Alexia Morgan

Alexia Morgan inquired about the significant drop in Leggett & Platt's bedding segment steel rod volume, which inflected negative to down 20% in Q3, and asked for the drivers behind this inflection.

Answer

Tyson Hagale, EVP, President of Bedding Products, clarified that trade rod volumes were stable, and the drop was primarily due to the elimination of billet sales. He explained that last year, they sold billets to keep the rod mill operating and employees employed, but this year, internal and external demand did not necessitate billet sales. He added that the trade rod mix was strong, trending towards high carbon, which was positive for profitability. Karl Glassman, President and CEO, emphasized that selling billets is non-value added compared to selling rods.

Alexia Morgan asked about the sequential improvement observed in the home furniture business, with volumes down 5% in Q3 compared to 12% in Q2, and sought interpretation on whether this indicates an underlying improvement in the broader category. She also inquired about shifts in end customer behavior across different price points within furniture and the drivers behind the significant drop in steel rod volume in the bedding segment.

Answer

EVP, President of Specialized Products and Furniture, Flooring and Textile Products Sam Smith explained that the Q3 home furniture performance reflected a normalization after April 2nd tariffs, with unit volume declines aligning with broader market data. He confirmed that higher price points in furniture remain stable while lower price points face pressure. EVP and President of Bedding Products Tyson Hagale clarified that the steel rod volume drop was primarily due to the elimination of billet sales in Q3 2025, which were strong in Q3 2024, noting stable trade rod volumes and a positive mix shift.

Speaking for Peter Keith, Alexia Morgan of Piper Sandler Companies asked about the drivers of the promotional Drinkware environment and whether recent product success was due to a specific focus on female consumers.

Answer

CEO Matt Reintjes attributed the promotional environment to market-wide inventory cleanup by competitors, noting YETI's strategy is to diversify its portfolio beyond these trends. CFO Mike McMullen confirmed guidance assumes this pressure continues in Q3. Reintjes clarified that recent product success, including the Camino bag, reflects broad-based appeal across all demographics, not a specific gender-focused strategy.

Alexia Morgan, on for Peter Keith, asked about the potential positive impact from the ending of the de minimis exemption affecting competitors like Temu and Shein, and whether Overstock's closeout-focused model could be hindered by suppliers holding onto non-tariff inventory.

Answer

Executive Chairman Marcus Lemonis responded that he expects more, not less, opportunity for closeout inventory as other large retailers struggle. President and CFO Adrianne Lee addressed the competitive question, noting that competitors like Temu are reducing performance marketing spend, creating an opportunity for Beyond to capture attention. Marcus Lemonis added that Beyond does not sell the same type of 'junk' products.

Alexia Morgan, on behalf of Peter Keith, inquired about the 'dead rent' dynamic, its impact on earnings flow-through from 2025 to 2026, and how the new Big Lots stores are expected to perform compared to the successful 99 Cents Only acquisitions.

Answer

Executive Robert Helm clarified that while dead rent on acquired stores pressures near-term earnings, it should lead to stronger, mid-to-high teens earnings growth in 2026 due to below-market rents. Executive Eric van der Valk expressed high confidence that the Big Lots conversions will be as strong or stronger than the 99 Cents Only stores, citing the benefit of acquiring 'warm boxes' with an existing value-oriented customer base.

Alexia Morgan, on for Peter Keith, asked about the promotional environment in Q1 and the outlook for franchise unit growth towards the company's 2027 target.

Answer

CEO Lori Flees stated there has been no significant change in the competitive promotional environment, attributing performance to the brand's quality and customer experience. On franchise growth, she expressed high confidence in reaching the goal of 250 total new units by fiscal 2027 (150 from franchisees), citing strong partner engagement, upsized development agreements, and a robust new unit pipeline.

Alexia Morgan, on for Peter Keith of Piper Sandler, questioned the company's exposure to China, its strategy to mitigate tariff risk, and the drivers of gross margin expansion, including the reason for an implied Q4 decline.

Answer

CEO Jeremy Andrus detailed that while about 80% of grills are made in China, the company is actively diversifying its supply chain with a new partner in Vietnam and has sourcing optionality. CFO Dom Blosil explained the implied Q4 gross margin decline is due to product mix and normal holiday promotions, noting Q3 benefited from a one-time 110 basis point credit that will not repeat.

Alexia Morgan, on behalf of Peter Keith at Piper Sandler, asked if Floor & Decor has noticed any impact on big-ticket sales from 'election distraction' and if there is a discernible sales opportunity from the recent Lumber Liquidators store closures.

Answer

President Trevor Lang stated that the company has not yet seen an impact from election distraction, noting that quarter-to-date comps have improved. CEO Tom Taylor commented that the Lumber Liquidators closures are a net positive, creating an opportunity to capture displaced business and hire affected associates. He expressed confidence that Floor & Decor's superior offering positions them to be a beneficiary.