2024 Business Outlook

The Company continues to navigate uncertainty in the macroeconomic environment due to low consumer confidence, inflation, a volatile interest and mortgage rate environment and continued declines in existing home sales. As a result, the Company is not providing financial guidance at this time.

The Company is, however, providing the following commentary:

• In terms of our sales outlook for 2024, while we strongly believe that our strategic initiatives of our CRM and Pro initiatives will improve the customer experience and help drive traffic to stores, our visibility is limited as to when the macroeconomic environment will normalize.
• Adjusted gross margins1 are expected to maintain year-over-year, driven primarily by potential reductions in transportation costs, offset by higher vinyl sourcing costs as we increased sourcing from domestic vendors and lower average selling price due to industry pricing pressure as input costs have declined compared to last year. The Company will continue to monitor the competitive pricing environment to inform its pricing and promotion strategies.
• SG&A dollar spend is expected to decrease for the full year primarily due to management's strategic review of our cost structure.
• Capital expenditures of approximately $13 million in 2024, primarily related to our strategic initiatives such as the rollout of carpet, and maintenance capital investments.
• We are pursuing a potential sale leaseback of our approximately 1 million square foot Sandston, VA Distribution Center, which is in a highly desirable location. This action, along with our Dallas distribution center, positions us to execute on our long-term supply chain network strategy by optimizing our distribution footprint and will provide additional liquidity for the Company.