TBHC Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

Net Sales: $75.8 million, down from $86.3 million year-over-year.
Comparable Sales: Declined by 9.7%, with a 38.5% drop in e-commerce sales, attributed to a tornado disruption and liquidation efforts.
Gross Margin: Decreased by 410 basis points to 16.3%, impacted by liquidation activities, inventory write-offs due to tornado damage, and tariff costs.
Operating Expenses: Slight increase to $31.1 million, representing 41.1% of sales compared to 35.9% in the prior year.
Net Loss: $19.4 million, compared to $14.5 million in the prior year; adjusted net loss was $17.8 million.
Adjusted Loss Per Share: Improved to $0.90 from $1.11, primarily due to an increase in share count.
Inventory: $82 million, down 12% year-over-year.

2. Strategic Updates and Business Highlights

Partnership with Bed Bath & Beyond: The first Bed Bath & Beyond Home store opened in Brentwood, TN, with strong initial sales and customer traffic.
Store Conversions: Plans to convert all Kirkland's Home stores to Bed Bath & Beyond Home stores over the next 24 months, with conversion costs expected to be under $100,000 per store.
Expansion Plans: New store openings in the Nashville area and potential expansion of Kirkland's Home into the wholesale market.
Omnichannel Strategy: Focus on enhancing the customer experience across both brick-and-mortar and e-commerce channels.

3. Forward Guidance and Outlook

Future Conversions: Anticipate converting 250 to 275 of the existing Kirkland stores, with plans for 30 conversions in Q1 2026.
E-commerce Stabilization: Expect e-commerce sales to normalize, with a focus on driving brick-and-mortar profitability.
Tariff Impact: Anticipated margin pressure in Q3 due to tariffs, but limited impact expected in Q4.

4. Bad News, Challenges, or Points of Concern

Tornado Disruption: Significant impact on operations and e-commerce sales due to damage at the Jackson, TN distribution center.
E-commerce Struggles: Continued challenges in the e-commerce segment, exacerbated by the tornado and liquidation efforts.
Declining Comparable Sales: Notable decline in both overall and e-commerce sales, raising concerns about future performance.
Increased Operating Expenses: Rising costs related to the tornado and liquidation efforts affecting profitability.

5. Notable Q&A Insights

Conversion Costs: The Brentwood store conversion cost was approximately $30,000, significantly lower than the projected $100,000 for other stores.
Store Performance: Strong customer traffic and sales growth observed at the Brentwood store, with plans to monitor seasonal product mix closely.
Debt and Liquidity: Total debt was approximately $68 million, with around $30 million in liquidity available.
Tariff Negotiations: Ongoing negotiations with suppliers to mitigate tariff impacts, with expectations of some margin pressure in Q3.
Future Store Count: The company plans to close about 25 underperforming stores by January 2026, while exploring opportunities for new locations.

Overall, while TBHC faces significant challenges, particularly from the tornado disruption and e-commerce performance, the strategic partnership with Bed Bath & Beyond and the store conversion initiative present potential growth opportunities moving forward.

TBHC — The Brand House Collective, Inc.