Excuse me everyone, we now have all of our speakers in conference. Please be aware that each of your line is in a listen-only mode. At the conclusion of today’s presentation we will open the floor for question. [Operator Instructions] I would now like to turn the conference over to Richard B. Hare, Executive Vice President and Chief Financial Officer. Mr. Hare, you may begin.

Thank you operator and good morning. During this conference call, we’ll make forward-looking statements, which are subject to risks and uncertainties. Actual results may differ materially from those made or implied in such statements, which speak only as of the date they are made and which we undertake no obligation to publicly update or revise. Factors that could cause actual results to differ include economic and competitive conditions and other uncertainties detailed in the company’s reports filed with the Securities and Exchange Commission. Our President, CEO and Chairman, Clarence Smith, will now give you an update on our results and provide commentary about our business.

Good morning. Thank you for joining our 2017 Third Quarter Conference Call. We had a challenging third quarter. However, we believe that our team had a solid performance despite the disruptions primarily due to hurricanes during the month of September. Hurricane Irma directly affected all our Florida stores along with many of our Atlantic co-stores. 55 stores were closed for one or more days during the hurricane. Not only were our stores down in important coastal regionals and our largest concentration of stores but we experience disruptions to our supply chain from close ports causing major delays in shipments of important containers along with the disruptions to domestic shipments. These cause delivery cancelations and delayed, new product introductions to move to the fourth quarter. Our teams produced improved profit margins due to the pricing discipline and improved product quality and handling, which shall produce damages and markdowns. As expected, the lower sales volume did not allow for us to leverage our fixed cost, but we did have good control over much of our cost. Both our average ticket and closing rate improved slightly for the quarter, but did not offset the mid-single-digit reduction in store traffic, which was affected by hurricane-related store closings. Our H Design business is growing in importance and continues to be a driving factor in our average ticket increases. For the third quarter, our H Design business was 21% of sales, customer upholstery is up 2.6% and we continue to see significant improvement in our expanded accessory program, which is also closely tied to the H Design of our success. We are currently taking a deep dive into all our marketing efforts to review how to reach and adjust to our best customer model. This is a continual evaluation process utilizing several different research methods. We…

Thank you, Clarence. In the first quarter, sales were $207.6 million, a 1.9% decrease from last year. Our comparable store sales were down 2.9% for the quarter. As we disclosed earlier this month, 55 of our stores were closed for one or more days in the quarter due to Hurricane Irma. The negative impact on the third quarter total written sales and written comparable store sales because of these closures is estimated at 1.2%. Our gross profit margin increased 20 basis points to 53.9%. During the quarter, we continued to see favorable pricing and product mix as well as a reduction in product markdowns, which were partially offset by $0.5 million increase in our LIFO reserve. Selling, general and administrative expenses were $102.1 million or 49.2% of sales, which is essentially flat with the prior year quarter. We experienced increases in occupancy costs due to new store openings and renovations, and advertising and marketing expenses, since our advertising plan shifted more spending to the third quarter. These expenses were partially offset by reductions in administrative costs as well as warehouse and delivery expenses. Other income in the third quarter of 2017 included the recognition of a gain on the insurance recovery, related to our Wichita, Kansas and Lubbock, Texas locations. Early in the third quarter this year, we temporarily closed our Wichita location due to flooding caused by rupture of a water pipe. In the third quarter of last year, we recognized a gain upon the receipt of a partial insurance claim related to the storm damage at our Lubbock, Texas location. We received our final insurance installment on the Lubbock location in the third quarter of this year. Our interest expense was essentially flat at $0.5 million, and pretax income decreased $2.5 million to $9.7 million during the quarter.…

Thank you. [Operator Instructions] Our first question comes from Brad Thomas of KeyBanc Capital Markets.

Good morning, Clarence. Good morning Richard.

Good morning.

I wanted to first ask about some of the new merchandise that you’ve been rolling out. Maybe you could just give us an update on where you are in the process of changing out floors here for this year? And how some of the new merchandise is performing?

Well, we had a complete changeover in our youth program, which we’re excited about. It came in later than we’d like, but it’s in place now, and we are very pleased with it. It’s a category that we’ve been underperforming in because it was a complete change. That’s one part of our case goods program. We’ve got a number of new collections that have just hit, that had been in process and planned to get in earlier. But we have them now, and we are excited about that. And then I mentioned in my comments about our leather program; that’s been an important new addition and a transition that is really hitting well. It’s more in the motion leather category that you’ve seen out there, but that’s in place and doing quite well. So we’re very pleased with the new the introductions and their initial impact.

Great. And then the guidance for gross margin for the full year is very straightforward and explicit. Maybe Richard, could you talk a little bit about some of the puts and takes on gross margin in the fourth quarter that are implied based on your guidance?

Yes. If you look at where we are for the – 54.2% is the guidance for the year, and you kind of see how we did the first three quarters. You’re kind of back and in into the fourth quarter. We would expect to see a continuation of negative impact on LIFO. But other than that, it should be fairly straightforward, based on the prior year quarters. That’s what’s driving a lot of the decline in margins in the second half of the year versus the first half of the year.

Got you. And as we think out to 2018, I know it may be a little bit early, but how are you thinking about gross margins when you look at some of the product procurement costs and transportation and level of promotion that you have in place. How are you feeling about the gross margin outlook?

Yes, I think it’s a little premature for me to comment on that. Right now, we’re in the process of putting our plan together for next year. I will be able to share that with you at a future date.

Thanks so much and good luck.

Okay. Thanks Brad.

[Operator Instructions] Our next question comes from Anthony Lebiedzinski of Sidoti & Co.

Yes. Good morning. Thank you for taking the question. So just a kind of follow-up, little bit maybe on the gross margin. So you’ve done a very good job with your product mix having fewer markdowns. How much further improvement do you think realistically you can get from those initiatives?

I think there is a little upside still there. We want to make sure we’re competitive across our key categories, and it’s pretty competitive out there. I think we’re getting more credit for the fact that we’re developing this product and that its got looks and value that our customers want. There may be a little upside, but nothing really major on that.

Got it. Thanks for that color. And Clarence, also, in your press release, you mentioned strains from the competitive landscape. Just wondering if you could provide some more color. Are you seeing that across your entire store base? Or are there any pockets or regions that you see more pressure from competition?

I wouldn’t say there is one region that’s stronger than another. We’ve got some major competitors, as you know, there is pressure in some categories from the Internet. But it’s mostly the larger players that are in almost all of our markets that are very promotional and how the value of furniture is perceived. I mean, if you have a real promotional company that’s selling big discounts, I mean, that’s a perception that, that’s what you should be getting in our category, and we certainly don’t like to play that game, and we’re pretty straightforward with our pricing. But I think, if compared to what we sell, I think there is real value. But the space out there in our category is very promotional with a lot of extended terms, a lot of discounting, just the whole space does make it look like it’s a tougher area to get growth.

Got it. Okay. Thank you for that. And lastly for me, you mentioned that traffic overall was down mid-single digits. If you were to exclude the impact of Irma, can you share with us what that traffic decline would have been?

I think it still will be down. I think it still will be down not as much, but..

Maybe low-single digits?

I would think that’s a guess. You had a good guess.

Okay. Thank you.

Thank you.

[Operator Instructions] We currently have no further questions in queue.

Thank you, operator. We appreciate your participation in our call today. And we look forward to speaking with you next quarter. Thanks, again, guys.

Thank you, ladies and gentlemen. This concludes today’s teleconference. You may now disconnect.