OLLI - Earnings call transcript Q4 2017 | Ollie's Bargain Outlet Holdings, Inc.

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Operator

Good afternoon, and welcome to the Ollie’s Bargain Outlet Conference Call to discuss the Financial Results for the Fourth Quarter and Full Year Fiscal 2017. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from Ollie’s. And as a reminder, this call is being recorded.

Stasz, from Officer; Mark President John Operating and today and Chairman, and call and Officer; Executive President Chief Swygert, Jay the management Officer. Butler, are President, Chief Chief On Financial Vice Senior Executive Vice over I’ll Investor Relations John to turn to Rouleau, started. get the call Please go sir. ahead,

John Rouleau

found those and press release Thank including fiscal was results our remarks future predictions, fiscal Litigation XXXX statements, or A statements the Reform could the contain Act that and a estimates, of mentioned may fourth but our year XXXX. press meaning call. release XXXX be and in afternoon, that copy Securities and be section should this from on to within results you, Company’s the everybody. on quarter such Relations Any Company’s can outlook financial I the limited issued forward-looking of covering today’s call including website. management’s for hello, remind of items, to and year forward-looking Investor considered this full expectations, that actual performance, everybody materially not the want of differ Private

to and review our factors. XX-Quarter, in quarterly place these which only undertake future events. forward-looking of affect results reliance should report control detailed a Form discussed description encourage and are including these might Form filings, of for in filings. our you on be reports not XX-K speak SEC future them we on undue update may our no We these more annual today, new statements, and or to information or You as obligation revise not any on for Factors that

said, believe net such income, EBITDA, today’s I’ll financial EBITDA, metrics investors be earnings we measures net call measures diluted may turn financial will the that certain adjusted referring adjusted assess in adjusted be release. Mark. important operating We and per to that closely call, are our income included Reconciliations as financial of non-GAAP over to to operating share adjusted on these to comparable With our income, non-GAAP performance. to most GAAP the

Mark Butler

Thanks, very consecutive us and fiscal and strong joining for the of John, quarter XXth record we quarter year. our positive the the in full had and another We achieved year. comps, bottom-line results and hello, call The was everyone. quarter today. fourth Thanks quarter on both and top

Our deal remains flow strong. very

of our performed expenses. new Our store sales. expectations adjusted We stack we increase Comparable in a versus in in above increase quarter increased increase and managed sales top last stores X%. a year delivered the a tightly and net X% income two-year XX.X% XX.X% on X.X% of

of sales positive. was Our comping nearly strength broad-based departments with our

of housewares, our and performing and bath, beauty and best healthy were furniture categories clothing. bed aids, Some

quarter achieved sales was Ollie��s. earnings history. banner the highest a Company’s end year in fitting XXXX, the fourth strong for to Our we In a and

the sales increased increased over XX% For always has $XX nearly years been income goal year, almost billion to ago, been our our $X.X Since and to and brands XX% first our always principle. XX net and our and opened store guiding for day. adjusted our formula real and cheap real stuff bargains good This be each sell to million. success every to give continues has customers

and offerings business ability store our of on the key in confident growing Increasing Ollie’s drivers: deals; expanding by Army. leveraging and focusing continue base; three We’re to our our growing great

from and strong, and Our we vendors. products a existing growing see availability both of overall new deal flow remains very

the as where dynamic a ever the and is in retail today. and strive positioned seen, and to as merchandise. better be XXX major strengthening our first stores we matters, the to We’re Scale Ollie’s deals. like The relationships majority of environment America most sectors and one remains closeout I’ve buying force strong growing these for call with with all gaining available manufacturers as access I of

in Island. performed Our new Rhode quarter new year stores the state quarter XX expectations above the store during opened of stores in our We full fiscal fourth both and X for our the stores the and year. including the first

model projectable they for XXXX, and it’s and stores growth. store it’s stores affordable, XX in profitable. our great off XX In far built importantly, is new all to year so this most opening start. to X opened including first It’s we Our We’ve Louisiana. a new Arkansas anticipate and locations are

for XXX, of of the the potential a more and in leasing existing to new strong base markets grow about our excited opportunities times X.X prospects pipeline to than our count and stores. current to have We continue over growth be our with both store

As count, grow close Ollie’s our our strong our Army outpace to X customers. to loyal continues Bargainaut of base store million growth. now leveraging we we’re and and store expanding is

we’ve make and allow Bargain initiatives us loyalty we will to launch XXXX the previously, In of app implementations XXXX and deals. mobile for against for and to Battalion. members member are of These designed initiatives summary, ability to in and continue Ollie’s Army, the build executing a very in and our track good business As strategic feel on rewards and beyond. to our of communicate the the will discussed lasting greatest offers positioning different that rewards and surprise Army about initiatives it reward include Ollie’s receive spending ranks their latest growth the relationships their level and of also our members easy the based with

today. pretty X,XXX our cheap. execution, openings coupled has We to tight we incredible work sale have for team and business and dedication buy for I’d That our store the new business. successful members nearly driven their XX and like with and our simple a cheap consistent to nearly we philosophy control remains expense focus thank model, years

work their on and Our a testament promotions. truly their I’d to also Jay take to hard their like and is recent congratulate success commitment. moment John and a

Chief I’m a business of and Vice evolution closely us to Officer. roles. take January, John to over XXXX work Chief excel I’ll part to execute of been you and to to Jay better Financial of Jay As position John our support confident Ollie’s. changes call Executive promoted forward through to the outlook in our President look more now Thank our President and are new and and put Operating in promoted going everybody’s Jay, with been the Vice and in manage to announced the results has a turn the Officer, again their in detail. to you for are I continuing These has Senior and and planned long-term both financial growth.

Jay Stasz

good Thanks, everyone. Mark, and afternoon,

strong to thrilled another quarter We’re and delivered year. have fiscal

fiscal $XXX.X million in million was full increased sales XX-week quarter Comparable an basket, of in compared increase on net basis, X% XXrd from and store driven Net week. to by including the a week a in As include store increase sales X.X% On increased year comp sales increase last sales two-year a average to XX.X% stack the fourth partially basis. reminder, by $XX.X the quarter XXrd reduction in ‘XX over sales and weeks the XX%. fourth year in XX a increased slight a The X% offset increase transactions. ‘XX.

an our of stores the in As Mark XX X states, base year-over-year. in the XXX with year said, we store opened quarter ending stores increase XX.X% during

of benefits and net to net to compensation. $X.XX. Net XXX.X% leveraged XXXX for income driven expenses markets, points of million $X.XX to share $X.XX per increased per related million income XX.X% and gross existing points increased Act is XX.X% which in income benefit sales. with the by less and to $XX.X XX additional expectations share share. income in benefit the EBITDA flat increased Adjusted as -- the year. the to in extinguishment costs. million to SG&A basis tax increased and fourth XX.X% Gross net SG&A XXX.X% continue loss for million basis Operating change base. contributed a chain Adjusted margin quarter Included Tax to to net new and to increased margin The debt, to XX% to our basis our $XX.X Merchandise we productivity accounting to and operating the after than these by $X.XX in supply profit quarter. EPS. margin Our a was basis penny excludes with The increased QX increased expectations net we on or stock-based income, last points the gross million decreased entire to and to XXX for XX.X% increased perform diluted $XXX.X XX diluted $XX.X per new XX.X%. and the very and points margin remain store above XX% diluted sales. increased was well in to week our XXX decrease quarter of as both million expense related across was of $X.XX the of stores $XX.X diluted $XX.X pleased XX.X% line

for Comparable the year XX% to increased sales ‘XX, For a the the X.X% weeks basis, increase basis. XX.X%. a year X.X% million or billion. of prior versus XX sales X.X% a diluted XX-week Net per year increased on two-year per to in increase net net adjusted sales increased fiscal $X.XXX On and increased $X.XX million $XXX.X to net income $XX.X share. and or increased XXX.X% for $X.XX share stack XX.X% income store diluted the

$XX.X We paid outstanding at with opening primarily borrowings year, loan prior balance cash to XXXX, million during ended of store credit of was the compared Inventory $XX.X total during deal we our and due in expenditures $XX.X borrowings increase At term The million to debt facility. growth the timing million. Turning by to and million the XXXX year-over-year of in the totaled versus end new XX.X% down ‘XX $XXX more increased ‘XX. year. data sheet. completion the of million flow. our the no center $XX.X stores year and the Capital had and end under the the revolving in approximately driven three of year in of

our Bear a in mind period ‘XX. for Turning reflects XX-week the fiscal XX that weeks our to guidance ‘XX outlook in for versus ‘XX.

sales Operating for XX diluted And XX $XXX million of no accounting ranges share of expect to of X%; net sales compensation. $XXX increase we year, the these $X.XX stock-based XX.X% income a growth any total net new income to and on change $X.XX impact basis; stores million; income of to million; XX-week of store with closures; net of planned Adjusted $XXX an both per adjusted to X% to of For to $XXX from billion, $X.XX, million the excluding The XX.X% billion to Comparable opening of $X.X

of $X.XX due $X.XX planning in tax reinvest XX% or years resulting $XX million. of than per diluted are of effective outstanding of shares expenditures million approximately the of an $XX prior million we diluted $XX capital million which and share. rate diluted to to planning a are to Act, benefit We XX%, XXXX We estimate approximately per average Tax XX share, weighted lower or

face will that in few XXXX items quarterly add to back XX-week some Let shift in other help our a differences year calendar. The might fiscal you me reporting modeling. your a in

a vary result, growth expect our we year-over-year sales in total the As to quarter-to-quarter. from

we mid For the in total and to forecasting teens. third first upper the are quarters, increase sales

increase For the increase a comparable X% to forecasting of one as in quarter, a are are in a the digits. double-digits. forecasting And forecasting basis, less to we each and selling the across sales we fourth total sales week, mid quarter X% second to total for the are consistent sales of the quarters the we result a store single range. high be On comps the in low

flat gross a year the of XX.X%. forecasting are margin approximately We for

SG&A basis currently from in result, the de-lever points impact our in reinvestments these are are to associates. second SG&A approximately quarter, basis savings XXXX XX in XX% Beginning mentioned, expected to XX Tax as planning our by a are XXXX. XX forecasting we we And of to to points. As Act approximately reinvest the

of through depreciation runs range $X.X decrease the expense We be million sold. expense to $X.X and million. to approximately approximately net million cost $XX $XX.X in We expect including anticipate interest that million of to to goods amortization

year between million. continued our aspects the of XXXX. of second outlook of store a store new the XXXX, halves first XXXX, a turn cards. reduction will year related thoughts over to Army more $X.X accounting back new we our half. cadence new our one-third were The year. accounting The is to the the first we’ve and quarter. now half our our the I’ll Approximately of reflects some year stores, two now of In evenly the this two-thirds in revenue in of first openings to for gift half the standard XXXX Given modeling the weighted for In Ollie’s $X more which recognition impacts openings be of certain as we our split openings and the to adopt are revenue this strength million for year. the John at more call sales will estimated on impact which

John Swygert

ability that, there XX going own good profitable trends strong quarters and very remain important of forward. continue and several we to up are easy remain Thanks, Jay. our growth. underlying business top-line business weeks consecutive the in are There in against our left Having driving numbers, With said we positive comps, no of confident our still comparisons sales are in the first and quarter.

We with pleased high comparable sales quarter-to-date year. the sales of two stores our X% our We new end of the would store our stores are with our first at and performance of and today be quarter initial trends opening annual celebrated a grand expect are pleased of to to X%. guidance this

gives our strength deal all trends flow continue our and feel expense Q&A good As shareholder to value. the model in stores. us business now turn consistency from of the with confidence driving new and very over operator growing to combined we about session. to to Mark our start I’ll scale, the to said, size control underlying business ability in The Operator? our call

Operator

Instructions] [Operator will the you. the of line Thank with And JP Matthew Morgan. first come Boss from question

Your now open. is line

John Rouleau

Operator, check line? to be his him he muted. -- ask you check may Could

Operator

Pardon see line your mute. me. if on Matthew you’re Boss, check to please

John Rouleau

to gets jump back one next circle we’ll on. with he if the and can We him back

Operator

Thank question the the Key come Capital And with Markets. of line will Brad you. from Thomas next

is line Your now open.

Brad Thomas

afternoon, good year. guys. great on quarter another a very Hey, strong Congratulations and

Mark Butler

you, Thank Brad.

Brad Thomas

XX% able and then XX% your mid-teen locations outlook questions, good A to door lower store of end to you for looks I guess, the the you’ve you growth. I’m maybe could if you stores, some the range which done. that to maybe if the a find year potential doing math outlook my be like bit couple XX sign? about should that of kind could, right, of growth, be that If for on accelerate stores little historically about first might talk this at for to I you XX

John Swygert

much to regards this been last of expectations for and is store that’s Brad, pretty our We John. our XX. in with Sure, line right XX% growth, feel XX in we’ve XX% and experiencing cadence years we said line With with several the range. what the it’s overall the to --

Last the store year. in for us step the But to So, there, we’re two the if getting this related a in this third of nature longer then that’s I of opportunistically concerning there sites some half marketplace a in would the first XX store just the delays gas that’s is the could opportunities that for little nothing get out it’s But than and thus don’t we and completed we construction the year, out above business on the would. that’s seeking XX% in Most taken half bit have is thirds us half of half liked. just foresee about second something about. and first we the worried nothing year. the -- bit in the planning a of little There delay second XX%, the cadence this openings year. we’re this year, year, number to

pipeline continuing move stores, our what real to of with we’re to full is we’ve intact the done be and strategy forward estate historically. So,

Jay Stasz

just Jay, to is this I right, line mid-teens growth. long-term that. our revenue Brad, unit right on mean, growth our I’ll this which is in mid-teen drives And algorithm, with add

Brad Thomas

anything side modeling course And take into flow quarters? the margin that consideration just could investments points then SG&A. XX of how the Great. as then here should on you to And Jay, share we’re color margin by year? if of the could over outlook Any on timing quarter starts in for through on basis year. the the noted and business follow-up the we things, the gross I the the you of

Jay Stasz

Sure.

reinvestment model got SG&A, second tax the that the to beginning We’ve about of And quarter. start benefit. again, it’s on million. the $XX the XX% in the So, of

other like chain But manage side right, D.C. that year gross as the the year, So, margin of XX%. target market, think, margin we the costs, have lot right, year to got follow able year’s we’re fact of we deal as closely taken certainly, goal map, that always have if last how that’s the we our going that tightening the we’ve overall, around a model. that the and is going to Georgia. you quarters. increasing along, headwinds -- pretty trucking annualize well additional Commerce, to on to a people we’ve footage just been a we’re with this I as supply at XX%; that fuel of said, this we’ve from And on full a far mean in I to goal standpoint, I basis square mean, would do down

that we at margin. a that all those got And and by be year-over-year outlook, at to flat increased into level offset we’ve a we increasing margin baked So, that’s XX.X%. how ultimately the high costs get our will believe merchandise

Operator

JP question will line from Matthew come of The next Morgan. the with Boss

Your line is now open.

Matthew Boss

guess, So, I best cadence think comps. to this we about Mark, quarterly way the of as what’s think larger picture, the about year,

any be just I consistent. as think of first in comments availability we think overall then picture, going the the on would to-date? change said you But, forward? And it the goods about pretty quarter any backdrop larger

Mark Butler

I’ll deals, selling as in Matt, reduced with Yes. very, ever we offerings. you prices, you very the certainly boys this importantly, buyers very consistent. and ringing, seen with the run goods specifics, we I and a the keep how consumer merchandising the the level, -- side. give been. then comp X% can but the know a Matt, keeps the to The we business and good most get it coming At that’s is And, plan as keep to name the phone with our and X% responding is Matt, high more somewhat major drastically getting I’ve great brands, and buying, go we’re

bit And own this some our week. year, shift numbers. against little of there of and holidays a up this XXrd is because the good of We’re

the So, everything, else. noise everything little But bit there boys can not is comps, little but bit the but more much in the cadence. in in quarterly a a of so you give

Jay Stasz

QX quarter, this to consistent a But sales, have are we planning our I a consistent. to a the would last X% and that. be just high-end an Matt, know as do year, at QX the range that’s nuancing look the we two-year QX spoke total performance towards comp by and that speak we can QX and simply QX impact far the is end. in noise it’s looking and would from in in towards little from to We very from X% at From X% stack. Sure. be generally X% comp across of year the our had low quarters. standpoint, course, to. standpoint, as Jay the And that which we we comp of past comp to And spinners. And that’s

Matthew Boss

in you reinvestment, competition forward? or that the decision a you just then, this backdrop, anything any you to with of to you up invest savings the we back anywhere your this talk And the business to from need into particular? the do back additional follow-up. made XX% think pressure you in And a wage competitive going seeing Can brings and the about think Are tax perspective changes associates? about

Mark Butler

and that Yes, is the experienced do think we but thing by not it’s do it too. Matt, we think thing we likely just a competitive to to change and landscape felt because prudent we candidly do what right any the have understand pressure,

a and of and the be be we in -- this in sure It do above. our been enjoy way make the and mind could is opening our shareholders’ make do be that It good in that’s new of care think the we take be we have able is all we But to wages. It be of importantly could them. to plan -- what most that good And the want one. could right to It going is we a level we associates will training. procedures could to certainly to prepared. business So, we be processes. decision store want maintain in all business

Operator

from come with line Thank Dan next question will you. Binder of the The Jefferies.

Your line is open. now

Dan Binder

My question quarter. good kind an of to of extension some other a on ones. is Congrats Thanks. the

the on QX has surprise a know first been I Just it’s period. not challenging. the anybody weather to that

just is slight function freight was then, some on you when the and you of side, versus comp I exposure if the what what the could look looks you secondly, reported, just Just year that mentioned at deceleration the what like to like? in [ph] market curious, a spot of there. And pressures most quantify the your wondering you looks two seasonal that of businesses?

Mark Butler

say Dan, deceleration. won’t as I’d surprise don’t you, Yes. with agree a the What I come this are we -- to

we We’re now some of up very, feel we overall our we against in got own where weeks about numbers. right We still are feel good really good ahead And important QX. very us. good. really really, But

as far the other As question…

John Swygert

this Yes, There’s dealing is that weather within issues -- Dan, been all some obviously the John. we’re marketplace.

seen, you us not for range of see stack. the with So, can we’re a end quarter, of really two-year of two-year X.X% as going X to high stack X a the the coming to off

up good our said. We’re we numbers against as own

see as our business numbers deceleration. So, we right the moving We that are are think The forward in fashion. trends that strong. don’t a

We our to there. be guidance going to it. are are to trying are also going prudent we’ve than try put to do to in But, you out excited we we obviously And better guys. about

Dan Binder

-- the any And which then to pressures spot side, freight just seems what is Understood. on those market, pressures? around color quantifying and the your exposure most to then, what of bear

Mark Butler

Exposure to Dan? what,

Dan Binder

freight. The on spot market

Jay Stasz

not Jay. going That’s is the something just This Dan. on quantify we’re to Yes, call.

Operator

comes the Bank Suzuki And Elizabeth the next you. of from Thank America. with question of line

now Your line is open.

Elizabeth Suzuki

have already you Hey, considered investments other that would benefit stores? you into planning XX% there other put new tax the that with are be guys. that the incremental wouldn’t of Are

John Swygert

is no. that is on John. answer this The Liz,

XX% There’s incremental delayed tax projects projects to The incremental would flow looking or with the basically do are to we shareholders. through savings. other other no the

no generate horizon. other need on that, to cash progress will continue delay to that pay the we than that would We down there’s do other and debt. we But

Elizabeth Suzuki

the regarding to from flow press there how purchasing see opportunity response release potential the out a just is you there? estate And standpoint deal put you the does closeout inventory merchandise look and has standpoint? what Toys"R"Us real a Great. And any and do been both

Mark Butler

there take talking might be is out think this that And of to the sites But, I not going advantage able about not that in we to of meaningful lot of, managers as the able any kind the is to those a be we’re business, We’d are some and for able big a if make many that side. get to consumer. opportunity that to point living. even the might our vacant are a is have there be portion, third do and advantage merchandise sites. do out take yet. we unique think there wanted we a mercantile human We opportunity the excites it. just this thing And living, do opportunity, is we’ll be might there substantial have able out us. we win-win managers because we Well, is to that portion of for be system will may there are -- to store that of the be think there. well. what everybody need love we experienced going employment. Toys might some able of big anytime any think it’s there a be help to be And a do remind to opportunities disruption capital a product We And portion we that, to it be them of talk them for that be we and how a subject both might product lot also they portion, available. business. they are then, an to And to

ability So, year living. ago a to of would a year anytime a this take be the anytime the or stores able maybe there closing there advantage we a disruption how make be a or have is container half market is reminder, of closing is this we of a factory, it. or is disruption, in to constant Whether it

Elizabeth Suzuki

or gross are a just And generally is terms follow-up or the run Great. quick that margins toys, to below what that margins, in above on company average? at tend of for at

John Swygert

normally of John. give would in I somewhere But, We don’t road are toys right the you on this Liz, tell in margins the is departmental middle the a for us. level.

Operator

The question come will the Jaffray. with next line Keith from you. Piper Peter Thank of

now Your line is open.

Unidentified Analyst

Peter Hi, today. [indiscernible] guys, for it’s actually

a you up season to liquidation or you Sports on in holiday goods geared toys? you maybe follow opportunity be toy the to saw exploring the see would Can benefit, couple the size to also QX? Authority years guys expect here Compared space. Just up benefits QX benefits of ago. perhaps And more of you can in and

Mark Butler

in don’t be willing Well, that We product the it’s the can take advantage tell in for very, these able better the able very We we are situation. ready, manufacturers. the I to take capabilities, product, certainly of sorry. fourth to cash the and -- and sell the wouldn’t logistic to how we have We we any have But, I’m know. process the toys we to think quantify early turn into big wouldn’t cash we -- going to quantify quarter, quarter. I’m first it’s going be, you, because

this how it know and might willing sporting think there pops advantage but an going shake it. an be don’t toys that take opportunity and there was to year, we ready, opportunity of to in it’s yet, do So, being we’re in always opportunity. goods, perhaps an something out able like is said, But just up,

Unidentified Analyst

toy toys, there, -- your you around incremental be there the freight closeout into robust freight say opportunity in closeout would that baked is a Okay, outlook? -- follow-up as your headwind great. And perhaps like anticipate outlook would just or is

Jay Stasz

stores. to our to goods ship Obviously cost the is freight outlook really

the numbers full So, and I our would year say, is baked on the overall for basis. our cycle, freight into margins purchasing the

Operator

from line with next Ciccarelli Scott The comes question of the RBC.

now is open. line Your

Scott Ciccarelli

categories say about just looks did square your did what January. post that of Maybe I guess, nearly I you comp X.X% like trying you comp the over comment. I’m in X.X% positive in misunderstood comp the quarter? Mark, But, and that the half to that with

Mark Butler

Yes.

did. or that But, with I consistent. That’s I very, previous think of normal. it was think about Scott, quarters, -- very them consistent half many probably it��s

Scott Ciccarelli

Okay.

complexion a up words, of quarter half that really other are in half you flat the negative, to high-single-digits is another So, have cadence? you’ve slightly got and categories basically typical your double-digits, that’s normal to

Mark Butler

Certainly deal all it’s could be and driven.

Scott Ciccarelli

future more of regarding figure, XX should continue number of The a question or this of that stores second start about XX to growth rate terms in a for is then, on about percentage actually we we thought one the because should to in good expansion think And year, expansion. for store as use terms on store I expected to think always percentage kind I’ve a to basis? guess, --

John Swygert

John. I on at percent would look basis. right for it is this now, a say I Scott, would

time reached of stores they’ll start a make to thinking come think, hit we but in where certain a that store I on basis, me that would not a have point we number yet.

think, I to we’re from a XX and on basis, a before we away annual whole be go XX start to number. to closer a going stores perspective maybe to to percentage go

Operator

Nelson Stephens. the next comes The Rick from question with of line

now is line Your open.

Rick Nelson

are if markets you versus today seeing obviously, expected ago, productivity than store and rent to But to accounts are you could maybe speak driver better was attractive Leverage that. a rent more rates? year the

John Swygert

se. the to and regards With John. we’ve per very opportunistic rent is the marketplace, in been rental always this Rick, selector a rates

better the years that on in advantage and terms in in of over to were able the an in been situations past. been have much changes consistent. pretty But, over get rent rent for overall very last the slightly very we us or boxes certain several We’ve us. consistent the last has locations it’s actually basis of overall gone that out maybe square So, some per several of take years, for the foot been market the

Rick Nelson

the for color. impacting that plans how about and you Ollie’s financials? like rollout Thanks for Army ask the Also, see period, your to

John Swygert

little regards the Rick, I’ll make with a take folks Mark already. pretty of within in a Army, up would I here. bit say majority Remember, may program. take the sales it’s but our the simple But these to ranks

very, very following. have loyal So, a we already

specifics. ones the to get next who don’t the a to be giving who more we We’re active go looking at are ways to by and level active, try active as them want as are to folks those I to them get want to into become not incentives. little additional reward to

to to We’re as able will they happen more the to a of them they star two Army we’ll more within special going one one to Army. not folks to become to other to people We’ll groups and able we’re actually bucket discount get basically, these creation to that star two get and and three the be what program ranks, the will this in be offer time. special they stars offers stars Army motivate of stars become and quantification to different at But, or have overall star to may spend the in are the within of the a our we three terms stars. there impact, go we in today. point certain three speak But, two going and to and financial try of perspective is not the the -- get General from

rolls. what are and to happens going how We that see

following. have we very a said, we loyal As

will the that program to much add how believe sure will not drive it. we’re we incremental loyalty sales, So but

not their carry at to program. create going We’re give have that point we’re in for also number, the pretty -- overall which behind time coupons approximately, who introduce to make point it. card know things any all the much same understand easier want to also those of their on QX, we’re folks and time, their introducing at at will their given smartphone avenue and the And drivers another sure time, balances their mobile the any it phone operate what in

them We’re well. vehicle as another give pleased to enhance loyalty help hopefully to

Rick Nelson

you’ve if Finally, $XXX the sheet, ask on I like debt a looks balance year-over-year million. by reduced could

am $XX You’ve paydown? are than free beyond your debt debt. what left to more wondering million I and reduce thoughts sufficient cash got

Jay Stasz

million can as is to that. speak this about, our debt Jay we’ve pay about include year the of and We’ve down. got in $XX to portion This I for know, you there. plan But, that as you debt is current when talked

with to the So, the free million paydown. after year. $XX point about be a by we the probably $XX debt that cash year And at balance would to of expect end end debt million the we’d of

further, one going have and our as kind we with going starts to And to I build to us. So, use and excess makes of discussions next think we that really that’s for what Board internally a that value be way the year move continue we get step cash from are then, into best that’s discussion to year. through capital and once allocation standpoint sense to to about and But shareholders. this return the

Operator

come next Our from will MKM with Partners. question McKeever Instructions] [Operator the of line Patrick

Your line is now open.

Patrick McKeever

then, Just members growth the some flat the gross rate. by another in maybe and of said you said a offset for margin. merchandise And pressure question terms question I could you margin you of supply just number numbers on on on higher the there chain the guidance with think us Ollie’s XXXX, Army, total give

is the question XXXX? So, my in merchandise are you just improvement margins where in expecting

John Swygert

of will I regards first the question reiterate of members Army the they at kind obviously some of XX% And of we With non-Ollie’s Army that of take the X.X from XX% strong Army, sales our to perspective. of and customer second. John. more let year total year. of members are statistics, members. is make approximately overall take as end about the we have loyal our the Ollie’s This spend Patrick. our up the Ollie’s Company Yes, that about They most end XXXX. Jay the than million

just basis, north on growth CAGR five-year of the of XX% they So, the Army. -- is a the on

Jay Stasz

Jay. to always In said, our margin margin, XX%. long-term on And Patrick, this target is goal that we of regards is like around

manage and whether the through goods. We takes, different on the have pricing over puts with ability an that transportation to demonstrated that’s or years

we’ve our in in supply So, do said, to chain baked confident you we into headwinds that. got that. are ability costs Like our

was flat good deal a by be things costs. couple the that. that and like sign. merchandise flow, saw of year-over-year has way. We in a continues increase which a overall in been strong are actually had increase the was margin has margin to play quarter, right are QX, said, And Mark for merchandise the we trending strong. margins And and Those an into fueled we chain supply largely the In So, margin. our XX-bp planning

obviously, of as good to the we a margin. related this based that, our But, pricing the so the position take So, like with mix part and quarter merchandise year to at on strong, merchandise sales margin we’re in and hand. feel can the price the any deals pipeline fluctuate

Patrick McKeever

winter I prolonged extended, outdoor like a your seasonal know impact then, soil you a seen the stores. businesses. I’ve furniture the kinds And potting it and weather things fair and and those has sound But, and said, in of word, on better cushions amount had doesn’t much probably of fertilizer

which in with is here -- it to at risk markdown there So, it which there question to prices decent sell still is is, merchandise or full window have with that you any the currently?

Mark Butler

stretch Yes. to no have XX.X Certainly, Florida spot we all difference way exactly the Mississippi. the But, the are the down going Patrick, years Rhode Island geography from is was were where all amount of then we than a and is of this and of our on. pops spot the amount be. to of it to our want greater ago. This the way we in merchandising the fertilizer where and

than a going next absolutely We that has I’ve this do lot first no we’re this right did -- probably whether And week, any any different been gets through risk. of or no done what this in we April now. have the absolutely, isn’t sell warmer merchandise year. York year is to than is that than it we’ve Certainly, fertilizer conversation But, New Rochester of we there gone other this cold. are

our where So, and we we results. are feel really good about

of about we the of So, QX right us. is really we’re big feel got ahead a good couple but at. way, where the then, weeks around by we’ve corner And

Operator

from Thank Sinisi comes next you. Morgan Vincent line Stanley. question with of the The

Your line is now open.

Vincent Sinisi

for for guys. around Hey, quarters in hi here. taking and the Thanks thanks very ‘XX color much my the terrific, question

Just question or a quick two.

companies is strictly kind doing headcount that you the certainly at to any -- understand for Just level is or that; sure, be or change change level? going guys concentrated manger per back just associated of around that at want thoughts just the to that associated Any investment, are a store? the lot of

John Swygert

the only think beneficial of crux manager big the to not Vince, associated people around the to that level. management another right level some level more be level where investments but we be more would and looking be also other the thought of items what at this the is centered are will and be may now, that the our from John. With associated make that the associated with associates training areas we long-term business. well. benefits not can have within But can we it’s at pure But, focused on other a just wage number is that level process we at perspective not regards as retention to regards the and

looking we’re So, at it’s how kind today. of

Vincent Sinisi

the just the of of margins for Okay. headwinds on And right. obviously you continue. know then, kind I will that chain All one quick some ‘XX. one said supply

margin things in perspective? to of kind thinking kind a of to of the kind you year. Just get flattish that for of What’s they freight from that -- gross Are as your implied outlook kind stay Thanks guess, anything mindful the today, freight then, margin gross does else we it should And better, that are get outside just a get I of worse? of? kind be line-up lot. it on of does

Jay Stasz

But and expecting by annual to said points is about like looking XX XX from of at we’re to kind impacts basis whole we’re Dan, supply going this increases kind not offset speaking quantify of cost lot. be generally to chain the merchandise margin to amount Vincent, Like in Jay. a I on the basis that the improvement? is

Operator

from of comes with question Edward Wells Kelly next the Fargo. the line And

is line now open. Your

Unidentified Analyst

This is taking question. actually for Ed. Thanks Anthony [ph] on for our

estimates consumers year? just to anything and side through are top-line that sticking other extent here of seeing a what see this that’s pay, reform you kind guys into tax the to begins flow So, the lower with on income starting here, [indiscernible] baked on to especially your of levels,

Mark Butler

shoppers. good we’re our cheap, not we like to are consistent think Yes. baked remind low-end we -- not process. probably you we though, I than anything really, sell don’t really planning stuff Well, I even that really, more really

middle good And a But think shopper. a as And think the as haven’t good that. our we’ve to and incremental we about offerings plan. our that the of be got have good increase just road We and going deals because any we baked in plan. of we we we’re feel

Unidentified Analyst

anything terms calculating, what can productivity, on we’re pretty to remain for in your And of continues follow-up elevated comment you there drivers? store just as on

Jay Stasz

is expectations. with But, have recognize standpoint, start can right, Jay. if chime have from anything these see above stores a to modeling we the I new that guys performed This our that and in.

our the didn’t we’re from for plan And do measure model, if our year-over-year math that still. a compared increase relatively new from year, you store million store productivity we X.X X.X this standpoint million. in new conservative So, to

Operator

Citi. question the the And of Concepcion with Alvin come will next from line

open. now is line Your

Alvin Concepcion

to wanted your EBIT question Just another ask about guidance.

bit that with margin line about week, little I quarter? issue pretty just takes or think little forecast bit a little besides you what talk think, to you you bit a can degradation expectations puts XXrd this should think freight this about? And some an you’re Is consensus of those and a of for prior is and was below other about. the it’s in internally planning much thing we and talked and

Jay Stasz

that’s is line start XX can Jay is and the on the This benefit, EBIT about with reinvestment, I bps that. Really, the tax impact. impact the

were we from well big the XXXX benefit a But, Act. you’re as the reinvestment out treating when there I the treating the on line. And looking XXrd a So that’s the how part what of the as how and think it. probably tax at is piece consensus, Tax was week were there at look people little disparity on was people SG&A

John Swygert

I associates the in keep think, mind reinvesting for you little got through us John, this geography between are different Yes. of and means, income all bit into is theme a whatever of who big Alvin, SG&A to taxes. our

do break margins a -- and bit. EBIT it does they mess up So, up little

us I probably invested of who So, the above savings significant we a line. theme, common see you’re amongst that’s all going have think where tax to

Alvin Concepcion

sound from Thank seeing. seeing sentiment list the just from what consumer huge what so like It you. are customers, I your pay you’re checks, doesn’t you post terms folks actually this am holidays? are general in with you of wondering higher expecting And

Mark Butler

I been Q&A, the on at. about holiday. times little of said, the a perhaps couple I there’s Certainly, feel good think in where Easter a we I As shift

better at. weeks, holiday are really week. up We against we had where we’re of the feel last good Sure, bit everybody, where really still like business. we I a course about few I happy are be but deal have ahead we And weeks us. in with to driven our big we I got we Easter am about we of good are think would stock will remind to we position. feel But, the a going a northeast happy. am at. it some I weather little

in am So, we got really at. about excited where store I deals and we’re the great

good. we So, feel

Operator

Mark further Butler, you. Chairman, the for like Mr. call back Thank I would any Executive am showing now remarks. turn no and to questions. over I closing to President Officer, Chief

Mark Butler

call participating everybody operator. you, for thanks and for And in in your our Thank support Ollie’s.

are speaking have much As you day. to off you excited June. on and year We’ll in Thank a look a very early in you first coming are just of great good heard, call forward continued XXXX. to and for we growth quarter again our

Operator

program. participating gentlemen, does and for Ladies This conclude your today’s conference. in you thank

disconnect. great a Everyone, all You day. may have

Ollie's Bargain Outlet (OLLI) 4 Apr 182017 Q4 Earnings call transcript