Thanks. Good morning, everybody. My name is Christopher Horvers. I am the broadlines and hardlines retail analyst at JP Morgan, and it's my great pleasure to introduce Kate Gulliver, Wayfair's Chief Financial Officer.
Good morning.
Thanks for coming again this year.
Happy to be here. Yeah.
Really appreciate it. It's an exciting time to cover the consumer. It's an exciting time to cover Wayfair. I wanna talk about your share gains and what's driven your share gains. You've been outperforming the market by high single-digit percentage. You know, we all operate in spreadsheets and wanna, like, rank order things and loyalty and CastleGate, like, how would you think about this acceleration of share gains? What have been the biggest drivers of that?
If you think about sort of when the share gain, sort of stepping back, obviously, for the vast majority of our history, we've been a pretty significant share gainer. You know, that is what has fueled our outsized growth. Obviously, that fell back a bit, sort of 2021, 2022, early 2023, returned to a share gain in sort of the back half of 2023. We were able to start accelerating. I know, it is a very we're very spread out here. We were able to start accelerating those share gains sort of towards the end of 2024 and throughout 2025.
What I think you really started to see happen there is once we got what we call our core recipe back into place following the post-COVID period, so price, availability, speed, we were then able to start adding in a number of newer initiatives. It's those newer initiatives that are really starting to hit, and then it's a sort of the benefit that, you know, of those initiatives sort of all hitting together because they do all play off of each other. The first and most obvious one that I talk about is the loyalty program. We launched that in October rather of 2024. We're, you know, a little over a year and a half into loyalty. The intent behind the loyalty program is to really expand incrementality of spend among a group of customers.
We know that many of the folks that are shopping us are in the market six to eight times a year for the breadth of what we sell. They're probably shopping from us about two times a year based on, you know, what we see on the customer data. There's a significant benefit for us if we can get even one incremental purchase, you know, and get half of the time that they're in the markets, let alone, you know, another incremental purchase beyond that. What we're really seeing that we're excited about in loyalty is, one, from loyalty members, we are seeing this incrementality, so the program is bearing out the way that we designed it to. Two, we're also seeing spend in other categories are sort of more frequency categories that we want to continue to expand and grow.
We're obviously known, you know, first and foremost for sort of core furniture and decor, but we have, you know, a really great selection in housewares and accents and seasonal decor, and those categories tend to be shopped more frequently, and so it's a great way to sort of keep the customer engaged on your platform and not have to reacquire them. Loyalty, a pretty big, you know, driver, ongoing of share gains today, but also into the future as we grow that program. The second piece that I'll mention is Wayfair Verified, which we launched in the summer of 2024. You notice a theme here. You know, everything sort of started launching in 2024.
Wayfair Verified is where we really put our stamp on a product and say, "If you're looking for a mid-price point bar stool, we think that this is the best mid-price point bar stool for you." We actually touch and feel all these products that we put our Wayfair Verified stamp on. We often, in many cases, have a designer talking about the product and explaining it to the consumer so that she can understand it better. It really helps folks sort of distill what is a very large catalog. If you're not interested in the breadth and you want more of a sort of clear, "Here's what I should buy," this helps you with that. I point to those as they're sort of two very clear product launches, if you will.
On top of that, though, there's been a number of improvements in the storefront experience. We went through our replatforming efforts sort of 2022 through 2024 or 2021 through 2024, and most of our tech time was dedicated to the replatforming work. As we, you know, completed that towards the end of 2024, early 2025, we've been able to really, you know, improve the pace of change on the storefront experience on the site. Some of that is because we've freed up developer capacity. Some of that is because in the replatform world, it's just easier to make changes on the site. The site is more, you know, sort of nimble and flexible, if you will.
When you start to think about, you know, what adds to share gain, it's overall better site experience, it's Wayfair Verified combined with Wayfair with the loyalty program, combined with, you know, ongoing improvements in delivery. For example, we just launched Delivery Plus, actually about a few weeks ago, where in this market in Boston, which is where we've launched it first, you can have sort of enhanced delivery experience as the product comes into your house. Things like that we're now able to sort of roll out in a faster cadence as well.
If you think about loyalty, it's interesting because most loyalty programs start in very high-frequency categories. We've seen other retailers try to launch loyalty in big-ticket categories, and they've struggled with it. Can you help us think about how this program is different? You know, what are you seeing in terms of taking that average two purchases a year?
Yeah.
Those million or so customers, what's happening over the past 18 months?
Yeah, it's a great question. First, certainly for purchasing, you know, our AOV is a little over $300, right? Purchasing a couch, you do somewhat infrequently. You know, a bed, you might do somewhat infrequently. To the point of like, is this a high-frequency category or a low-frequency category, relative to consumables, obviously extremely low frequency. Relative to luxury furniture, you know, certainly higher frequency because we're selling all those other pieces as well. I do think, you know, within each category, while the big furniture ticket items are lower frequency, buying, you know, kitchen accessories is actually a few times a year.
When I, you know, say that we wanna sort of move our customer into spending in those categories which we already sell, we have the selection, we have the, you know, the great price points, all of that, you know, we know that there are some things that we can do in loyalty to make that more appealing to her. Part of what we've done is, you know, work with our suppliers to make sure that for loyalty customers, we have really compelling offering in certain categories, so we can differentiate more of the catalog in something, say, like housewares. We can do special promotional events in those categories that are, you know, access for loyalty customers only. You know, generally the vast majority of what we sell ships free because the average AOV is $300.
Even if you're buying, you know, if you just wanna replace two glasses, you know, if you're on loyalty, that will ship for free even though it's below our threshold, right? We're trying to make those incremental purchases easier for her. What we are seeing is that we are getting that incrementality. We gave out a stat when we updated on the loyalty program in the fourth quarter call of last year around, you know, the number of loyalty program members that are buying, the vast majority are sort of buying three plus times a year, right? They're actually, you know, coming into the market and sort of buying on a regular cadence. We've also seen really nice renewal rates, so we had sort of the first renewal class, you know, start to come through.
We're seeing really nice renewal rates, which means, you know, Folks wondered if we may just get folks coming into the loyalty program for a specific project and then cycling back out. What we have seen from the renewal is that we are starting to see behavior where folks are staying in the program. Even if maybe they initially came in for a project, they're seeing other, you know, benefits from it and therefore are holding on to the program.
Just as an aside, in a little bit we will open up for audience questions and then also take online questions. Please engage with any questions. I didn't wanna jump into margins, but it's a good just quick tangent as we think about, you know, investors get nervous when they see gross margin pressure.
Do you think they get nervous? I don't know, I haven't noticed in the share price.
20, 30 basis points. Well, it's indicative of customer acquisition costs, it's indicative of pricing power and so to speak. Can you maybe talk about that? Should we think about it as more one-for-one offset to advertising leverage, or do you think actually between these two lines it ends up being a net benefit?
Let's step back first and talk through again the philosophy around where we drive gross margin, contribution margin, ultimately, you know, EBITDA margin. We are very clearly marching on this path to north of 10% Adjusted EBITDA margin. Nothing has changed about our objectives there from when we launched that at Investor Day in August of 2023. If you remember at that time, we were, you know, basically break even. In two years, we, you know, two and a half years, whatever, we've gotten to north of 6%, right? We're quite confident in our ability to get to the 10%+ Adjusted EBITDA margins.
When we think about how to do that, our focus is generally on how can we grow gross profit dollars, contribution margin dollars, such that we're sort of maximizing the growth to ultimately drive that EBITDA dollar and EBITDA margin faster. Our sort of north star that we're looking at, we actually focus even more internally on owner's earnings, the EBITDA less the SBC, less the CapEx, 'cause, you know, we do think about the SBC as a real cost. You know, in general, we're far more focused on EBITDA dollars, EBITDA margin. That is the direction that we are going in.
In terms of the puts and takes on that, you know, when we make an investment like the loyalty program, which does have an impact on gross margin, we are doing that because when we, you know, look at the math, we see that it actually optimizes on those gross profit dollars, optimizes on these contribution dollars, and therefore actually helps us achieve that EBITDA margin, EBITDA dollar growth rate that we're targeting faster than we otherwise would. That's why we make those investments. When we think about the loyalty program, you know, specifically, obviously it has a drag on gross margin because of the 5% back, but those customers come to us increasingly direct. That's probably actually accretive on the contribution margin line because it's probably more than offset on the marketing spend.
On the other hand, there are investments that we make on the marketing spend that we think make sense, so we've said, you know, "Hey, we're just gonna hold that at 15% right now," because we think that's the right place for contribution margin to be to again maximize for that EBITDA dollars and EBITDA margin. So that's sort of how we think about the puts and takes up and down the P&L.
The strength of your top line against what's been a very uneven market. We can talk about the market backdrop a little bit. You know, last year it was a flattish market, and then we sort of tilted down low singles.
Yeah.
down mid-singles quarter to date. What do you think is happening? As you look ahead, you know, do you worry that sort of this whole cauldron of energy prices and post-stimulus consumer behaviors, how do you, how do you think about how the category might shape out for the rest of the year?
I was laughing in the beginning 'cause I think we've used every possible word to describe the category over the last few years. Flattish, choppy, bouncing along the bottom. All of this to say the category's not been great, right? The category has not been a tailwind yet for us. At some point, this is cyclical category will recover, but our expectations for 2026, our guide for the second quarter, none of that assumes a category recovery.
When we think about what could happen in 2026, our, you know, operating mode is that the category basically stays where it is. If we think about sort of what's happened over the past few years, generally, this category is sort of a GDP plus grower, right? It should grow 3%-4%. That's been the long time historical CAGR of the category. And, you know, we obviously have not seen that even if you were to take 2019 and CAGR it out to 2026. We think we're sort of double digits below actually where that trend line would be. That's not the annual comp. I'm just saying sort of overall in terms of sales that have been missed out and sort of are being held back in the category right now.
There's quite a bit of, you know, pickup at some point to happen. We did start to, we think, see the category, you know, start to stabilize towards the back half of last year, as you pointed out. I think at the early part of this year, some of the challenges were weather comps. You heard us and other folks in the space talk about that. I think, you know, that sort of sounds a little bit silly coming from an e-commerce retailer. As we've learned, you know, when the customer gets very distracted by significant weather, they do not shop our category. They are getting what they need. They're focused on getting their kids, you know, getting the driveway cleaned up, getting their kids back to school, getting whatever, you know, their heat working again. It tends not to be a time that they shop.
The beginning of the year was actually quite choppy from that. We started to see some recovery, obviously the consumer's been a bit under pressure. You, Chris, have actually had a number of reports that have shown sort of the tax refund benefits. I do think there's been, you know, the consumer's been able to hang in there a little bit because of stimulus sort of, you know, helping when gas prices have gone up. They've had the stimulus benefits, it's sort of helping to buttress that a bit right now. When we think about sort of, you know, where the category can go, what can drive the category, certainly if the consumer feels under pressure, discretionary spend in general takes a bit of a hit.
Our category's already so far off its trend line, though. I think there's a reasonable question on how much further of a hit could this category itself take. You know, from a housing perspective, at some point, housing will turn around. We're not projecting any sort of recovery this year from that. That will be a tailwind when that does happen, not if, but when. As we look at the rest of the year, though, we're saying, let's assume the category sort of stays where it is, which is, you know, down from even 25.
Even within that, we believe because of our share gain efforts, we can continue to, you know, nicely outpace. We obviously guided to a mid-single digits number for Q2, so sort of a 10% two-year stack there. We're continuing to sort of see expansion. I think that's all the pieces that we talked about at the beginning from the share gain, really starting to hit and drive that.
You know, April was, as you think about the category down mid-single digit quarter- to- date, you know, obviously that April's a big month for tax refunds. It did get worse from the first quarter, which was down low single with definitely significant weather issues overall. You know, is that like the, I guess, how do you think about that trajectory, especially as you, as you think about, you know, how maybe energy prices hit the consumer going forward?
Yeah. I think what you started to see in March and probably into April is a bit of the impact of energy prices. you know, again, pulling on the consumer's wallet and, you know, if more share of their wallet has to go to non-discretionary items, they are going to pull back in discretionary categories. You also did have some Easter timing. Easter moved around quite a bit.
Yeah.
I do, as we look at April, I think that's an important thing to keep in mind, in terms of sort of general, you know, retail comps, obviously. Even within our category, you had, you know, pretty significant movement. There was like a three-week difference this year.
Right.
You know, that was sort of all factoring in March and April as we looked at it.
Right. I guess, said succinctly that down low single, down mid-single could have just been the Easter shift.
Yeah. I mean, I think the down low singles in the Q1 was weather. You started to, in March, get some, you know, Mideast impacts. April, probably a combination of those things.
Yep. Got it.
Easter, yeah.
As we, I guess you've talked a lot about share gains, obviously have had good traffic, generally good traffic overall, but the category's also seen a fair amount of it, of tariff inflation coming through. Can you help us think about maybe how much has that benefited your business? As you think about in the lack of inflation theoretically, if tariffs stay at this current level, you know, do you think that has any impact on your ability to gain share? Asking the question a better way, if the marketplace did suppress pass-through of price, that would have accelerated your share gains. Are you concerned about lapping that in the back half?
Yeah. Short answer is no, we are not concerned about lapping that. You know, again, we're quite confident in the ongoing share gain story. You know, what we had actually said in Q3, you know, of last year is that in general, we believed that suppliers were working quite hard to, you know, maintain where their prices are, particularly on the products that are moving and that are selling. We've been asked, you know, as, you know, there may be refunds. We'll see how, you know, the sort of the pace at which those might get paid out. As a reminder, we are not the importer of record, those refunds would go to the wholesalers.
As there may be refunds, as the tariff world keeps moving around, do you think that, you know, prices could come in even more? I don't expect that to happen. I think these suppliers have been under pressure. They did their best to hold in there. Anything that they get will, you know, they will sort of use to offset some of what they sort of had to absorb last year as they were moving through that. On the other hand, we have not seen, you know, revenue being driven by inflationary pricing, to your point. In general, if you look at our own AOVs, those have moved and our, and our own order volume, you've seen revenue growth, a pretty nice mix of both. And again, normalized AOV growth in this category is roughly 3%.
That's like the 20-year-long sort of history of AOV growth in this category. Generally speaking, that's a pretty normalized pricing environment for us. You know, folks have also asked, and this is sort of a piece of your question, you know, do we think we sort of disproportionately benefited, you know, last year, during the tariff environment? I certainly think that our model is set up to do well in, you know, times of complexity. I would argue we're operating through another time. It's been nonstop complexity for the last five years. You know, our model does tend to do well there because of the marketplace dynamics.
Because of the marketplace dynamics, we're able to really keep pushing towards the customer what is best at that given moment, and that allows us a lot of agility in how we operate. Even now, while you may have, you know, some suppliers sort of managing fuel surcharges and sort of, container rates, you know, again, we're able to help our customers sort of get the best value that's out there. I think that, you know, continues to be a strength of ours.
Yeah. I'll pause here for any questions from the audience. If you do have a question, if we can just wait for the microphone. Got one right here.
Thank you for taking my question and for the remarks. I really like the point around Wayfair Verified and kind of the customer discovery journey. Could you talk a little bit about the Universal Commerce Protocol initiative and maybe, you know, what's the scenario analysis that you and your team have done around the long-term impact of the business? Would be really appreciative for any color specifically on any potential impact of the cost structure around like sales and marketing and things like that. Thank you.
Great question. Just so everyone's aware, Universal Commerce Protocol, or UCP, is Google's, you know, shopping protocol that they're developing for agentic shopping. We were announced as an early partner in developing them, this with them. Google's a longstanding partner of ours. I think it speaks to our overall philosophy and approach here, with agentic shopping. Sort of generally speaking, I'll go into sort of how we think this category might evolve. Generally speaking, our view is we wanna be where our customer is at. If that's, you know, she's on Gemini or she's on, you know, ChatGPT, or she's on Claude and she's, you know, searching, we wanna show up there. We wanna be well-positioned there. We tend to do well when we're at the forefront of helping to develop these products.
You know, we will work with the breadth of LLMs and help them develop, you know, what agentic shopping in this category may look like. That's sort of how we've always approached ads, for example, in the past. And given our scale in the category, and the breadth of first-party data that we have in the category, you know, we are an attractive partner as folks start to understand what this looks like. I often get asked, you know, "Okay, if agentic shopping takes off, won't many of your manufacturers start to go direct to the customer?" I do not believe that that will happen. This is a very complicated category. There's a reason why, you know, frankly, it has been challenging for others to build the online platform that we've built.
It's not just the upfront discovery, which is critical and important, and I'll get to some of the changes that we think might happen there in a minute. It is the entire back-end process, which really requires the logistics network that we've built, which is a very important moat for us. This is a category that has high incidence rate. It's a category where people come into your home to bring the product into your house, where the AOV's relatively high. If you have an issue, you wanna be able to, you know that you can talk to the retailer, that they can solve it. All of that requires a pretty significant sort of back-end experience.
Unlike a consumable where you're sort of replenishing that, you know, on some sort of regular cadence and maybe your agent can, you know, go across multiple platforms and sort of tell you where the best Tide PODS are, you know, from a price perspective at any given moment, this is a place where you do need trust in the retailer to make sure that it's fulfilled the way that you want it to be fulfilled. On the front end, this is a category where breadth matters, right? That's why we've always operated across millions of products. We know that the consumer values choice here. It is highly emotive, right? The consumer she feels that this is sort of a part of how she defines herself, right? What her home looks like is part of her reflection to the world.
Similarly in the way that, you know, for many folks, fashion and apparel could be that, this for our customer is sort of quite reflective of her. As a result, the discovery process is really important. It's not the kind of thing where, you know, you'll sort of be able to or you may be able to have the agent complete the entire process for you, but it's generally a place where consumers are gonna wanna actually think about what they're buying and look at it, at least in our, you know, 25 years of experience in the category. When we think about discovery, I do think that that will evolve quite rapidly, and we're really excited about what we can do on our platform as well.
There's what we can do with our partners as we work with the LLMs, and then there's what we can do, you know, on the Wayfair platform. You know, how can we help you take a photo of your room and then, you know, you describe what you want it to look like, and then we can populate that image with all of our products, right? That's immediately buyable, you know, on the site. How can we continue to personalize so that when you show up, your style preferences just keep getting tighter and tighter and tighter? You know, AI helps us pretty significantly with those leaps, which are things that we've been working towards for, you know, some time that now get accelerated.
I think it's actually, you know, as you think about sort of how the shopping experience can change, it will evolve quite rapidly, but a lot of that can happen, you know, on our platform. To the extent that there's, you know, shopping outside on other platforms, we are happy to partner with the LLMs and work with them on that and then ultimately be the retailer of record.
Sorry, just one quick follow-up, and thank you for the response. As part of the UCP deal, does Wayfair share first-party data with Google and other partners?
Yeah. We have not talkes about data. Generally the way the UCP works is we sort of overall help develop what that should look like, and then ultimately, because the transaction's happening on our site, we're capturing that. You know, the purchase is actually happening through us, so we're capturing that customer and that data.
Could you talk about just your advertising philosophy? You guys cut marketing spending last year. Was that because of the tariff and kinda cyclical dynamics, or are you guys doing something structurally marketing-wise? How do you think that's gonna evolve in the next two or three years?
Yeah, great question. We sort of started actually ramping up dollars in the back half of 2024 and early 2025. That was to do a number of things. One was to test in a bunch of new channels all at once. A bunch of channels that we were actually slower on and farther behind, frankly, than we would've liked, but that we thought, you know, had promise and opportunity in our category. We were also retesting sort of where the limits and thresholds were in some of our existing channels like PLAs, like Pinterest, et cetera. You did see an inflated ad dollars in back half of 2024 and early 2025, Q1 of 2025.
We use all of those inputs to help us, you know, rebalance the media mix modeling and improve, not change our thresholds, but sort of improve, you know, what we truly understood is incremental from each of the various channels. We have a payback period that we expect for each channel. Generally speaking, those payback periods have held for quite a long period of time, but we will sort of rebalance across the media mix as we get new data. We also then in 2025 did holdout tests. What you're referring to, you know, the ad spend went quite a bit lower in Q3. We said at the time we're doing a large holdout test in Q3, a PLA holdout test. That can have quite a big impact on the total dollars, you know, spent in that quarter.
That was a little bit artificially low in Q3 of last year, we did call that out at the time. As you think about in general, we've obviously improved, you know, the ACNR quite a bit, and that has really been, you know, as we were able to get back into a period, once we got sort of the site and experience back to where we wanted to be, we were able to get in a period where the testing would matter, and we were able to improve, you know, the overall media mix as a result of that testing.
Maybe talk a little bit about your store strategy. It is an omni category.
Yep.
You've got some specialty retail brand stores. Now you're opening up various sizes of the larger Wayfair.
Yep
Store. One's coming to Westchester County, where I live, next year, next spring, which I'm very excited about. Maybe talk about how you're thinking about how, like, the differentiation between the Wayfair versus the specialty retail brands and how scaled and how big could this opportunity be?
Yeah, great question. Our specialty retail brands are Joss & Main, AllModern, and Birch Lane, and then our luxury brand is Perigold. We actually started opening up stores with the specialty retail brands because those were much smaller format. They're about 8,000 sq ft-10,000 sq ft per store, so they were a little bit easier to get open, and they allowed us a chance to learn in a just, you know, sort of lower-risk environment. And we have two Joss stores, three AllModern stores, and four Birch Lane stores across the country. We have two Perigold stores that we opened this year, and we have two Wayfair stores currently open.
The Chicago store, which was the first Wayfair store, opened in two years ago, actually this month, and then Atlanta opened about a month ago. Those are both large format, 150,000 square foot boxes. The Perigold stores are sort of 20,000 sq ft-30,000 sq ft boxes. One of those is in Houston and one in West Palm Beach. Sort of stepping back, overall, we believe that the category, a large portion of the category will remain offline. You know, I can't tell you exactly if that's 50% of the category stays offline or if it asymptotes at, you know, 60% offline. Who knows? Somewhere within there will be a large chunk that stays offline.
Most of the things that are required to be a good offline retailer in this category, many of those things we had already built. In this category, as we talked about in terms of, you know, the rise of agentic shopping, you do need a logistics network, and we've already, you know, built that out. You need a broad supplier base. Obviously, we have that. You need a large brand. We have the brand. We have a 100 million customer file, right? Many things that we've invested in to build the e-commerce channel over the last 25 years are also applicable, you know, to the, to the offline channel. You obviously need to learn how to operate stores, which we're in the middle of learning.
We do believe it's an omni-channel category, and it's really important to show up in both places. As we look at the stores, we expect the stores to hold to certain payback thresholds. We, you know, are looking at not just the sales within the store, but we're also looking at sales that we can attribute to the store and sort of broader halo stores. Sales that we can attribute to the stores are, you know, sales that we know are from a quote that was made in the store. If you shop in the Wayfair stores, you are encouraged to, you know, pull up the app to sort of build a quote or to look at sort of broader selection online.
We can actually geo-locate a lot of customers to having been in the store, and then we can see what their purchase behavior is five, 30 days after being in the store. And then we then see, as we've tested the Chicago market, we see this enduring sort of ongoing halo effect in Chicago, you know, from the presence of the store, which, you know, has sort of a broad signage on two major highways. There's obviously some local marketing associated with the store, and that helps, you know, lift the area. We will now be able to compare that to Atlanta. Now that we've got another store open, we'll be able to sort of test that out in Atlanta.
Atlanta has opened very well. It's opened much stronger than actually the initial Chicago store did, as we should hope because we've spent, you know, two years learning at this point. You should see us, you know, sort of ramp up the pace a bit. Columbus will open this summer, Denver in the fall, Westchester in the spring of 2027. We have two other leases on the Wayfair stores already signed for 2027 that we announced. We just announced Cincinnati last week, Fort Lauderdale we announced a few weeks before that. Generally, what we're trying to do in each of these new locations is sort of learn something incremental and new. The size of the store may change a little bit. The one in Columbus is a 70,000 sq ft store.
You know, 70,000 sq ft-150,000 sq ft is a pretty big range. I think we'll find that the ideal store is probably somewhere in the middle there, but, you know, that gives us sort of the bookends of where we might wanna be. The types of shopping centers are a bit different. Some are sort of more grocery-based shopping centers, some are, some are a little bit sort of more furniture corridors, like the Columbus stores and a great shopping mall, the Polaris Mall in Columbus, but it's also on a nice furniture corridor.
There's a number of other furniture stores right in that area. Given how furniture is shopped because of the desire for breadth of selection, you generally do see furniture stores clustered, so we'll be testing that out there. The rollout allows us to test these things and sort of incrementally learn. We're quite excited about what we're seeing, and I think you should expect this to sort of continue to go at pace.
Is there any part of the strategy on the Wayfair store? You know, should we marry it up against how many CastleGate facilities that you have?
It is helpful to have a store, you know, within a day drive of a CastleGate facility. We have the country very well covered from a fulfillment center network. When we think about where we put in new stores, we certainly wanna, you know. I always use Maine as an example because that's where I'm from, so I know the geography. You're not gonna put a store in rural Maine, but for many reasons you wouldn't do that, but that's not near any sort of CastleGate facility. Most of the country in the large urban centers are near CastleGate facilities, so it doesn't really rule anything out.
Yeah.
The Chicago store is serviced by Romeoville. The Atlanta store, we have a FC right outside of Atlanta. In terms of sort of are there chunks of the country that wouldn't be accessed because of that? Not really because of the way that the network is set up.
Yeah. Additional audience questions? Time for one. Big question that the energy prices are up. You do, part of the complexity of this category is delivery, and you ship a lot of heavy stuff around the United States. Ca n you talk about any potential risks around fuel prices?
Product generally ships to the customer domestically one of two ways. Either it goes on the, you know, on an existing small parcel network, largely through the FedEx network, or it goes through, you know, our folks in terms of our home delivery operation. That depends on the size of the product, obviously. It is very common in small parcel contracts to have fuel surcharges. To the extent that a fuel surcharge gets kicked in, we then pass that through to the customer in terms of the sort of ultimate retail price, so that, you know, does protect our margins. In our own network, obviously, you know, sort of with local players that we're working with, it's also very common to have fuel surcharges, but we can do things to try to, you know, minimize that.
For example, with FedEx, we can, you know, move the inventory as far forward as possible that's efficient, so we'll zone skip so that you're, you know, running less on the network if you need to as you try to balance there. In general, given our scale, we're probably better positioned than others to sort of manage that, we do, you know, sort of move that through in terms of price and the margins hold up as a result.
Great. Thank you so much.
Thank you. Appreciate everyone being here.