1Revenue declined 9.4% to $1.0 billion, reflecting the impact of the company's retail optimization strategy and a challenging consumer environment.
2Net income reversed to a loss of $7.0 million from a $16.3 million profit, with diluted EPS at -$0.07, driven by gross margin compression and lower operating income.
3Gross margin was 34.8% and operating margin was 2.1%, as merchandising payroll and store occupancy costs, which are largely fixed, deleveraged on lower sales volume.
4Free cash flow was negative $21.9 million, as net cash from operating activities was negative $13.0 million, despite a reduction in capital expenditures to $8.9 million.
5The decrease in net cash used in financing activities was primarily due to an increase in net borrowings related to the ABL Facility, partially offset by the repurchase of common stock.
6Management believes its strategy will enhance customer experience, reduce the cost structure, and improve working capital to support reinvestment in customer initiatives for long-term growth.