Jeremy Hoff: So, as it relates to the visibility, which is really when we’re talking about the Hooker Legacy side of our business, that increased visibility is as we mentioned, also allowing us to be able to try and sell a lot more of a customer base than we’ve had previously. Selling that customer base and the particular types of customers we’re talking about takes some time to really get into their wheelhouse of what they’re doing from a project level, whether it be the interior designers and, you know, the things we’re trying to work on. So step one is the visibility. Step two is opening the account. Step three is the engagement level that we’re able to achieve with those additional accounts, which takes some time, but we, but from our history of doing this with thousands of accounts before we somewhat know that it will eventually kick in and we believe it’s a significant growth opportunity for us.
David Storms : Okay. And then just one follow up on that, what kind of timeline do you expect around, you know, going from making contacts to opening accounts to that turning into sales?
Jeremy Hoff: I would say from when we started the higher visibility, I would say, I believe that, you know, it’s a from now another 12 to 18 month timeline to really see significant boost on that legacy side due to the visibility exercise.
Operator: Thank you. [Operator Instructions] Our next question is coming from Budd Bugatch of Water Tower Research.
Budd Bugatch: Good morning, Jeremy, and good morning, Paul. And congratulations on the profit performance in the quarter. And then that, that’s notable. Hard to do that with down sales.
Jeremy Hoff: Yes. I really appreciate it. Thank you.
Budd Bugatch: You talk about getting back to normalized margins, gross margins in the Hooker Legacy business. What are those now, after having gone through covid and supply chain and inflation and disinflation and what are those normalized margins today?
Jeremy Hoff: Okay. On the Hooker Branded, yes. I mean, it’s been a long time since we’ve seen normalized margins, but I think, you know, in that low 30% high 20, low 30 is a more normal margin. You know, obviously there are a lot of dynamics that could still affect it, but that would be sort of a, once we get through this last round of mismatched prices and costs, which right now working in our favor, it should be back in that low 30% range for Hooker Branded. The other part of our Hooker Legacy business is the domestic upholstery business, and that’s a mid to low twenties margin. It’s a manufacturing business, it’s a different dynamic.
Paul Huckfeldt : You know, but our goal was never to increase our Hooker Branded margins and to increase our prices because, you know, we wanted more margin. Our goal was to keep our margins historically where they were while we went through the incredible fluctuations and cost of freight and ocean freight and demurrage, I mean, you name it. And any furniture people on the call know exactly what I’m talking about too, but it was pretty crazy the gyrations we had to go through as a business. So we also protected our backlog for our customers that had orders for customers going into that, all of that chaos, which we took hits on the other side of that negatively, which impacted us. But it was the right, we believe it was the right thing to do.
Because we’ve said publicly, we believe in our relationships and our customers, and that’s a big part of what we do and who we — what we believe we are. So we did that on the front end, on the back end, we’re getting some cost reductions that are helping us temporarily, but we have — as we promised, all of our customers, we have reduced our prices to what we believe they were close to where they were from a value proposition standpoint previous to all the crazy freight rates and everything that we had going on.
Budd Bugatch: As a former retailer, I can tell you that, I remember the angst that was created when the price prevailing phrase was bandied around the industry through a previous inflation or time period. And you do too. I’m sure
Jeremy Hoff: I do. Absolutely. I do. You’re right.
Budd Bugatch: So my question is, how long does it take to get back to those normalized margins? That sounds like that mix is somewhere at the low 20s high — low 30s, high 20s kind of range. And that’s a notable time — notable delta. How long does it take to get back to that normalized gross margin?
Paul Huckfeldt : We expect that it’ll be first quarter. We’ll be back to what we said normalized margins.
Budd Bugatch: Okay. That’s encouraging. And the next question is, I’m confused a little bit about the 14,000 contact number. Those are not unique accounts. That’s if you see your same account multiple times inside that number and…
Jeremy Hoff : No those are unique. We don’t — and we don’t count individuals. We count accounts. And in fact, we had two significant entertainment evenings in high point. One was a celebration of our opening showroom. And we do it kind of once a market. We don’t count those numbers when the attendance boost. Because we believe those are kind of the same people candidly coming back multiple times to enter — to have some fun. So we try to make it as — we really want the real picture for ourselves, not just for you. We want to understand what’s actually going on so we can anticipate what will happen. So we were somewhat — we knew it would be better than what we were on the 10th floor of commerce before versus where we are now.
We also thought it would improve from our Las Vegas showroom and our Atlanta showroom. We had no idea we would more than quadruple. So this is — we’re pretty excited about it. And we think that this is really set us up for a very good future for our company, for growth and really across the board. But the legacy in particular from those showroom removes.
