Apr 19, 2018 • 09:00 am ET

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Operator
Operator

Good day, ladies and gentlemen, and welcome to the Tile Shop Holdings Inc. First Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference may be recorded.

I would now like to turn the call over to Mr. Ken Cooper, Investor Relations. Sir, you may begin.

Executive
Ken Cooper

Thank you, Chelsea. Good morning to everyone on the call, and welcome to The Tile Shop's First Quarter Earnings Call. Joining me on today's call are Bob Rucker, our Interim CEO; Cabby Lolmaugh, our Chief Operating Officer and Kirk Geadelmann, our Chief Financial Officer. Following our prepared remarks, the call will be opened for analyst questions. Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.

Words such as, but not limited to, plan, expect, anticipate, believe, estimate, target and any other similar words may be used to identify forward-looking statements. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued earlier and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements.

Today's call will also include certain non-GAAP measures. Please see our earnings release for a reconciliation of those non-GAAP financial measures, which is also available on the Investor Relations section of our website.

With that, let me turn the call over to our Founder and Interim Chief Executive Officer, Mr. Bob Rucker.

Executive
Robert A. Rucker

Thanks, Ken. Good morning and thank you for joining us today to discuss our first quarter results. We saw some good early signs at our initiatives that are taking hold as we return to The Tile Shop way of doing business and serving our target customers. The highlights of the quarter was our gross margin bouncing back to be at the high end of where we expect the metric to be. We did this by eliminating advertised price promotions and seeing a higher average sales price due to our product assortment initiatives.

We believe this is repeatable; however as a reminder we have expanded our setting and maintenance assortment to include some great new products our pros are reacting very favorably to which come at a lower gross margin but can deliver more gross profit dollars.

Our elimination of price promotions did impact our revenue and traffic as expected, however we were pleased that we experienced only a modest sequential decline in our comps in light of our change in promotional strategy. For Q1, our comps were down 6.8% which compared to down 4.9% in the fourth quarter.

We know one of the common questions on the mind of our investors is do you think this is a bottom of the comps? The short answer is we do