top of those strong quarters that we experienced last year. Carl, do you want to add anything to that?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

That's great.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Okay.

Oliver Wintermantel
Oliver Wintermantel
Managing Director at Evercore ISI

All right. Thank you. Just as a follow-up on the gross margin line, if you could maybe talk a little about the drivers in 2026 on your gross margins and if you could maybe the cadence throughout the year. Thank you very much.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure. The guide assumes a relatively consistent year-over-year gross margin. Implied in that is also some of the gross margin impact that we saw in Q1. Typically, with a sales impact, you would see flow through that would be more concentrated in SG&A. In Q1, given the weather impact, we did see some gross margin headwind as it relates to some supply chain inefficiencies. That's gonna be reflected in the full-year guide, but otherwise it's consistent flat year-over-year in terms of the midpoint of the guidance range.

Oliver Wintermantel
Oliver Wintermantel
Managing Director at Evercore ISI

Thank you very much, and good luck.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Thanks, Oliver.

Operator

Our next question is from Robby Ohmes with Bank of America.

Robby Ohmes
Robby Ohmes
Managing Director and Research Analyst at Bank of America

Oh, hey, Bill. Hey, Carl. Thanks for taking my question. I wanted to follow up on just, you know, maybe looking at the 20% of stores not impacted by storms and any color you can give on, you know, are you seeing a lot of benefits from tax refunds right now? Maybe a little more on, you know, the customer trade up in those stores. Are you getting a lot more best, you know, versus good going? I know that you're entering this year with, you know, prices a little higher, you know, any response to that? Maybe another would just be, it sounds like North Carolina is going well. Have you not seen any competitive response to you guys going in there?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Listen, Robby, it's good to hear from you. A couple things related to your questions. Number one, you know, you mentioned our prices. One of the things when we take price, we always do it in a manner that protects the value proposition to the consumer. We always wanna be the best value in the market. What we've seen is a continued positive consumer response to our prices across our regions. When we look at the non-weather impacted days, we're very encouraged by, again, the performance across our good, better, best. This is in all the regions, including the ones that were weather impacted. That's the way we looked at it rather than one region versus another. We looked at each region individually, weather versus non-weather impacted.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We looked across the cohorts, we looked across our product assortment in our good, better, best, and we're really pleased with the performance we've been seeing. As I mentioned earlier, for example, we've seen all the cohorts stepping up more into the better price tier from good and the more affluent consumers, in fact, stepping up even more. It's a continuation of the trends we saw last year. You know, the weather hit in the middle of the quarter. It was unfortunate, but I couldn't be more proud of the team and how they responded the Bob's way in taking care of the customers, fulfilling those deliveries, but then getting back on track with our great values.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Again, as we've seen post weather event in the month of March across our regions, we're really pleased with the momentum and the comp growth that we're seeing going into the second quarter.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Let me just jump in there on tax refunds as well. Historically, we have correlated well with tax refund season. There's a few dynamics in the industry going on right now, specifically in March as we see this outperformance. Certainly the recapture due to weather demand, and you could certainly say that there's a tax refund benefit happening in March as well.

Robby Ohmes
Robby Ohmes
Managing Director and Research Analyst at Bank of America

Just a quick follow-up, and sorry if I missed this, but the propensity of your customers to use financing. Are you seeing any signs of that going the other direction, starting to use financing again?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

No. So far in 2026, it's pretty similar to how we ended the year. We're closer to that low 40% area where historically we've been about 50%. We see great opportunity with a new partner coming on board midyear, Synchrony. We see several benefits in terms of, you know, better approval ratings, more customer data and analytics, and then better just overall, you know, transaction terms. We're really looking forward to that partnership and helping drive that opportunity to impact AOV.

Robby Ohmes
Robby Ohmes
Managing Director and Research Analyst at Bank of America

Got it. Thank you.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Thanks, Robby.

Operator

Our next question is from Bobby Griffin with Raymond James.

Bobby Griffin
Bobby Griffin
Managing Director of Equity Research at Raymond James

Good afternoon. Good afternoon, everybody. Thanks for taking the questions. I guess first for me, Carl, could you maybe spend some time just double-clicking into the gross margins? You know, called out flat for the year, but it seems like you have fuel as a headwind. You got 1Q as a headwind. What are some of the good guys to help us get back to flat for the year?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure. So one thing we're seeing, you know, from a full-year basis is we are looking at, you know, maintaining our, you know, the playbook that we had last year with the tariff mitigation. We're maintaining, you know, our dynamic pricing teams to make sure that we're holding to a targeted gross margin that we wanna be at. That's really a target area where we're able to focus and hit a profitability that we see as where we wanna land. From the headwind in Q1, again, that's more weather concentrated and some supply chain dynamics happening. But to your point, any fuel cost is not embedded in the guide if that was to extend beyond the first quarter.

Bobby Griffin
Bobby Griffin
Managing Director of Equity Research at Raymond James

All right. That's. I appreciate that. Then maybe secondly, just given the environment here is a lot more dynamic, and you guys, you know, we don't have as much history maybe with the company being out here public. Can you just talk about the different opportunities inside the P&L that you can flex, given if things move one way or another, and how you can manage in kind of this more dynamic environment geopolitically?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure. I mean, what I'll start with is, you know, we have a long history of managing through any macroeconomic environment, whether that was, you know, a supply chain dislocation, COVID, et cetera, financial crisis, and we tend to do better and take market share during these periods. That's been our history, because of the value and discount player. In terms of flexing, you know, we're a large player. We're national coast to coast. We're able to use that strength of really the size of our business to navigate these types of environments.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yep. We're always, Bobby, looking at different initiatives to get efficiency regardless of whether there's economic challenges or not. A number of the things that we've taken on in the last few years has been reflected in our outsized performance, both in our top-line growth, the strong comps we saw last year, as well as our growing EBITDA margin over the last handful of years. You know, we took this company from pre-COVID, you know, mid to high-single-digit EBITDAs up to around 10% EBITDA for the last three years. We have a history of being very disciplined operators at the SG&A level, as well as driving top-line, and we're very disciplined in gross margin. You know, just now Carl mentioned our pricing dynamics.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We have a pricing analytics team that's very, very data-driven by market, and they can flex our pricing both to protect our value proposition and to protect our margins. We are very agile and dynamic when it comes to market conditions, and I think the recent track record has demonstrated that.

Bobby Griffin
Bobby Griffin
Managing Director of Equity Research at Raymond James

Thank you. I appreciate the details. Best of luck. You're wrapping up the first quarter.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Thanks, Bobby.

Operator

Our next question from Brad Thomas with KeyBanc Capital Markets.

Brad Thomas
Brad Thomas
Associate Director of Research at KeyBanc Capital Markets

Hi, good afternoon, and thanks for the questions. I wanted to start with e-commerce and maybe seeing if we could follow up around recent trends in e-commerce. I know those will still be somewhat connected to if someone visited a store. Curious what you're seeing there of late, and then maybe more broadly, how you think about e-commerce continuing to drive sales going forward here.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Hey, Brad, it's good to hear from you. This is Bill. Yeah, look, you know, we are an omnichannel retailer, and e-commerce plays a vital role in that. You know, historically, or at least in recent years, we've been running about 14% e-commerce and about 76%, I'm sorry, 86%, transacted in stores. But honestly, we don't really look at it that way. We look at it as an omnichannel across the board. You know, the vast majority, over 70% of our consumers will work with us across channels, and we're kind of agnostic whether they close online or in store.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Having said that, we put a lot of effort into bringing our e-commerce environment since 2023 up to par, making sure that it creates a congruent customer experience to that in-store so that the consumer can have that seamless customer experience as they move between channels. We're seeing a lot of improved customer satisfaction and transactions on the website. Again, you know, whether they wanna transact in the store or online or over the phone, it's all the same to us. In fact, you know, during the weather outage, you know, we were there online being able to take orders and service customers through our e-commerce channel. It's one of our faster-growing channels for sure, as customers get more and more comfortable moving between channels.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

You know, we mentioned in our opening monologue the Omni Cart that we introduced a few years ago that travels with the customer between channels. That's become very, very popular. In fact, it's one of our highest average ticket and highest closing rates or conversion rates is from the Omni Cart. E-commerce continues to be a vital part of our business. It's a fast-growing channel, and it's complementary to our physical channels as we think about our omnichannel offering to the consumer.

Brad Thomas
Brad Thomas
Associate Director of Research at KeyBanc Capital Markets

I appreciate that. Maybe one other area that we have been getting questions about is just, you know, you all moving into the South, and you spoke positively about what you're seeing in North Carolina. It is unique about the furniture industry, and it's a pretty regional industry, both in the style that's offered and competitors being different. Could you just speak a little bit more to the confidence you have in your ability to be successful in the Southeast, much like you've been in other regions you've gone into?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah, you bet, Brad. Great question. Well, first off, let me back up and say this. You know, we talk about opening stores, but we develop markets. We'll spend on average two years planning, studying and planning for our new market entry, and we did exactly that with our entry to the South. Obviously, we look at things like our merchants study the, you know, the furniture being bought in those markets, the styles, et cetera. We study our competitor set. We hold focus groups with consumers to see how our branding and our marketing resonates with consumers. We spend a great deal of time in a very disciplined way developing our entry plan. Now, as you know, North Carolina is mecca for furniture, right? I mean, it's a place that you wouldn't wanna enter casually.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We spent a good two years planning that entry, and the net result of all that is that those stores opened strong, all performing. That cohort is all performing above plan, and we're really pleased with the reception we've had into the North Carolina market. You know, we finished the year with six stores, I believe, in North Carolina. We're opening another four this year. With that strength, we're also opening in two more southern markets, South Carolina and Tennessee. Again, you know, we're taking the time to study and plan entry into those markets, not presuming for a second that this northeastern heritage brand will resonate the same way in the South. In fact, we modified some of our merchandising. We modified some of our brand messaging.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We kept the core message, of course, the Bob's way, who we are didn't change, but some of it we modified to that consumer set, and boy, we've really been performing well down there. Just gives us a ton of confidence. You also heard that we're opening a distribution center in Georgia in 2027 that'll be able to service all of our stores that we anticipate having in the Southeast. We're really excited about the success down there. Moreover, I think it speaks to the discipline and the methodology we use to study, plan, and enter markets.

Brad Thomas
Brad Thomas
Associate Director of Research at KeyBanc Capital Markets

I appreciate it. Thank you, Bill.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Thanks, Brad.

Operator

Our next question is from Mike Baker with D.A. Davidson.

Mike Baker
Mike Baker
Managing Director and Senior Research Analyst at D.A. Davidson

Okay, great. Just want to follow up really on that last point. Talk about the local merchandising initiative, how far along you are in that, any particular call-outs or opportunities there?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah, Mike, good, great question. Look, you know, historically, Bob's has had the same product offering in all our stores across the country. Over the last few years, in fact, you heard us talk in our monologue about an initiative we call clustering, which is looking at similar characteristics of stores, you know, be it geographic or be it kind of consumer, and really kind of fine-tuning the offering we have in those markets. We clearly did that as we entered the Southeast when you think about, you know, a propensity for more light color furniture, et cetera.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

We anticipate, and this is just broad brush numbers, but we anticipate that roughly 80% of our merchandising will be the same in all the stores across all of our regions, and that we may vary as much as up to 20%, locally. Locally, it's really regional, not really store by store, but regional. You know, we're really focusing a lot on making sure that we're providing the right merchandise to the consumer, at the same time, managing our inventory well. You know, we have rapid turnover, much quicker than the industry on average, and so we wanna maintain that inventory efficiency, but at the same time bringing the right merchandise to market for those consumers.

Mike Baker
Mike Baker
Managing Director and Senior Research Analyst at D.A. Davidson

That makes sense. Thanks. If I could ask one more. You had said something in the prepared remarks about going after additional cohorts that you don't hit now. Just curious if you could give a little more detail on that, or is that you know, something you don't wanna talk about for competitive reasons?

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Well, I think what we were trying to say, Mike, was not that ones we're not hitting now, but that, you know, we have a very large customer database, right? We've been doing this 35 years, and so we have a lot of information about customers and their different behaviors. So we slice and dice that information, study it, and market specifically to different cohorts in different ways. I think that's a bit of what we were reflecting on. When we find a, you know, high value cohort that we think we can fine-tune our messaging or fine-tune our merchandising, we'll lean into it. We'll test it first. We're a test and learn organization, and then we'll lean into it. We're just constantly doing that, churning our customer database and finding ways to attract and go after new cohorts.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

I think that's kind of the message we were trying to get across there.

Mike Baker
Mike Baker
Managing Director and Senior Research Analyst at D.A. Davidson

Okay. Yeah, that makes sense. Thank you.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yep.

Operator

Our next question is from Peter Benedict with Baird.

Peter Benedict
Peter Benedict
Managing Director of Equity Research at Baird

Hey, good afternoon, guys. Thanks for taking the question. So, one is just kind of back on the pricing. I know you talked about your dynamic pricing approach. It sounds like that's being flexed to kind of offset maybe some of the higher costs that come through. I'm wondering how that maybe fits with the broader promotional environment. I know you guys aren't promotional, but the industry typically is. I'm just curious what you've seen maybe over the last few months on how some of the competitors in the market have been behaving. Any changes on that front? Just kind of curious what you're seeing. Thanks.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Peter, great question. Look, a couple of things. Over the last three years, we implemented a pricing analytics function here at Bob's that allowed us to take a look at zone pricing around the country, and really get specific as to opportunities and competitor dynamics in different markets. That capability really came home and helped us a great deal during the tariff period, where we were able to maintain our value commitment to the consumer and at the same time protect our merchandise margins. We have a capability now to be very flexible, you know, by market to maintain that commitment and protect the margins. The competitors make moves at different times. As you called out quite rightly, we're an everyday low price player. We don't promote.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Where we see that we have an opportunity to reduce price to protect our value proposition or in some cases take price to protect our margin, we can do that in a very surgical plan and thoughtful way. As we sit here today, you know, I'm proud to say that we can maintain our commitment in every market we serve to the consumer, who has the right to know that when they come into a Bob's, they're getting the very best value. That's how we think about managing our pricing. We're not promotional. We don't run sales. We never run a sale, but we'll change our prices as we need be to achieve those two objectives I just mentioned.

Peter Benedict
Peter Benedict
Managing Director of Equity Research at Baird

Okay, got it. I guess my follow-up, maybe, Carl, to you, just back to the tariff issue. It sounds like the outlook assumes the post-SCOTUS ruling tariff regime, I guess. Is that the right way to think about it? I guess when does that really start to affect you? Would those rates, different rates be helping you in the back half of the year or just maybe a little bit more on that would be helpful. Thanks.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure. The assumption in the guide is really current policy. Post-ruling, we're not making any assumption about any follow-up, in terms of implications for, you know, some sort of other offset. The guide assumes current policy pre-ruling and how we've already been structured, the pricing dynamics and the vendor contributions that we did to offset, those tariff co-tariff costs. That's what's assumed in the guide.

Peter Benedict
Peter Benedict
Managing Director of Equity Research at Baird

Got it. Thanks so much.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Thanks, Peter.

Operator

Thank you. Our last question is from Anthony Chukumba with Loop Capital Markets.

Speaker 15

Good afternoon. Thanks for squeezing me in. Congratulations on the IPO. You know, obviously there's a lot of macroeconomic uncertainty, right? You guys have done well, even in some, you know, not, you know, sort of suboptimal housing markets. Like, how do you think about the opportunity? Let's say that the U.S. housing market actually improves in 2026. Like, you know, how do you think about the opportunity for you in that scenario from an outside perspective? Thank you.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah, Anthony, great question. Thank you. Look, first off, we're not necessarily tied to housing. We prosper in all macroeconomic climates, both you know good and challenged. Again, we've been around for 35 years. We've seen all kinds of different macro environments, and we know how to deal with all of them. One of the things that we've learned along the way is that value is always in vogue and there's always demand for furniture. If we stay true to our knitting and true to our value proposition, there's always plenty of demand for furniture, and we tend to pick up market share in those times. We're also very agile, so we can make moves as needed, depending on the macro. But again, we really do prosper in all economic times. You know, there's.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

It's interesting, you know, even though furniture is a discretionary purchase, it's not optional, right? Every home in America has furniture. Furniture has its own life cycle. You know, needs change. You know, as we said, I think in our prepared remarks, right, young people still start their first home and start a family or retire, upsize, downsize. In the distressed macro environments, value is even more important. We really see how we pick up market share in challenging times. You know, we would certainly benefit from any housing recovery, but there's no housing recovery presumed in our guide. In the meantime, we're just making sure we deliver those values to the consumer that they've come to expect from Bob's.

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Yeah, just to reiterate what Bill said, the midpoint of our guidance assumes no potential housing recovery or change in consumer, really no major change to macro for the better or worse. Certainly we would benefit from a housing recovery, and that would be on the up end of the guide range.

Anthony Chukumba
Anthony Chukumba
Managing Director, Senior Research Analyst, and Consumer Sector Head at Loop Capital Markets

Got it. Just as a quick follow-up. I was really interested in your commentary on your financing. If I recall correctly, so Synchrony is gonna be your first look. Do you also have a second look credit provider and then also lease to own? Can you just remind me of that in terms of your credit waterfall?

Carl Lukach
Carl Lukach
EVP and CFO at Bob's Discount Furniture

Sure, that's correct. We do have a full waterfall. You know, we have several different tertiary labels, and we have, you know, lease to own, buy now, pay later. The majority of the financing sales are in that first tier, which would be a significant opportunity as we migrate over to Synchrony.

Anthony Chukumba
Anthony Chukumba
Managing Director, Senior Research Analyst, and Consumer Sector Head at Loop Capital Markets

Got it. Thank you.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah, you bet.

Operator

Thank you. We have reached the end of our question and answer session. I would now like to hand the floor back over to management for any closing remarks.

Bill Barton
Bill Barton
President and CEO at Bob's Discount Furniture

Yeah. Thank you, operator. Listen, I wanna thank everybody for joining us today, and we look forward to speaking with all of you again on our next earnings call. Thanks for joining us. Take care.

Operator

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

Executives
    • Bill Barton
      Bill Barton
      President and CEO
    • Carl Lukach
      Carl Lukach
      EVP and CFO
Analysts
    • Anthony Chukumba
      Managing Director, Senior Research Analyst, and Consumer Sector Head at Loop Capital Markets
    • Bobby Griffin
      Managing Director of Equity Research at Raymond James
    • Brad Thomas
      Associate Director of Research at KeyBanc Capital Markets
    • Christopher Horvers
      Senior Analyst at JPMorgan
    • Michael Lasser
      Equity Research Analyst of Hardlines, Broadlines, and Food Retail at UBS
    • Mike Baker
      Managing Director and Senior Research Analyst at D.A. Davidson
    • Oliver Wintermantel
      Managing Director at Evercore ISI
    • Peter Benedict
      Managing Director of Equity Research at Baird
    • Robby Ohmes
      Managing Director and Research Analyst at Bank of America
    • Simeon Gutman
      Managing Director and Senior Retail Analyst at Morgan Stanley
    • Speaker 15
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