Good morning everyone, and thank you for participating in today's conference call to discuss Kirkland's financial results for the second quarter ended July 31st, 2021. Joining us today are Kirkland's President and CEO, Steve "Woody" Woodward, Executive Vice President and CFO, Nicole Strain, and the company's External Director of Investor Relations, Cody Slach. Following their remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to Mr. Slach as he reads the company's safe harbor statement within the meanings of the Private Securities Litigation Reform Act of 1995, that provides important cautions regarding forward-looking statements. Cody, please go ahead. Thanks, Betsy. Except for historical information discussed during this conference call, the statements made by company management are forward-looking and made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Kirkland's actual results in future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in Kirkland's filings with the Securities and Exchange Commission. I'd like to remind everyone that this call will be available for replay through September 9th, 2021. A webcast replay will also be available via the link provided in today's press release, as well as on the company's website at kirklands.com. Now, I would like to turn the call over to Kirkland's President and CEO, Woody Woodward. Woody, over to you. Thank you, Cody. Good morning, everyone. As always, I'd like to start our call today by thanking our entire organization for their unwavering commitment to continuously providing best-in-class service to our customers and driving our transformation story. The progress we've made to date could not have been possible without our dedicated teams across the business. Let's jump into the quarter. We faced headwinds that could have driven significant weakness across our business, but the steps we've taken to transition our company have driven resilience to dynamic markets like we faced in the second quarter. Looking at our total comp, we were down about 5% compared to the prior year period. Two things drove this performance. The second quarter of 2020 had unusually high comparable store sales due to the significant increase in demand for home furnishings and decor brought on by the pandemic last year. We knew the quarter would be a tough comparison from the start. Second, we struggled to maintain inventory as we continued to be impacted by global supply chain constraints and shipping delays that are affecting our industry at large. This included some key outdoor pieces that arrived about a month later than expected, which impacted our sales in May. While our overall inventory position improved as the quarter progressed, we continued to experience volatility across specific products. We would see availability for certain items return to normal, only to experience issues that resulted in shortages for other categories. This just goes to show that the global supply chain issues continue to be unpredictable and will likely remain a challenge in the near term. A bright spot to this situation is the fact that we have seen high sell-throughs of new, updated merchandise as soon as we get it in stores. We've made significant strides over the past few years improving our inventory control, primarily around improved planning and product flow by destination, down to specific shipping points and shipping ports, which resulted in changes at how we write our orders specific to the back half of 2021. We've added weeks to our order flow process to allow for supply chain delays. We also experienced volatility in traffic patterns within our stores throughout the quarter. For example, in the month of June, we saw less traffic on weekends, but more traffic on the weekdays, whereas July was more of our typical in-store traffic with weekends picking up. Additionally, we also experienced an in-store sales increase during the latter portion of the quarter. We believe this reflects customers' appetite to get back outside to shop, particularly as vaccination rates have improved, our customers have generally been more comfortable resuming some state of pre-pandemic shopping behavior. No matter what medium our customers choose to shop, we're ready to serve them. We continue to build out our omni-channel approach in the quarter. We also remain well on track with our direct sourcing. As we stated on the last call, expect to procure about 38% of our merchandise from direct sourcing for the year. We're not stopping there. With all the recent success in ramping up this percentage much faster than anticipated, we believe we will have 50%-75% of our product from direct sourcing in the next three-five years, with a goal to have at least 70% by the end of 2025. We also spent a significant amount of time looking at our optimal store count for the quarter. With all the successful changes we've made to our store profitability, we're revising our optimal store count to approximately 350. This will include additional store closures in the future, limited opportunistic store openings, store relocations, and extensive updates and enhancements to the existing store base. Let's discuss our product category performance. Despite a tough comp, we experienced healthy improvements in AUR across multiple categories, resulting in total AUR increases of approximately 5% over the same period last year. This was less than our annual target of 10%-15% due to inventory shortages in outdoor and furniture, we still experienced positive momentum, such as in our furniture category, whose AUR was up 26% to $197.06. In addition, we saw a 44% year-over-year increase in mirrors, along with improvements in other categories like outdoor living, Holiday, wall decor, frames, and lamps. We believe AUR will continue to improve in many of our categories as we increase our direct sourcing and continue selling larger ticket items like furniture. With higher AUR, we can better offset the recent declines in traffic and lower store count to continue driving sales in our key product categories. AUR will be an important KPI we track as we continue our transformation to unfold because it represents our customers' continued acceptance of our shift towards higher quality merchandise. We look forward to continuing to report on our progress. In past calls, we've talked at length about our key strategic initiatives and financial goals for the next two- three years to transform Kirkland's into a specialty retailer where customers are able to furnish their entire home on a budget. I'm happy to say that Q2 is another data point that shows we are on the right track. We're accelerating our product development to reinforce the quality and relevancy of our assortment so that we are viewed as a high-performance, specialty home furnishings store offering immense value through an omni-channel experience. One of the major ways we're accomplishing this is through significantly enhancing our furniture offerings and providing customers with quality and stylish products at an affordable price point. We've continued to see increased demand for home furnishings, and ShopperTrak data shows that industry traffic for this product category was up approximately 61% during the second quarter. To better highlight these products, we've been working on adding various upholstery items to our floor because, at the end of the day, how do your customers know that you're a home furnishing store without having sofas on the showroom floor? We recently added new chairs and sofas to our floors. This includes our vegan leather sofa at $999 price point and matching chairs at $599 price point. We've seen great success with an early 25% sell-through in the first few weeks. We plan on introducing our modular sectional in the coming weeks at a $1,200 price point. We were able to accomplish this without having to do significant work reorganizing our floors. It was really just a matter of cutting down on the number of units on the floor rather than eliminating assortment. Our customers are seeing the same product offerings they've come to expect with the added benefit of now having chairs and sofas to touch and feel. These products also have proven to help sell ancillary offerings like pillows or side tables, and the customer can see how these items tie a room together rather than just being highlighted in a standalone manner. As we make enhancements to grow our furniture category, we're focused on expanding our outdoor offerings. This includes moving away from outdoor wicker, which is a commodity at this point and can be purchased at places like The Home Depot or Lowe's, towards a higher quality in-house designed teak offering. We will look to shift towards selling more outdoor furniture rather than having a heavy focus on outdoor accessories to further drive an increase in AUR. This will allow us to leverage our e-commerce channel to sell those accessories and existing lines that customers still desire online while pushing our higher quality new product offerings both in-store and online. If we can bolster our offerings in both furniture and outdoor product categories, we believe this will enable us to drive profitable growth across all four quarters, moving beyond our traditional seasonality and dependency on Harvest and Christmas holidays to drive growth for the whole year. Now turning to the other side of the growth formula, our customer base. We've done an excellent job maintaining our core customers by providing enhanced product offerings and relaunching our loyalty program. Now we're really focusing on driving new customers and improving our customer acquisition strategies. In fact, we've recently brought on Lisa Foley, who I've had the pleasure of working with in the past, to lead our marketing department and strengthen these efforts. Lisa brings a proven track record from notable retailers, including Crate & Barrel, where she used an analytical approach to drive both e-commerce and in-store traffic and sales through revamped digital marketing efforts. As we look to drive customer growth, the biggest thing for Kirkland's is to increase awareness of our brand. We need to get in front of the right people, those who are looking to furnish an entire home, to show them we've changed and now have an extensive merchandise assortment that can fulfill all their home furnishings needs without breaking the bank. We believe Lisa will be instrumental in driving our efforts here with her in-depth knowledge of high-end specialty retailer customers and look forward to sharing more details on these digital marketing strategies as they begin to roll out. Once we've attracted new customers to our stores or e-commerce channel, then we're going to be focused on what we can do to keep them as customers and further increase their visits. Keeping them as a customer will really come down to the further expanding of our assortment and consistently providing high-quality, stylish offerings that are up-to-date with the latest trends. After we've landed them as a customer and proven we can meet their needs, then our focus will shift to what we can do to increase the numbers of times they shop with us. We'll primarily do this through our revamped loyalty program. With a reward program that provides a 3.3% reward for all purchases and was recognized by Newsweek as the number one loyalty program in the home decor sector earlier this year, we plan to further enhance this program with added benefits, including VIP shopping hours, advanced shopping on new collections, and more targeted offerings towards specific customers. It will also be imperative that we continue to improve the overall customer experience, such as adding delivery options that consumers have and expect from other specialty retailers, to ensure that we're providing convenient options that drive customers back to us time and time again. Overall, I'm incredibly pleased with where we sit today. I believe we're just getting started in realizing the true potential of Kirkland's. We're a much leaner organization with a more efficient cost structure and a strong focus on delivering relevant product offerings that are both stylish and affordable. As we begin to ramp up our customer acquisition efforts and better showcase the company Kirkland's is today, I firmly believe we'll achieve the financial goals we've laid out. I want to thank all of our stakeholders for their support in getting us this far, and I could not be more excited for the future of this company. With that, I will now turn the call over to Nicole Strain, our Chief Financial Officer, who will provide additional commentary on our performance in the second quarter and detail on our outlook. Nicole? Thank you, Woody, and good morning, everyone. Before we dive into the P&L, I wanted to reiterate that the second quarter of 2020 had significant COVID-related tailwinds, despite it being a traditionally softer quarter for our business. As such, it created a challenging quarter to compare against. With that being said, we are still very proud of the progress we've made and firmly believe in the path we are on to achieve our longer-term financial targets. Now, let's jump into it. Net sales were $114.8 million compared to $124.7 million in the year ago quarter. The decline was primarily a result of the tougher comp, along with 18 fewer stores. Breaking down sales within the quarter, we had a comp decline of 3.9% in May, a decline of 8.7% in June, and a decline of 2.1% in July, resulting in a total decline of 5.2%, which included a decrease in e-commerce of 12.6% from the prior year. Our sales were impacted by inventory shortages, most notably in the first half of the quarter, and a decline in traffic across both our physical stores and e-commerce channel. Sales declined for the quarter, but our two-year stacked comp was approximately 5%, showing growth over pre-pandemic levels. Additionally, the prior year comp was tougher as the quarter progressed. With a 20% two-year stacked comp in July, we are happy with how we ended the quarter. On this topic, I want to be clear that we are sacrificing some sales growth by limiting promotions, and this is intentional. As we invite new customers to our brand, we don't want to train them to only buy when there's a sizable discount. We are remaining disciplined in our level of promotions to set appropriate expectations with these newly acquired customers and our existing customers. We believe the improved quality and design we are offering is the real value. As Woody stated, we saw several abnormalities within our traffic patterns for both in-store and online. For the remainder of 2021, we expect traffic comps to vary significantly month-to-month as we compare against COVID-impacted trends and inventory challenges in the prior year. Improving traffic and converting existing traffic to our more elevated assortment will continue to be a main priority throughout our brand transformation. E-commerce accounted for 28% of our sales in the quarter. Our fulfilled in-store e-commerce sales were 32%, compared to 40% in the prior year. Lower in-store inventory has continued to limit the volume of these channels and does restrain our profitability. During the quarter, we closed one store, resulting in a count of 369 stores. As Woody mentioned, we have refined our expected store count to approximately 350 stores, which will include 20-30 closures of declining stores, relocation of 40-50 stores, and refreshes of much of the remaining store base. We expect these changes to take place over the next three-five years. Gross profit increased 600 basis points to 34.6% of sales, compared to 28.6% in the prior year quarter. The increase was primarily driven by improved landed product margins as a result of the continued benefit from direct sourcing and our disciplined approach to evolving our discount strategy. Store optimization benefits, including store closures and rent reductions, and the reversal of the negative timing difference impacting distribution costs mentioned on prior calls, were also drivers of the improvement. It's worth noting that these margin gains include absorbing almost 500 basis points of year-over-year incremental inbound freight. Landed product margin was 59.8%, which shows growth from the second quarter of 2020, again, while absorbing the significant freight impact. Store occupancy costs were 14% of sales, and we remain on track with the additional 100- 150 basis point improvement in occupancy costs in 2021 relative to the same quarter in 2020, excluding the much larger benefit in the first quarter due to the incomparable sales. Even with the sales deleverage in the quarter, we are trending towards the high end of this range. Freight costs from our DC to our stores was 2.3% of sales, compared to 2.2% of sales in the prior year period as a result of moving more freight within the quarter than in 2020. DC costs were 4% of sales compared to 5.4% in the prior year period and were slightly higher than our expectations. Again, we moved more freight within the quarter than the prior year period as our inventory levels improved. This includes the benefit of the capitalization timing adjustment mentioned earlier. Similar to our commentary on our last call, we continue to see productivity and infrastructure improvements offset the incremental cost to pick and pack e-commerce orders, along with strong performance from the two e-com hubs we added last year. E-commerce shipping at 4.9% of sales increased year-over-year as the volume of ship-to-home sales grew, which goes back to the lower-than-expected fulfilled in-store e-commerce sales. As inventory continues to improve, offering incentives for pickup in-store options will help these channels return to prior levels. Operating expenses excluding impairment increased $4.1 million from the prior year period to $39.5 million or 34.4% of sales. This increase was primarily attributable to lower store labor in the prior year as COVID store closures extended into the second quarter, and one-time corporate cost reductions in the prior year as a result of the pandemic. The quarter also included a half-year catch-up of incentive compensation accruals. On a comparable basis, we remain down just under $9 million from the 2019 level. Adjusted EBITDA, excluding impairment and other minor non-operating expenses for the quarter, was $5.1 million or 4.4% of sales. For the quarter, our normalized tax rate was 24.4% compared to a normalized rate of 23.1% in the prior year period. The actual rates for both periods were impacted by a valuation allowance. Adjusted earnings per share, which excludes non-cash impairment, normalized tax rate, and other minor non-operating adjustments, was a loss of a penny compared to a profit of $0.02 in the prior year. The GAAP earnings including these items was $0.04, up significantly from a loss of $0.66 in the prior year. We ended the quarter with $45.2 million in cash and no outstanding debt, compared to $100.3 million at the end of 2020 and $27.6 million in the year-ago period. As mentioned on the prior call, we expected a reduction in cash of $45 million as we rebuilt inventory levels, and the quarter included a more aggressive approach to our buyback program. We will continue to balance appropriate inventory levels with sales risk and adjust accordingly. Inventory at the end of the quarter was $92 million, which was a build of $29.9 million from the end of fiscal 2020 and compared to $77.1 million in the prior year. We repurchased 562,000 shares within the quarter for $12 million at an average cost of $21.38. In the month of August, we used another $6.5 million of our authorization at an average cost of $19.26. Year-to-date, we've repurchased 945,000 shares or 7% of our outstanding shares for $19.8 million and at an average cost of $20.99. As announced in our earnings release this morning, our board has approved another $20 million share repurchase authorization. As we continue to execute on our transformation and get further past the dynamic environment brought on by COVID-19 last year, we wanted to provide a same-store sales comp range that we expect to achieve in the second half of fiscal 2021. For the second half, we expect mid-single-digit positive comp sales driven by a larger Harvest buy than last year and improved inventory position in key categories, specifically furniture and wall, with the inventory benefit having a larger impact in the fourth quarter. In addition, we anticipate year-over-year earnings growth despite absorbing significant incremental freight costs. As we look ahead, we firmly believe that Kirkland's is well-positioned to execute on our long-term vision for the company. We've created an efficient organization with an appropriate cost structure and the necessary capabilities to be nimble in these uncertain times. As we continue to build out our omni-channel platform and focus heavily on new customer acquisition, we will be supported by a strong financial foundation that has us set up to succeed. Based on our progress to date, we are increasing our one-two year targets to gross profit margins in the mid to high 30% range, EBITDA margins in the low to mid double-digit range, and operating income margins in the high single digits. We expect these targets to be driven by top-line growth, fueled by an increase in our average ticket, new customer acquisition strategies, lowering of freight rates, continued direct sourcing benefits, overall efficiencies in supply chain operations, and continued disciplined cost control. We look forward to continuing to share updates along the way and achieving both our near-term and longer-term outlook. Operator, we are now ready for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing a key. At any time your question has been addressed, and you if you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Jeremy Hamblin with Craig-Hallum Capital Group. Please go ahead. Thanks and congrats on the strong results. I wanted to get a little more granular into your gross margin performance. Really quite impressive to be up 200 basis points sequentially. Just to understand some of the components of that, in terms of thinking about how much of that sequential improvement is initial markups improving versus the sourcing that you're doing and the year-over-year change that you've seen in directly sourced goods. Yeah. Taking the pieces of the 600 basis point improvement, the one thing that I would say is just the timing impact, and we've talked about on a couple of calls, is the 170-ish basis points of timing that we talked about. Our inventory levels negatively impacted distribution costs in the third quarter of last year, I believe. Getting back to normal inventory levels allowed that timing difference to flip. The bigger piece, 380 basis points roughly, is in landed product margin. Look at this holistically. Direct sourcing provides a benefit that we've talked about, which is 500 basis points for everything that we move over, but really, I think has a halo benefit because the quality and the style are significant improvements, and it allows us to sell more of them at original price. It really is also aiding us in pulling back discounts. For me, it becomes a bit hard to break that apart because I do think outside of just the initial cost benefit, it has a much larger benefit on our ability to operate with lower discounts. The other piece is store occupancy, 140 basis points. Again, that's within the range where we expect to continue to see opportunities for rent reductions. Those are the big pieces we mentioned. E-com shipping going about 50 basis points the other way, and really that's just mix within that channel. Great lead into the follow-up question, which is, as you look at, you've done an incredible job on renegotiating rents, right-sizing the store base. As we get into those conversations and retail in general has sustained at stronger levels, how are those lease negotiation conversations happening? I recall that I think your average lease negotiation renewal was at about a 20% discount versus prior levels. What are you seeing today? I think a lot of that will be answered as we get through the rest of the year. Almost all of our lease renewals happen at the end of the fiscal year. We have about a third that come up for renewal at the end of this fiscal year. The ones that I would say that we're working on now are the higher performing stores that we want to lock in early, longer term. I'd say on almost all of those, we are either locking in at flat rent, not taking escalations or at a slight discount. Those, again, would be the ones where the centers are fully occupied, and we're in great centers. I think, we may be below the 20% at year end when we're negotiating, but I still think there's going to be quite a bit of favorability. The majority of the third that come up at the end of the year, we haven't yet had an opportunity post-COVID-19 to negotiate those. I do think there's going to be opportunity. We'll give an update as we get a little bit closer and further into those negotiations. Great color. Just one other item that I wanted to follow up on, in terms of your cash, it's been a great asset. Last year, you talked about where some of those targets might be at the end of the year. Do you have a target range that you're looking at? Obviously, you've been able to buy back some shares at lower levels now, quarter to date. Do you have a target range that you're looking at just to utilize some of that balance sheet? Yeah. At this point, I think we end probably down $10 million-$20 million from last year, really just depends on how aggressive our share buyback is for the rest of the year, that will be dictated by where our stock price is. If our stock price remains as significantly undervalued as we believe it is now, we will be much more aggressive on, or continue to be aggressive on our buyback. Great. One more quick one. Can you give any color on quarter-to-date trends, where you're tracking versus that mid-single digit? Yeah, I think the easiest thing to say there is last year going into Q3, we saw in August and September really unprecedented demand for our Harvest product, which meant the comps that we're comping against in August and September, really tough. We got to October and had basically no Harvest inventory to sell. The October comp, much, much softer. We are down about 5% to last year in August. Similarly, when we look at that on a two-year stack, we're up 5% from 2019, I think we continue to carry that forward. I think the opportunity for us to comp up is pretty heavily in October. The other thing I would say is I feel like with all things considered, we did a decent job of getting Harvest into our stores, but we are a couple of weeks behind. Sales are pretty soft in the start of the Harvest season, so definitely recoverable, but that did have an impact on August as well. It doesn't change anything. We feel really strong. We bought Harvest up this year and feel like it really helps us to be more smoothed out throughout Q3. All right. Congrats. Thanks for all the transparency and color. Best wishes. Thank you. The next question comes from Anthony Lebiedzinski with Sidoti & Company. Please go ahead. Yes, good morning, and thank you for taking the questions. Certainly impressive results even with all the cost headwinds that are out there. First I just wanted to get a little bit more specifics about the average ticket, which, Woody, you talked about a lot. Can you give us a sense as to, on the consolidated basis, where you are with your average ticket so far this year for the quarter, for the year to date, however you view it, and how does that compare versus last year? With the products that you're looking to get into more on the furniture side, where do you think that average ticket could go to? Yeah, I'll take the first part of that. Woody definitely can add some color on the merchandise pieces. We mentioned up 5% for the quarter, really our expectations, which we also mentioned are in the 10%-15%, that's what we saw last year as well over the prior year. We look at that as we make these merchandise changes, it's more a mix of what we're selling, that there will be sequential years of a 10%-15% increase even on the conservative side. Being up 5% helped us, it was under where we expected to be because we were light in furniture, the outdoor showed up late, those are things where we've really taken some steps to improve the higher ticket offerings that I'll just jump in with just a broader statement. A year ago we said that as we migrate more of our assortment to direct sourcing, we would take part of that increase in gross margin, and we'd add it to our financial benefits. The other half, though, is starting to really pay off, and that was where we decided very methodically to increase quality, improve our packaging across all categories. Where it's really showing up is now in some of our larger ticket categories like furniture, which we intend to grow substantially over the next three to five years. A lot of the things that we're seeing today are the result of making good decisions over the past year and a half or two years. Not only is our store looking more inviting, more appetizing, selling a better quality, but we've also made the considered decision to maintain opening price points. This is a carefully thought-out plan to make sure that we're not alienating customers that have looked at us for an opening price point, but really delighting customers that are looking for a better best assortment. Like we said on the call, that one of the big differentiators right now is to get upholstery onto our floor so that we can look like we're a holistic home furnishings retailer. This has been so well received initially on the first sofa that we've landed in the vegan leather. By the way, vegan leather is just kind of a fabric. It's not leather from some tomato or something. We've had some really nice surprises on the customer acceptance of those products, and I think as we grow our ability to get that to customers with a white glove delivery in the future, it even enhances that more. Most of the things we're landing now are meant to be able to be picked up within the store or put into the customer's SUV. We're really proud of where we are. It's been very methodical, and I think this AUR is going to be an important story. The other side of that is that remember that our ability to move towards this direct sourcing is unrelated to all of our competition who had done that years ago. We were a little bit late to the game, and so those benefits come to us in this year and the next several years that other people won't be seeing. Got it. Thanks so much for that color, Nicole and Woody. Then, in terms of just looking at the back half of the year and the comparison. Last year, your third quarter gross margin was unusually high for that particular quarter. Just as we look to update our models here, keeping in mind what you said as far as the mid-single digit comps for the back half as well as earnings improvement, are you looking actually to have earnings improvement in both quarters, or just be more weighted towards the fourth quarter when you have an easier same store comparison? Maybe if you could just give us a little bit more color as to how we should update our models, that'd be great. Just starting with top line. I already mentioned in Q3, the opportunity really is in October, but in the back half, mid-single digit comp increase, a significant opportunity exists in Q4. Even looking at that, I think the opportunity on the top line is higher in Q4. A piece of that is really low store traffic in late November and in December in the past year because of the new wave in COVID cases. Probably the bigger thing specific to us is we were down 30%, 40% in inventory, in furniture, in art, and really didn't have anything for the customer to buy in a lot of cases. That's a pretty significant opportunity that I think we'll see in the third quarter, but more so in the fourth quarter. To margins, you mentioned, because we sold Harvest through without having to go past the initial discount, the actual margin rate for Q3, the landed margin, is going to be tough to comp. That, I think we talked about before, but we'll make that up in other areas. In Q4, a better comp, but also I would say on the Christmas product that we're bringing in, paying a little bit more to get that on the water, we've been able to offset some of that with pricing that we took on the Christmas product. I would look at it and say margin is a tougher comp and bottom line, a tougher comp in Q3, but quite a bit more opportunity in Q4. I think bottom line Q3, we could likely be similar to last year, then Q4, more opportunity. Okay. Got it. Thanks a lot. That definitely helps. A couple of other quick questions, if I may. As far as the store base target now moving to 350 versus 300 to 350 previously, can you give us a timeline as to when you would expect to get to that 350 store count? Yeah. Obviously every year, we went from 60 to 70 stores that were four-wall negative EBITDA to now one. We made a lot of progress last year. We do have a group of stores that we know are not in markets that we want to be in long term, but they're profitable because we have had significant rent reductions. We've changed the labor model. The margins are much better. A little bit of that is just where is the decision point where they're down to a level of profitability that leads us to want to close it. It's not going to happen all in 2022. I think we talked about before having a handful of closures, maybe 5-10 of those this year, and then I think the same thing as we move forward, and it really will just depend on where those stores continue to perform from a sales perspective. Got it. Okay. The last question from me here. Can you give us an update on your loyalty program, where you are in terms of membership there and kind of what your expectations going forward? Yeah, I think just overall what I'd say on the loyalty program is we're really happy that we got it relaunched. We have a new head of marketing now who's taking a look at the program and how that fits in with customer acquisition, and we've always talked about Loyalty 2.0, which would be much more targeted at tiers and would offer different things. We're happy with the loyalty program. We've made some progress in sign-ups, but I think the potential is really remaining as we dig further into that and how we can make it more targeted and more specific. Got it. All right. Well, thank you very much, and best of luck. Thanks, Anthony Thank you. The next question comes from John Lawrence with Benchmark. Please go ahead. Yeah, thanks. Good morning. How are you? Morning. Morning. Yeah. Woody, would you dig in just a little bit, your comments about the freight situation and on the other side, we've got this direct sourcing, and you mentioned the fact that it was some of the work that you've done the last couple of years. Can you comment a little bit how you're able to, and describe maybe the bad side of the freight, and then the positive of how you're able to get this direct sourcing on the floor? Yeah. I can speak for everyone, most likely, in the home furnishings industry and overall just the supply chain industry. It's really been hard to navigate, and it's still somewhat unpredictable. I think what we're doing is we're hitting a stride of how can we win at our particular part of what we can do. Right now, unfortunately, it's paying more to get these containers on the water. We realized that not having the inventory was more damaging than paying more for the inventory, getting it here. That continues. Hopefully there'll be a day in next year where that starts to moderate and actually works in our favor. We've made really good decisions. What we've done is make sure that every single shipment is prioritized. Is it an urgent shipment where we're willing to pay additional for that container? Is it something that's nice to have that fills back in on our core? We really prioritized our Harvest shipments, and that's why we're in such good stock shape on Harvest. That will pay dividends, not only right now, but as we get into that October period where we ran out last year, that will help us bridge the gap of the next Christmas wave, which we've also prioritized. Those two categories are important for us because customers really recognize us for that, and it brings traffic into our stores. Right now, we're pretty well set up for some of the core categories of furniture, mirrors. Any place where we've got good inventory, we're having good sales, which is a really good indicator that our merchandise direction is paying off. I think that we're just learning how to navigate this, and it's not everywhere around the world, but certain ports are very complex. We're watching those. We're micromanaging what goes out of those ports and really making sure that we at least can communicate, if you have three containers, which one should you put on the ship right now, and which one can you hold another week? Part of it is just us really doing our homework and due diligence. Great point. Thanks for that. Just that process of on the direct side, much of this work has been done prior to all this disruption, hasn't it? Yes. It's something that is a work in progress. We had to build the teams. We picked all the, what we consider the very best agents to represent us overseas. Now the fruits of that work over the past year and a half is starting to come through and accelerate. Like we said, we'll end up in the 38%-40% range of direct sourcing this year with a goal to continue to push that. The residual benefit I think, when Nicole mentioned, is we get more exclusive product that is well-designed, and now our stores are actually looking like a fully curated casual home furnishing store, which is our goal all the way along. When you're buying it from a group that you're buying off the shelf, it's harder to make sure that our look is exactly 100% our look, and that we can really stand behind the fact that we have exclusive product at great value. Great, thanks. One last question from me. Do you have a plan or that prototype of what the remodel would look like, and have you remodeled any of those at this point? Yeah. We've done, over the past two years, a series of tests, and really for us, a lot of our stores have darker walls and darker carpet, and it's just how do we make the stores lighter and brighter so that the merchandise really shows up. In saying we're going to refresh the majority of our store base, it's not a significant contribution per store. It really is focused on painting the walls, changing the flooring- Okay Making sure the lighting is right. Really, we've seen it make a significant difference. I mean, the comments we've had are it looks like there's different merchandise in the stores that we refresh versus the one that haven't been. I think it's really going to be a key part of making the changes that we're making in merchandise be reflected to the customer in the store. Great, thanks. Congrats, and good luck. Thanks, John. This concludes our question and answer session. I would like to turn the conference back over to Mr. Woodward for any closing remarks. Thank you, Betsy. We'd like to thank everyone for listening to today's call, and we look forward to speaking with you when we report our third quarter 2021 results. Thanks again for joining us. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.