Thank you, Dan. I want to start today by revisiting the outlook for 2023 that we shared with you at the end of 2022. With some economic signals flashing red, we wanted to position Tandy to weather a challenging consumer demand environment.
We focused on growing profit and cash and took a conservative position on investments to drive sales growth. This meant managing both cost of sales and operating expenses, managing CapEx and continuing to optimize the retail fleet, seeking better renewals, moving to lower rent locations, closing stores with negative cash and/or a long-term trend of declining demand.
And while our focus was not primarily on sales growth, we did continue to invest in building the foundation of the business. This is what we said we were going to do, and it's what we did do. The results in snapshot speak for themselves.
Sales were down about 5%, which we'll talk about in a minute. But gross margin rate was up. And that, combined with a significant decline in operating expenses, delivered $4.4 million in operating income, up $3 million over last year. Adjusted EBITDA, a non-GAAP metric, which we're showing here to provide additional insight, was $6.5 million, up $2.5 million over last year.
Turning to the balance sheet. Cash was up $4 million -- over $4 million to $12.2 million. Inventory was essentially flat to last year. And we continue to have no debt.
Turning to sales. At $76.2 million, sales were down 5.1% over 2022, driven by continued weak consumer demand. We had 6 stores with sales in '22 that closed in '22 or '23, representing about $1.4 million or 170 basis points of the sales decline.
We do have some new stores as well. We opened our store in Queens, New York in July of 2023. And while sales are continuing to ramp up, it's off to a very good start.
We also have leases signed on 2 more stores, store 188 in Margate, Florida, near Fort Lauderdale, which should recoup sales lost from closing our store in Miami, expected to open any day; and store 189 in Richmond, Virginia, a strong market for us, where we closed the store with an unfavorable lease during COVID. This store should open sometime in late April, early May.
Our new store in Queens, New York is a test of a new model of store for us. It has a smaller footprint and, therefore, allows us to have smaller, lower rents. It has better merchandising of leather. It's hanging, it's visible.
You can touch and feel it.
You can see in the photo in the upper right there.
Our workshop and class area are at the center of the store, with an emphasis on classes and makers activities.
And it's a full service model, both necessitated by the smaller footprint and less self-serve merchandising, but also to leverage our competitive advantage, which is the expert service that customers get in our retail stores. We're using a variation on this model for new locations, both new markets and store moves going forward.
2023 gross profit dollars were down 2.9% to $45.2 million, with a 130 basis point improvement in gross margin rate. Rate improvement came from reduction in freight and warehouse overhead, better full-price selling, some product and channel mix shifts, and other adjustments.
Better gross margin rate combined with a 9.7% decline in operating expenses over last year, drove a $3 million increase in operating income to $4.4 million.
While we weren't happy with the decline in sales, as we said at the start of this year, we had a plan to deliver earnings and cash growth even in the face of declining sales, and we did that. With our clean store and 2 more new stores underway, we're also taking steps to grow profitable sales in thoughtful locations with attractive economics.
We talked about our key principles for the last couple of years, and these continue to be what guide us. From a financial perspective, number 1, disciplined capital allocation, meaning capital investments to be funded from operations. Number 2, conservative balance sheet, cautious about leverage. And 3, a focus on long-term shareholder value with consideration for all mechanisms for increasing value without impairing the long-term prospects for the business.
And we said from an operating perspective that we're focused on the consumer proposition: quality, value, consistency and service.
Secondly, we're building an operating model, the talent, systems and processes that can support the business for many years to come. And 3, but that can also remain flexible and nimble that we can both scale and allow us to respond to changing market conditions quickly.
Looking forward to 2024, we will continue to focus on profitability and cash. We're going to grow sales with a focus on retail new stores, targeting an additional 3 to 5 stores.
Our stores continue to be our competitive advantage with low build-out and relatively low operating costs. It's a good source of positive cash flow.
And with our new full-service model, we're going to continue to invest in our competitive advantage: experts to teach, serve, inspire and engage their broad local communities in leather crafting.
And as previously announced, we're exploring a sale of our Fort Worth property. The rationale: We seem to have -- we have -- not seem to have -- we do have a lot more square footage and undeveloped acreage here than we need.
Someone else could potentially get a lot more value out of this property than we do. And we have some unique benefits here such as our I-20, which you can see right behind me, significant power. And again, someone may find that a lot more valuable than it is to Tandy.
The market has also appreciated fairly significantly in recent years. And we've modeled scenarios where we sell this property and buy or lease something that more specifically fits our needs and potentially releases excess cash, if we get the right price.
The Board would certainly consider all options in deploying any excess cash, including potentially returning some to shareholders. And while interest has been strong, any move would be a very significant disruption to the business.
So we are proceeding accordingly. And now moving to questions and discussion. I see that Isaac has a question. Do you want to go ahead and unmute and ask your question?