Ollie’s Bargain Outlet Holdings, Inc. Reports
“During the fourth quarter we exceeded our earnings expectations. We navigated numerous headwinds including unprecedented inflation in merchandise and transportation costs, shipping delays of imported product, and backlogs at our distribution centers. We accomplished this by controlling what we could by leveraging our vast network of vendor partners, improving efficiencies in our distribution centers, and keeping a tight control on expenses. We continued to execute our retail expansion strategy and deliver great deals to our customers during these challenging times,” said John Swygert, President and Chief Executive Officer.
Mr. Swygert continued, “Looking ahead, we are excited to celebrate our 40th anniversary and have several special events planned to recognize this milestone. We are also pleased to announce that for the first time in our Company’s history, we are launching a store remodel program, which we expect will improve our customers’ shopping experience and drive higher sales. We remain highly confident in our business model and expect to see trends improve as we move through the second half of the year, positioning us to return to our long-term algorithm.”
Fiscal Year Summary:
| • | Total net sales decreased 3.1% to $1.753 billion. |
| • | Comparable store sales decreased 11.1% from the prior year increase of 15.6%. Comparable store sales increased 3.6% compared with fiscal 2019. |
| • | The Company opened 46 new stores in fiscal 2021. |
| • | Operating income decreased 26.3% to $204.6 million. Adjusted operating income(1) decreased 26.4% to $204.2 million and adjusted operating margin(1) decreased 370 basis points to 11.6%. |
| • | Net income totaled $157.5 million, or $2.43 per diluted share, as compared with net income of $242.7 million, or $3.68 per diluted share, in the prior year. |
| • | Adjusted net income(1) was $152.9 million, or $2.36 per diluted share, as compared with prior year adjusted net income of $208.0 million, or $3.16 per diluted share. |
| • | Adjusted EBITDA(1) decreased 22.6% to $237.3 million and adjusted EBITDA margin(1) decreased 340 basis points to 13.5%. |
(1) | As used throughout this release, adjusted operating income, adjusted operating margin, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA and adjusted EBITDA margin are not measures recognized under U.S. generally accepted accounting principles (“GAAP”). Please see the accompanying financial tables which reconcile GAAP to these non-GAAP measures. |
Fourth Quarter Results
Net sales in the fourth quarter of fiscal 2021 totaled $501.1 million, a 2.8% decrease compared with net sales of $515.8 million in the fourth quarter of fiscal 2020. The decrease in net sales was primarily due to a comparable store sales decrease of 10.5% as compared with record sales in the fourth quarter of fiscal 2020, partially offset by new store unit growth. Late deliveries of key seasonal product combined with early holiday shopping impacted sales.
Gross profit decreased 10.6% to $183.0 million in the fourth quarter of fiscal 2021 from $204.7 million in the fourth quarter of fiscal 2020. Gross margin decreased 320 basis points to 36.5% in the fourth quarter of fiscal 2021 from 39.7% in the fourth quarter of fiscal 2020. The decrease in gross margin in the fourth quarter of fiscal 2021 is primarily due to increased supply chain costs, the result of higher import and trucking costs and, to a lesser extent, higher wage rates in the Company’s distribution centers, partially offset by an increased merchandise margin.
Selling, general and administrative expenses, exclusive of $0.1 million and $0.2 million of gains from insurance settlements in the fourth quarters of fiscal 2021 and fiscal 2020, respectively, increased 4.1% to $119.2 million in the fourth quarter of fiscal 2021 from $114.4 million in the fourth quarter of fiscal 2020. This increase was primarily driven by higher selling expenses associated with 43 net additional stores and higher wage rates in select markets. As a percentage of net sales, selling, general and administrative expenses, exclusive of the insurance settlement gains, increased 160 basis points to 23.8% in the fourth quarter of fiscal 2021 from 22.2% in the fourth quarter of fiscal 2020. The increase was primarily due to deleveraging as a result of the decrease in sales.
Operating income totaled $57.5 million in the fourth quarter of fiscal 2021, a 32.2% decrease from operating income of $84.7 million in the fourth quarter of fiscal 2020. Excluding the gains from the insurance settlements, adjusted operating income(1) decreased 32.1% to $57.3 million in the fourth quarter of fiscal 2021 from $84.5 million in the fourth quarter of fiscal 2020. Adjusted operating margin(1) decreased 500 basis points to 11.4% in the fourth quarter of fiscal 2021 from 16.4% in the fourth quarter of fiscal 2020 primarily due to the decrease in gross margin and the deleveraging of selling, general and administrative expenses as a result of the decrease in sales.
Net income decreased 30.8% to $44.7 million, or $0.71 per diluted share, in the fourth quarter of fiscal 2021 compared with net income of $64.7 million, or $0.98 per diluted share, in the fourth quarter of fiscal 2020. Diluted earnings per share in each of the fourth quarters of fiscal 2021 and fiscal 2020 included a benefit of $0.01 due to excess tax benefits related to stock-based compensation. Adjusted net income(1), which excludes these benefits and the after-tax gains from the insurance settlements, decreased 31.2% to $43.9 million, or $0.69 per diluted share, in the fourth quarter of fiscal 2021 from $63.8 million, or $0.97 per diluted share, in the fourth quarter of fiscal 2020.
Adjusted EBITDA(1) totaled $66.1 million in the fourth quarter of fiscal 2021, decreasing 28.2% from $92.1 million in the fourth quarter of fiscal 2020. Adjusted EBITDA margin(1) decreased 470 basis points to 13.2% in the fourth quarter of fiscal 2021 from 17.9% in the fourth quarter of fiscal 2020. Adjusted EBITDA excludes non-cash stock-based compensation expense and the gains from the insurance settlements.
Fiscal 2021 Results
Net sales totaled $1.753 billion in fiscal 2021, a decrease of 3.1% compared with net sales of $1.809 billion in fiscal 2020. The decrease in net sales was the result of a comparable store sales decrease of 11.1% as compared with the record sales in fiscal 2020, partially offset by new store unit growth.
Gross profit decreased 5.8% to $681.2 million in fiscal 2021 from $723.4 million in fiscal 2020. Gross margin decreased 110 basis points to 38.9% in fiscal 2021 from 40.0% in fiscal 2020. The decrease in gross margin in fiscal 2021 is due to increased supply chain costs, primarily the result of higher import and trucking costs and, to a lesser extent, higher wage rates in the Company's distribution centers, partially offset by improvement in the merchandise margin.
Adjusted operating income(1), which excludes gains from insurance settlements of $0.4 million and $0.2 million in fiscal 2021 and fiscal 2020, respectively, decreased 26.4% to $204.2 million in fiscal 2021 compared with $277.3 million in fiscal 2020. Adjusted operating margin(1) decreased 370 basis points to 11.6% in fiscal 2021 from 15.3% in fiscal 2020 primarily as a result of the decrease in gross margin and the deleveraging of expense components due to the decrease in sales.
Net income decreased 35.1% to $157.5 million, or $2.43 per diluted share, in fiscal 2021 from $242.7 million, or $3.68 per diluted share, in fiscal 2020. Diluted earnings per share in fiscal 2021 and fiscal 2020 included a benefit of $0.06 and $0.52, respectively, due to excess tax benefits related to stock-based compensation. Adjusted net income(1), which excludes these benefits and the after-tax gains from the insurance settlements, decreased 26.5% to $152.9 million, or $2.36 per diluted share, in fiscal 2021 from $208.0 million, or $3.16 per diluted share, in fiscal 2020.