Good morning, and welcome to the Duluth Holdings Fourth Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that there will not be a question-and-answer session following this presentation. Please note this event is being recorded. I would now like to turn the conference over to Nitza McKee, Senior Associate Investor Relations at ICR. Please go ahead.

Thank you, and welcome to today's call to discuss Duluth Trading's fourth quarter financial results. Our earnings release, which was issued this morning, is available on our Investor Relations website at ir.duluthtrading.com under Press Releases. I'm here today with Sam Sato, President and Chief Executive Officer; Heena Agrawal, Senior Vice President and Chief Financial Officer; and Stephen Schlecht, Founder and Chairman of the Board. On today's call, management will provide prepared remarks. Before we begin, I would like to remind you that the comments on today's call will include forward-looking statements, which can be identified by the use of words such as estimate, anticipate, expect and similar phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties include, but are not limited to those that are described in our most recent annual report on Form 10-K and other SEC filings as applicable. These forward-looking statements speak only as of the date of this conference call and should not be relied upon as predictions of future events. And with that, I will turn the call over to Sam Sato, President and Chief Executive Officer. Sam?

Thank you, Nitza, and thank you all for joining today's call. Let me begin by sharing our fourth quarter results, starting with the significant challenge we faced in fulfilling orders which we addressed with immediate corrective action. I'll then highlight the foundational progress we made in 2024 on our Big Dam Blueprint initiatives, strategic work designed to transform the business and unlock our full growth and profit potential. After reviewing our key focus areas for fiscal 2025, I'll turn it over to Heena to provide a detailed financial update and our outlook for the year ahead. Our fourth quarter results fell short of expectations due to processing delays at our legacy fulfillment center. Net sales declined 1.8% to $241 million, with direct channel sales remaining flat with increased mobile penetration while retail store sales decreased 6.9% as traffic declined and shopper conversion held steady. Adjusted EBITDA for the quarter was approximately $9 million. Although, we experienced improved performance leading into Black Friday week through Cyber Monday, resulting in record sales during that period, we subsequently reduced promotional depth and frequency to address the order backlog and maintain sales quality. This decision, while operationally necessary constrained our top line growth. Let me address the processing delays at our legacy Belleville fulfillment center. Following the surge in unit demand over the Black Friday weekend, we significantly depleted inventory units housed in our highly automated Adairsville center. This resulted in a higher level of orders being routed to our Belleville facility. Belleville's order process capacity is considerably less than Adairsville, which ultimately resulted in a significant backlog in orders being filled. We've since implemented enhanced operational protocols and planning processes to ensure that we have optimized unit inventory distribution across our fulfillment network. Moving on to our full year 2024 results. Net sales…

Thanks, Sam, and good morning. I would like to thank Sam for his partnership over the last year, and I wish him all the best in his retirement. As Sam discussed, our fourth quarter results did not meet our expectations. Promotional adjustments after Cyber Monday reduced top line while limiting gross margin pressure. However, we finished the quarter with higher quality inventory, no debt and $103 million in liquidity. Looking ahead to 2025, we will leverage the advancements made through our strategic initiatives and are sharpening our focus on execution to enhance our operational performance. Now providing further details on our Q4 results. Today, we reported fourth quarter 2024 net sales of $241.3 million, down 1.8%. Our reported EPS loss is $0.17 and adjusted EPS loss is $0.04. Adjustments to EPS include $3 million in software impairment charges and $1.8 million valuation allowance on our deferred tax asset. Adjusted EBITDA for the quarter was $8.5 million. Starting with the top line. Our Q4 2024 net sales declined 1.8% to $241.3 million, including a benefit of 230 basis points from the 53rd week. Direct channel sales were flat as a decrease in web traffic was offset by a 30 basis point increase in site conversion and 3% growth in AOV. Retail sales declined 6.9%, driven by lower foot traffic and lower AOV with shopping conversion flat to last year. Mobile sales grew 4% year-over-year, driven by a 50 basis points improvement in conversion. Mobile also continues to be our top sales channel with a penetration increase over last year. Moving on to gross margin. For the fourth quarter, our gross margin contracted 410 basis points, driven by an AUR decline of 8.9% as we drove unit sales and reduced inventory levels. Importantly, through our direct from factory sourcing initiatives, we continue…

Thank you, Heena. On behalf of the Board of Directors, I want to thank Sam for his years of service and dedication and wish him the absolute best in his upcoming retirement. Sam's career in retail began more than 30 years ago as a young sales associate on the Nordstrom shoe floor. His passion for people, the customer experience, product knowledge, operational excellence, have served him well throughout his career. Sam and I share a deep commitment to Duluth Trading Company's success and I appreciate Sam's many contributions to our company, including his leadership in creating and advancing the Big Dam Blueprint. These efforts have established important foundational building blocks for our company's future. As Sam mentioned earlier, to assist with a seamless transition, I will be stepping in to take over the day-to-day operations while we move forward with a permanent CEO search. Thank you, Sam and Henna, and thank you all for joining today's call.