John Baugh

Question 1

John Baugh's questions to HG Holdings (STLY) leadership • Q3 2015

Oct 28, 2015

Question

John Baugh of Stifel Financial Corp. asked for clarification on the adult product line, questioning if disappointing orders were due to production issues or pricing. He also inquired about the market adoption of the new value-priced adult furniture and the financial outlook for EBIT and revenue in Q4 and Q1.

Answer

President and CEO Glenn Prillaman clarified that there were no long-term production issues with the adult line. Instead, a delay in launching the new youth brand, Stone & Leigh, created a temporary shipping backlog for some adult products. He explained that targeted pricing actions on specific, underperforming brick-and-mortar products, not the entire line, were implemented to boost sales. Prillaman projected that gross margins would remain in the mid-20s, allowing the company to stay profitable, and anticipated sequential revenue growth despite a tough Q4 year-over-year comparison.

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Question 2

John Baugh's questions to HG Holdings (STLY) leadership • Q2 2015

Jul 29, 2015

Question

John Baugh of Stifel Financial Corp. inquired about sales performance across different distribution channels, the timeline and financial impact of the new youth product line, the future of CDSOA distributions, and the company's cash flow outlook.

Answer

President and CEO Glenn Prillaman noted that sales were down more in traditional channels but that new initiatives aim to drive online customers to brick-and-mortar stores. He explained the new youth line requires minimal investment and will be a key connector to millennial customers, with meaningful sales expected next year. VP of Finance Anita Wimmer added that CDSOA distributions are nearly complete and that future cash flow, while break-even this quarter, will depend on inventory investments offset by operational profitability.