OLLI - Earnings call transcript Q4 2021 | Ollie's Bargain Outlet Holdings, Inc.

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Operator

00:06 Good afternoon, and welcome to Ollie's Bargain Outlet Conference Call to discuss Financial Results for the Fourth Quarter and Full-Year Fiscal 2021. Currently, all participants are in a 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. der management Jay John and Stasz Officer; Eric from Chief President Chief call President and Officer; Vice Executive Senior van today's we Operating Swygert, have and Financial and On Chief Executive Officer. Valk, Vice President

Jean Fontana

from Jonathan. company's you, welcome and found issued a the afternoon financial full-year results afternoon, Quarter A press copy remarks to the XXXX. conference should items be and press be XXXX statements, was everyone on to earnings the I Good or those Relations call. including fourth today's release performance that on of release call. and section predictions, including Thank forward-looking meaning website. within XX:XX our company's Ollie's of fiscal want Investor actual expectations covering can future that Litigation remind the contain to Act estimates the to call management's Securities this this but of and with not XX:XX materially results respect mentioned considered Any may of on such statements Reform limited that Private forward-looking differ could

the obligation or You update for might should reliance on no measures only as certain performance. revise we operating these or undue turn may included future that closely detailed reports of release With are information to quarterly over future of the may events. today will today. our in financial non-GAAP XX-K, not Factors comparable any to filings, be we GAAP on our undertake assess that, you today's believe statements, affect review annual description most SEC encourage earnings I’ll new on not which control in Form our them financial factors, these call call and XX:XX John. measures to release. to the and be XX-Q, investors forward-looking these Reconciliation a place non-GAAP speak to important earnings For our including results measures earlier Form more We our are as discussed as for filings. issued in report financial on our well be referring to that we of XX:XX

John Swygert

and everyone. call our joining XX:XX Thank you hello today. Thanks, Jean for

vast Looking back backlogs merchandise what leveraging imported inflation We our control at our distribution unprecedented in transportation by efficiencies headwinds, our in contracts of great delivering network deals and numerous delays our execute worked container centers and partners, -- navigated strategy of product improving aggressively including All cost, continue initiating our normal. customers. negotiations to of than shipping control we at we and distribution expansion negotiation XXXX, while through to import and centers. can vendor earlier to retail

centers back comparable and challenges, season. changes remained inventory and values XXXX the customers closeout offering the on decreased to our throughput excited our XX:XX changes and market selling forward. created us chain our fourth canceled overruns spring We focused capacity opportunities our to expectations. have our with to container package We to delivered due During well distribution navigate will were XX:XX exceptional basis spring Turning our to merchandise today which the progress excess made the product are better enabled getting levels. to we compelling the results, compared to inflation, We've to for a customers orders, our deals timely able we store great positioned by innovation. seeing the about our supply we're to to most quarter desire line chain on we're in X% sales in supply to important secure believe stores. additional deliver even the made going quarter us fourth enable Importantly,

deal plays flow these This of bath, our our see to on ensure hardware, environment deals. and merchandise seeing automotive and canceled pets. health and aids, remain we to way to due we type in deals strong expect and beauty into arriving bed capitalize We more holiday nimble strengths. come XX:XX housewares, late seasonal, We're

we Our customers our that inflation The as gas are secure merchant is want. critical customer rapid we everything value our rise for by teams nimble has risen provide ever more and being that great react than quickly groceries to prices know the impacted we to able to recognize as is in deals from dramatically.

In several our of and that our to spending Turning from goods other including experiences While run, income, know value discretionary the real of a unique In to to customers, all become services shift there important with dynamics ultimately customers to lack less we increasingly and refunds. this will addition, XX:XX consumers. value estate. impacting we offering XX:XX expect of compelling our long tax timing in and leaves stimulus win. are

fourth quarter, opened stores, the year in XXX the we with ending five XX stores During new states.

We are with store levels. new pleased productivity our

related and of We permitting stores. are currently construction to delays experiencing our new

Army The in XXXX. support between stores We can excited making to for XXXX. format expected the in announce stores model shopping As stores experience annually first we Army open in customer are the open to resume over sales time prior with over X.X% our the ending We period an and X,XXX that store sales, that our net grew Crown to Ollie's time year, Ollie's confident important our cheapskate since anniversary, by we and We to first higher the XX:XX XX deserve they customers in we and normal overall. are why holding to prove again members. a the our XX.X to reaching doors our shopping remodel Army million we year America's honor. to active the milestone. plan were Night, cadence evening to members result, have pleased marks plan quarter. program. at to in with This an are Ollie's opening XX XX XX% plan biggest history we merchandising XX:XX to events remains store remain stores discounts. several store driver are between our in sales exclusively planned over we to once XX anniversary to asking stores for total us new We penetration Army our XXth to and The are our enhancements of XX:XX drive distinguished to where XX a least of For launching company's special tell XXth a a contest this this XXXX. remodel newest celebrate our special

event our will addition, week-long year for including during XX deals our terrific days’ In we celebration. XX anniversary Ollie's be

Operationally, the We and tighter have the to ongoing enhancements market events and due excitement made have lineup to join supply great of chain labor other impact to and we a to you create in. we refinements COVID. of welcome our

completed end reaches and We distribution centers our stores location. full late provide stores end approvals. to now. of of brings year. stores foot We February centers are at for The can XX and they year. over from of levels level been total number final to of operating total distribution York This to DC to the our plan the permits expansion have the us to are in have improve third ways it Texas to continue this this find expansion well Our since our a XXX,XXX this distribution the efficiencies of our Pennsylvania running desired XX:XX XXXX point time, we XXX. permit service service and an throughput in start the of that Georgia distribution quarter additional XXX to centers this square construction awaiting XXX will issued of in at ability once expect by This and from centers

uncertain XX:XX we In plan excited our the expand footprint position have we anniversary, spring distribution the in a store seasonal customers. about to strong to our feel recognize our remodel for inflationary we highly that As summary, environment. inventory program That we and the said, we continue and are in product the offering center are We our navigating of fourth seeing quarter are about deals, XXXX. we XXth our good market. open incredible our second in an

While pressure of first long-term algorithm, continued to in anticipate will return we our we that confident the are half XXXX. we

of can our expect will us from drive down. as algorithm. to second the and for trade see are return what that our trends an to control, improve year, through business value we XX:XX move We benefit position consumers on to need half to increased we focused believe the We long-term

well as retailer are customer of closeout long-term The firmly experience. business that hunt positioned treasure a to intact. a capture potential remains this and delivers We extreme our value

work that stores have free and of generate share have almost to We to customers. dynamic during environments company a we communities committed that experience have our we offer I our of a X,XXX our the closing, In in the to long entire runway team in has our Ollie's for hard reflected to a challenging at value thank least you been base ton like highly customer We announced the buyback and shareholders sales December. that our returning to our as XX:XX increased XX% We possible their remain program flow. serve and history. cash to what best of in would stores, most appreciate all and loyal our generates done one dedication

financial we to over through As to are you call our take say, we Jay now results. will Ollie's. I hand XX:XX the

Jay Stasz

XX:XX throughout for thanking Thanks, entire by John, the incredible dedication the start good to year. teamwork team want afternoon and and I Ollie's their everyone.

would X%. hoped prior improved XX.X% store from quarter, move sales negatively we our Late store seasonal sales. early Comparable year. last the a decreased sales to deliveries minute X.X% benefit through in-stock declined net For the decrease We shopping. holiday quarter, that in quarter had as XXXX totaled Comparable of million, from we as with product the impacted $XXX.X the position compared the key prior-year. compared sales

decreased that XXXX, XX.X% profit new compared to point end XX In points shop XX.X% plan more decreased many the XXX a $XXX,XXX Adjusted five in margin gross in to opened XX:XX excludes the XX.X% to We X XX.X% stores which XXX related the increase and the decrease year. in XX:XX stores to open to in of to customers to the SG&A chain points sales. margin. an the XX points as sales. additional deleveraging states benefits to XXX than stores. prior result primarily we and earnings basis the ago. in period XXX The year of earlier million merchandise fourth SG&A to lower excludes including settlement operating insurance decline margin margin due from was quarter supply a which expenses costs, due gain and operating offset Adjusted decreased to XX:XX insurance million increase share season. margin quarter, diluted store excluding quarter basis XXX a opened stock-based gain the insurance $XXX $XX.X the to count. decrease deleveraging XX.X% relocations. ending adjusted basis income, Since was in basis for which XX.X% margin a the same in settlement to decline Gross million, because points $XX.X we've the due However, found the five we our year-over-year expenses with of compensation holiday million $X.XX. XX stores, period XX.X% and adjusted and net decreased the gain basis in $XX.X on increased income, in XX.X% was XXX per totaled quarter. Adjusted in of and Adjusted XX:XX of was the EBITDA gross tax EBITDA

for to as this year. million, to $XX.X of $XX attributable stores, primarily and which the tax to increased and stores the compares increased sales stock-based half year totaled expenditures of per XXXX, decreased the and fiscal in was related $X.XXX the net $XXX.X Capital to costs existing income the and and supply full-year XX:XX chain million increased with of million increased adjusted excludes of decrease income prior-year. and sales the of driven billion, Inventories for almost X.X% with For $XXX.X Comparable diluted net X.X% XXXX. was the gain million compensation store compared number compared merchandise of timing remainder $X.XX. end insurance totaled ‘XX XXXX by for net benefits in the XX.X% $XXX.X year a XX.X% the variance compared receipts. of share the new Adjusted prior with to XX:XX the million

the In outstanding the and of stores fourth XXXX were addition, the our for inventory XX:XX with in of to date period, importantly, last the inventories positioned in our reduced heightened are the as levels year. comfortable spring facility $XXX well due quantity of and Most of our the are no and productivity At of throughout $XXX cash. had season. selling to million revolving quality end credit end quarter we fiscal we under believe we borrowings million sales

repurchase to XXX,XXX fourth $XX invested stock. shares approximately the quarter of we million During common our

currently invested approximately our the our year, stock. ’XX. some million on common on We high-level million of fiscal will repurchase I share million repurchase share shares XX:XX For remaining approximately $XXX program. $XXX full thoughts we have to X.X

comp We store X net our taking the have in Based the billion on $X.XXX We XX.X%, on to pressures guidance long-term expect to the first bigger third to inflationary sales for new costs, and stack XX and the of benefit flat quarter factors to basis. total these sales between with of geometric year. quarter, nine stimulus during environment, that Comp first year second -- expect of that we gross lap on of supply full-year fourth our one face and in our on highly opening in are expect approximately Our we in range in That we XX:XX is a said, three-year will and including first second, actions believe line time, the algorithm these stores half of in X labor as basis. to to a chain we these dynamics, algorithm The XX headwinds are costs. higher full to XX we XX the while XX half. XX billion. margin plus the half the the a these uncertain relocations, the within continue quarter. $X.XXX offset year, navigating the quarter. significant At especially three-year were begin product the first in results lapping we long-term recognize transportation, and the same XX:XX impact from of an reflecting increased full open stores, we

the in declines half in pressure margin of QX. gross and margin in similar first year-over-year result this expect QX to We each in

to in sequential normalized levels expect the in gross margin a improvement quarter. and return We some QX overall fourth

the approximately income tax net benefits in to $XX $XXX An stock-based goods of between to $X.XX, including of tax XX.X%, through shares million, share adjusted $XXX both of million to exclude $X.XX $XX of income and $X million tax million. excludes compensation of that per operating $XXX related of and expense amortization runs to sold. excess related diluted million, rate expect $XXX net XX:XX We to between Adjusted benefits cost range effective million. million outstanding which weighted $XX income and average stock-based compensation. million approximately the of which Depreciation of diluted

$XX We expenditures XX:XX $XXX store the million expansion, approximately related level For of new expect total capital York $XXX expect to initiatives, stores, quarter, to million million of $XX DC our projects. sales and to million. we IT first

in and related half, we $XX pressures stock-based net be basis, store expect of down margins our of to the to $XX diluted of algorithm. operating income the million expected $XX Q&A geometric now is to finally, margin down Gross closing, with both compensation. operator first between we'll to have start the approximately stimulus. income and and $XX.X in slightly to call $X.XX, our million back expectation adjusted XX.X%, to back million have I'll excess ’XX. as three-year -- metrics XX% returning be lap exclude benefits QX per net million. Operator? tax to session. of negative income to long-term adjusted while XX:XXIn And a expect to the half We improvement in turn comp XX:XX as the of XX% On to be $X.XX we share stack we sales unprecedented we ’XX, which compared expect of in to

Operator

the Our first Capital. question of KeyBanc from line Instructions] Thomas from [Operator Brad XX:XX comes

Your question please.

John Swygert

thinking you how year? the the John think provide XQ. how very into same-store I you're To progress get through would given about your the you're it, math ask afternoon, be quarters. and Jay. if perhaps full-year it as how guidance on try sales quick about to you thinking normal on some do be we more to that in the helpful. we get about can comps comp XX:XX I does through we're imply outlook may Any later above year Good as color difficult comparison Hi. and wanted is

Jay Stasz

This Brad. is Jay. Yeah, XX:XX

on forward the We the really geometric XXXX there. from are focused stack so as going base calculation, using three-year

basis right about that it, in two of it's off call is QX. XXX%, negative by, to is a -- to be to say be Right? point, year on for which of or X% years. a under in your So those So that X%. to three one going X full the to And be in to it's at QX range going going closer XX comes

to three-year QX. equates call X.X%. those So be make QX, about XXX.X a up quarters, three-year it have a a we that to math, basis remaining When in we will about average QX for that on do which and it geometric would on

the within range. still So

So that's thinking how we're it. of

Brad Thomas

program much a And of could the pretty from sort remodeling about XX:XX was you That's little what to hoping those spending? And going encouraging. How you're what I more you're investments? for helpful, very uptick I thought then looking Jay. talk entails? be that sounds just bit

Eric van der Valk

take question. this XX:XX Sure. Eric, initiative. Brad, this the super excited is I'll about We're

We have an of which attention. stores, from will some fleet benefit aging

Our is rightsizing One enhance are example to to objective We're business to fee our customer is, store books committed our PAT. the we experiences give current repositioning primary we're merchandised. to customer the this format. linear and the How decreasing increasing categories reflect new experience. space

import XX:XX installed. of So have one, Many I of example our what experience. We're not think also older good very racetracks we're the do improving shopping doing. stores

tracks in adding register end, them, many stores in these So the stores. you if includes have we're queues of installing existing front racetrack, which enhancing race the re-configuring

sec. think, we're to in Brad get the in I'll mind, question what a keep spending I about

part we the proposition to value it's and charm to is our and the how business we that as communicate refer our of important store that like discount deep retain the customer. lovely to -- in what are semi environment We we

on be Our going spend .And store $XXX,XXX mode. in is and learn we're average per to test

last and two just completed we we weeks. Now, them in the completed several

early. So XX:XX far. what We're so we're with pleased seeing it's very

a We comp return ready sales lift, expect with to more we to that the additional bit we'll to as payback more of to because quarters line in terms remodeling little able future means But stores. early what process commit this say we to that. get the be Not yet stores. it's the get on talk in experience new just in speak to about be in

John Swygert

thing the of only XX Brad only it's I'd XXX. stores to is, -- the think I only XX:XX thing it out add

small it's from it's of this -- and year is and we step percentage, really the out pedal learn years. see and so we and the So relatively can in test on XXXX with it what learn then it

Brad Thomas

you so Very Thank much. all XX:XX helpful.

John Swygert

XX:XX Thanks, Brad.

Eric van der Valk

XX:XX Brad. Thanks,

Operator

XX:XX Thank you.

question line next the from Kate comes from Our McShane of Sachs. Goldman

please. question Your

Kate McShane

afternoon. question. what you how March traffic And an that a be We just be think it with why that standpoint, a about further be Or lapping? will XX:XX be for talk little in regards you. is commentary the the if bit from second half better, will could Thanks. half our would back half trended Thank it quarter-to-date? first could that stimulus, you away taking that Good throughout we around on fact Have little helpful. our from give you if a you and that do quarter? Thanks seen will color traffic to more you improvement wondered comp,

John Swygert

XX:XX Kate, is John. this

were the believe stimulus a most arriving lap believe it to to we'll the the second call to with last really we way of that running quarter. clear the think in of talked our to we're that and with lapping lot that positioned our we've chain, getting year right disruption get the us of that, in throughput question regards I'll XXXX and business. good With we with the can the are this product goods that in last last much distribution And much the had foremost of we paramount almost March to collided the stimulus holiday the Let to the to our set sourced. position the we domestically our with late maybe first me through our But that back year what centers just basically and believe question at stimulus the Jay prioritize to half be year we regards regards the and product had we product in supply of delayed we fourth half, is and with the had answer all through handle part and off moved in QX to started your able end we're ran closeout importantly, much, kick better we year the just will be created here shipments, running then we out all and once a with a back way of better last levels about May, first that challenges -- up import normal the shape May.

mentioned I really way to here. the you up to a I flow benefits. to XX:XX some in take loose. once that think much that the forgot I starting sure be about in will I some and we're one a we're store see and think we out position I big see is see inventory And deal away shake am I to pick big get position things and of And is, obviously very going and the ready the we're starting is, you So we of think of condition go. better think

Jay Stasz

is And Jay. Kate, this XX:XX

the the with transactions. comp better coming so into to so get say of I too you part Just to the add can’t of to will your we're granular But going I than we that a the that from quarter a ago. not give the on seeing stimulus we're on question, trends, But said, first -- that heat current have little is bit far year guide. we're

-- super to were stimulus. because weeks five the strong weeks year last that four of next So four

and a we're why long And to hence now it's at. the way where a But trending currently so, guidance hence we've go that. bit of right little got ahead

Kate McShane

XX:XX Thank you.

John Swygert

Kate. Thanks, XX:XX

Operator

you. Thank XX:XX

of from from Sandler. comes the Piper line question next Keith Our Peter

question Your please.

Peter Keith

I were XXXX. talking starting about pretty are follow-up, want back you're about. I shake on John, everyone. afternoon, hoping could lose, good I just to some to you And ask -- Hi, excited that you was closeouts a reflect XX:XX

closeouts year there but have get been, chain You've maybe you last do been that throughout a been has versus is able strong, maybe has issue, like a adamant challenges? supply the I'm quantity feel you good the are wondering bit to the there but if quality that closeout, been months just quantity of XX depleted, global quality pretty a the given

John Swygert

Yeah. of XX:XX we impacted. closeout haven't have quality Peter, the felt that the been

I through to think our was network the our move the impact biggest goods ability we experienced year. last

that I was the takeaways. big think of one

quality network a the chain, in you supply issue. location. of deals I quality the a couple movers So don't Our on good merchants merchants like seeing year that it periods we Obviously, I makes for all certain year in didn't us the inventory level. really into in when ads purchased have right XX:XX was and execute they -- able with for through certain times on we're stores it execute it struggled to it that, they and used needle items that product and very the look that to put to we're hot put can’t difficult seeing think arrive the seasonal backburner need specific the put couldn't struggles right what they're to and that in of all It ads and our selling that our we the this we for timely happen. last believe basis. because big the you they in had when at need the quality a ads for And of season. good with move just

confidence open the recently want to strength and So from closeout get some now starting have starting I had just up merchants is of any real coming strong to details. to how to flow. momentum we're we're we and a back as right into the very be starting to execute to to. back It's their deal see their it and able that position we're don't funnel starting expected that see that's

talk a I about for that's think issue create myself I things. when competitive I that

let just it – the show let where be to we're going strong we're and I'm it numbers that. sitting, good So will feeling and

Peter Keith

encouraging. it's [indiscernible] the talk on that's QX. so little accelerating right, think a but I this from points, XXX Jay up All Okay. separately XX:XX maybe margin, And merchandise one, basis to bit

take to about guys of it can up how a some in Maybe Just you more you're the able maybe elevated XXXX? talk regard price being is a these you has than to offsetting little competition bit, freight earlier little pricing? Are in costs? you that, were loosen

Jay Stasz

that's about call. Yeah. yeah, last that we to we to the some price good on call, a talked Peter, we it's mean was come and – obviously points I value I XX:XX XXX very basis yeah, up our fruition. But to that so And did basis are then overall points. were important think, maintain XXX margin And your proposition. down we in the take that point, able March quarter. the

XXXX, of of look abate is fourth expecting half, quarter to some the have to continue are normalized in we merchandise the the historical heaviest and we that. are first continue. we're headwinds side, on Obviously, our I mean, So chain supply expansion a kind level And those margin. for plan to then really they in remainder to to but chain on quarter the the was start the of when third margin supply going

Peter Keith

XX:XX Okay. It good, luck. sounds guys. Good

John Swygert

Peter. Thanks, XX:XX

Operator

XX:XX Thank you.

question next Our from comes the Matthew of Boss JP Morgan. line from

question Your please.

Matthew Boss

Great. XX:XX Thanks.

progresses? And from the consumer? to could baking any tied to you're speak down first the as are maybe you're the impact any low are seeing yet or trade we that Jay, as behavior to to year comp, your up mid-teens, changes or X from backdrop prices you income the any So, flat on from middle seeing potentially down in year full consumer bridge income potentially John, that you inflation that, just that topline, so higher to macro quarter you embedding gas today's tied

John Swygert

this XX:XX is John. Yeah, Matt,

can with good now income grocery crunched on and is we and Let that the fixed getting the question is, gas for we go shopping the and adds very incomes, me and you more with see it what shocker the beginning they first mainly before, right most where crunched when pretty to these believe month, big What feel who for who welfare, a income get while that last was low it the just answer are at obviously pain where on you consumer. now recently we they're the in today, people people regards and price lower consumer, look are a folks. spike,

we So income, cards, percentage of don't bit. don't folks we seeing XX:XX huge take crunched a foods us, the EBT have were are I business, it's in very who fixed not that Fortunately on our a little believe we get tight them our for do not we're stores. perishable a --

said So between the somewhere stores, business, items in discretionary. XX% XX% discretion our of but it's we've all non-discretionary is always to we -- rest have our

the we it don't and think in cater people coming hit but starting the deal three, the right believe effect we're is us that pay in our we're range And very positioned real very four, gas in a in the of and everyone's half of cost, going in the pretty we're groceries going us order. short to five market. higher So we've that I would pay year. and now. Once And benefit something wide yet, and got see to it's in to putting trade-down position I see is feeling seen feeling, that it's flow right here the think utility start I second folks strong tanks their for for to weeks soon. a row a I coming

Jay Stasz

And now effect I a of the it to the consumer environment QX comp is answer right about that one our guidance, historically not your we little spot long-term, sweet trade-down cautious of talking the the guidance it's in because right comp. with the out John's point, We're that Matt, factors to has these two XX:XX more To obviously, mean, about that just like seems with yet, dynamic such we're happened. been but have great we're necessarily all seeing deals. now. a And question

don't that really the our I yeah, So control. of anything are think out macro items for there's

in little per embedded QX. this se other in additional a haven't We maybe bit guidance conservatism than

Matthew Boss

puts was there reinvestments about for wages X consider think XX:XX any the and comps just takes I this to just historical, expense leverage follow-up just on expense to to think Great. one front? front, how any maybe maybe year the X.X And about then and think, on best or as we the

Jay Stasz

Jay. but we it, and plan but I DCs, would on a SG&A, call increase we're basis to significant not in year or on in we made we – made in merit Yeah. year. did captured but level it, obviously made versus store ‘XX investments ‘XX in deleverage that's saw we a step the slight at this front, stores, DC gross look in is, this make significant And the last say up we're related year, Matt, XX the at expecting XX:XX the the When have our our investments expecting we points major little the in we for investments like the margin XX. XX

to some around things together additional have simple some again. will We just get like investments teams starting the

will as with meeting, be deleverage We've with that. a the from ’XX. plan which, ’XX have from at in incentive high it So got deleverage little as travel so for obviously, wasn't in little least the comp we a

Matthew Boss

Best of XX:XX Great. luck.

John Swygert

Matt. Thanks, XX:XX

Jay Stasz

XX:XX Thanks, Matt.

Operator

XX:XX Thank you.

question comes Morgan next from the Stanley. Simeon line of Gutman from Our

please. question Your

Michael Kessler

Kessler for in our -- XX:XX wanted ask taking about is for guide to sense. Thanks Michael Hey, about ‘XX Jay. Hey, This Simeon. ask on the to questions. a I I broader guys. John and wanted

X-ish, period out XXXX the playing just look below in this think as still to been XX:XX onwards, of of and for XXXX expect. potential to a around you on that are rate you which right income of and guess, EBIT, do we of some, CAGAR business about we and think the at broader profile. been XXXX sense puts I the time. growth level growth how business? Is lot midpoint go for the in So then forward baseline for what some that Thank how where about is headwinds growth, and operating potentially annualized And the new abate, a might plan a you over in the to the X.X% the If there is XXXX historically I from moving implied of baseline recapture there's using takes that think -- as have growth the right points and of you. extent we XXXX the XXXX

John Swygert

XXXX the XXXX, of the gross or there pressure is biggest that at think on XXXX. pretty margin to the detail back for I we very to Michael, back you is and this great XX% discussed the focused be back our thing expect look XXXX we for in very, in when it’s We gross Yeah. margin, XX:XX year we impact told algo that will significant the long-term that to close margin.

and be pretty should the as back close very historically consistent they've been the So, well. to to be growth margin what should EBIT

two, little of have So margin quarters the work have gross cost a to the year. this pressure chain we that because first supply just this that we but with through year of contract our three

Michael Kessler

follow-up out playing of XX:XX expansion a higher Okay, last get to the and know on taken, the point there, the response recognition, the trading call that pricing are maybe we gross chain a and store there. on supply your about, about transportation as to what have and target XX% as back accept versus goal willingness quick other anything levers? talk first guess, you're little far that prices? one actions? consumer last a bit one costs? far offsetting great. big you And margin the margin from I price merchandise the role the within increased How you or as Can is mitigation earlier, the of as biggest just on And those just customer I talked to then the that any how

John Swygert

very obviously been second to selective it's one easy all competitors. Let With regards Eric. stores, the and the the me give been part XX:XX very, first, pricing comp I'll on our behalf and take against to that's shopped the in increased

maintain still value proposition. we So the

else way. up from neither accordingly. Walmart comparable Walmart up If proposition. would [indiscernible] So, value up item, finally or for go had profile a same went similar can or went instance, a the we to someone But keep we

model. very that's that heavily. we're that We And stay that's losing. we something So our keep that to -- we're true not

I each some of And So takes and value proposition. and a margin? about day that from every wash the on the merchants can let puts Eric the talked

Eric van der Valk

started is John. way action most the a cost pressure Michael, Thanks of number X in by his in XX:XX John year, made the discussing XX%. number relationships, the spot market taking this year far the expense much import actions and mitigate freight reliant In a progress, from with incremental how be in meaningful gross procured remarks our typical the was referenced at XXXX, We've started than on and the the a number In a new terms quarters, significantly we've it spot pleased to one less X really about the we're been we’ve XXXX to the capacity container we're that rates. how negotiate to on seeing of significant mentioned margin. in increased carrier ton margin you than We've overall support we're previous of of community. expect that we we of very earlier that several we've container impacts import contracts opening in months been XX% earlier. contract market.

this -- May. the years but why our believe our are in the reason of generally So it they with in The in the higher we spot you're than are in the the cost of line in is, certainly we're were XX:XX where rates the year rates the sense starts seeing are of And QX, of to than actually of what experiencing average, the ’XX. market inverse expecting for ’XX. market starts ‘XX market historical is we half back lower that The significantly we benefit in year. more in next where kind contract see experienced our

to in contract the QX kind So those then full we experience of benefits new of benefit and begin rates in QX. the

Michael Kessler

Thanks you. thank right, All XX:XX guys.

John Swygert

Michael. Thanks, XX:XX

Operator

XX:XXThank you.

of question from line comes Securities. Truist Scot next from Our Ciccarelli the

question Your please.

Scot Ciccarelli

magnitude obviously you Ciccarelli. goods. that comments idea issues year. the were throughout of supply in like with negatively John, double chain your XX:XX Hey on guys, you the it’s Scot guys down It difficulty sounds surprised about flowing the by

rate. Eric to quarter the chain be here? kind you was at specific contract once to any just supply the as least get first provide as from change guys won't talking think examples I we -- ‘XX of spot about past in other can substantial But the why issues examples

John Swygert

XX:XX Yeah.

regards year. then, but a it, to have do with we points me Let than better last to little fine-tuning some did answer Eric why And bit, Scot. to may feel add we

takeaway is, the needed it easily our late the increase product invested to think of in center be lot But all to count goods to didn't we a into of arrival to inefficiency one who work that made very other basically new where a to that We your put, with we're made is the the center to in store. sitting. buildings your to focused having distribution collide on head then run we lot our into more it is changes, distribution to move good the able And have the we're -- the where and obviously, with processes invest Head invested grow the labor do to try heavily other we and timely lot in think the on today. fashion our the get inability a and changes, we've feel operations, I and in company. is process -- there biggest created I in and efficiencies through trying then and think network. freight invested building pieces center of we Distribution it we've a get business We've the piece but import party to

behind say I we So our well is movement forward. positioned those And we going last import learned we're we're think very I a and in funnel our at. how sure I ago And the minutes and the us, vital went know the commitment the we container season. and we to the few we said commitment avoid my confident feel the we've timely fashion. with -- think a goods had were making of lot right I pain and for pitfalls got Eric season where discussion would and to opening a through you, think through tell lot contract well move a in year. to we contract I know I right successful in selling remarks, things focus positioned would as feel those We QX goods we very container early into spring heavily in We got on

Eric van der Valk

Yeah. XX:XX

more is details very for QX and of benefits quickly we did contracts, I of scrambled on John but are focused rates. question I into would in a secured we make moving last QX these rates, at spot capacity work market the contracted a answered say, Scott, Michael's particularly of great capacity capacity, implications have us. job, secured think And I here. huge We in the year some more now when cost a the I favorable but the at to was certainly sure capacity just

in flow with we with being don't to equipment in touched goods from throughput arriving supposed the systems, improvements XX our in months, including need IT as the to that that of associated cycle or to distribution more because our and including get I'll our standpoint, of invested adjustments handheld about and them, we of parameters and those people, can And the made handling course of distribution nine logjam in get side in leadership people did goods really centers different last and just goods of when a of out positions note material invest buildings. and kind We wage our the add we we in helps systems many previous important devices process we've guess capacity making over final means So having in well just the kind invest down organization, numerous calls. to investing John we've quickly side deal we we're Just which spikes to talked that. is, fluidly making on on on I adjustments with of continue this. XX:XX in when the

the in has primary Our been facility. focus commerce

and more building help with continuing a both to out speed, is to in also stores and throughput with to throughput, demand. with we're reflection spikes service getting So York that of the service capacity those of extension more building that investments efficiency

Scot Ciccarelli

XX:XXGot it.

thanks Okay, guys. lot a

John Swygert

Thanks, XX:XX Scott.

Operator

XX:XX Thank you.

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

question Your please.

Edward Kelly

curious year on I it you -- above inventory was the guys, up good about afternoon. ended XXXX. the inventory Hi side, store looks solidly like with the XX:XX per

stands would terms coming acquisition I in that how here, cost think start the know just versus in carry like quality is of generally, be like in came today higher do I late. that forward it inventory you from about additional of like product how of how this you color -- just much how I of to what's just holiday sales is mean, months? some and as thinking don't available we kind did Now, you any of John, think much

John Swygert

at, the With XX:XX whatever actually just caught the take cost XXXX the years part Jay it Ed, to give up chain I'll XXXX, increased of inventories, want overall look XXXX, regards are the that because to and over technicalities. you supply let in inventories of of are the inflated costs the product.

not So in I be would XXXX stores. inventory actual the would store over tell in higher you the

were seen So a in inflationary be right obviously the but there not actually have liked that the number, we would ourselves, on is pressures a that would to because lot higher ’XX, product. I

deal sitting strong of of the that obviously, the position end as feel half then at would rolling and byproduct the some I see where of we pretty have is ‘XX XXXX. store we that increased really the costs to supply would well. half embedded increased to we moderating overall, first chain close significant after increases in probably the I of half back would with year the of in inventory just numbers to that year levels the the expect pressure compared be the first inflationary the goods. the XXXX, about a out but the inventory there's and I see flow eventually expect that growth to XX% then in XX:XX like said, you of and of But really, year-over-year we're So overall

Edward Kelly

And you you've store guess, the may about flyer can just I role ask thing also supply I into you put the then to the how wanted about Okay. been side, that had to traffic? potentially, impacted talk chain how that that some play issues in flyer? you've on other the the XX:XX has is at able like And product

John Swygert

to year think. the obviously -- and product issues here, going was be to last to a it put to time, timing lead putting obviously, going the us lack all and able a one well that's time then time. and here confidence seasonal merchants will from here continuity lack DCs in to in challenge you definitely continuity that to the so put the goods of buildings the receiving couldn't to having press is we But than in time able we the is available wasn't as a had advertise print, navigate together and might of XX:XX product the in for through. and a se, be to if Sure. be there's purchased have print in flyer and three created they Ed, be the per goods weren't there bigger the It integral in half very the that give product that of some product, we of to flyer of back

that basis. some products we for XXXX challenges the available are and when ready we and and creates together to ad in an put that normal don't here to be going we when plan obviously So it's on back XXXX timely a expect in merchants where to have what to at a cadence stores the know the be

big a is part and part big that our for forward a of confidence well. as So going us

Edward Kelly

you. thank Great, XX:XX

John Swygert

Thanks, Ed. XX:XX

Operator

you. Thank XX:XX

line the of from Randy comes question Konik Jefferies. next from Our

question Your please.

Unidentified Participant

our Thanks XX:XX this Hi, (ph) on questions. [Cory taking is Konik. Carlo] for for Randy

been how has maybe Ollie's then acquisition to customer you new of highlight customer conversion to these enhance Army? on retail acquisition? can And recent some First, customer efforts, traffic efforts

John Swygert

introduced and pieces and to to been we're we we've either only thought using I'd working benefit the YouTube, than work where would going, differently from changes XX:XX to and continue world is we going or to pieces to will perspective. the In with we very invest committed So but big able we're first it's the that obviously, need call going print we're I Tic-Tok, digital with Stitcher local -- Facebook the We on but digital on need that Cardlytics Obviously XXXX, to important to those then where our on still been is allowed, transformation long think three the and Print now Ollie's Sure, Instagram. using been are testing to customers to XX:XX good and Ads powerful, say the Pinterest Ollie's so right what Google and still very just we a influencers our which digital three certain customers, changing think of older we've going we is a that's see never about just the I change we feel of a be that XX:XX world small started customer. that continue all software very, for and using continue both through, areas have in front. that print understand as but I do digital a in an term decrease for with the have work that think the at share the Corey. do a is in as we With we print said, regards it to Ollie's we I'll -- on we've that strongest through.

Unidentified Participant

XX:XX And Army? the conversion Right. Ollie's on then retail to traffic

John Swygert

XX:XX answer to It's -- previous Corey. to question, your years compared we're in strong conversion

better sale So of seeing year. we're [indiscernible] point any previous the at in than

Unidentified Participant

beauty, categories flow. very And thanks strength automotive on health I just and in have been and you there believe mentioned bit a more pets, difficult? follow-up little much. Great, a deal XX:XX any then are that

John Swygert

timing see this little of and would has recent and category to these have that food we'd like come been to about. two deals that programs little of this a powerful that, year some a but flowing candy tell how you, augment any our As other than would but deal it's flows and of tighter with it. value Corey, I categories, XX:XX just some of on Food other But I some we deals from would in areas have tighter been our and most we is say than to see like some in of the try been pretty pressure free we're working to perspective, that pretty timing

Unidentified Participant

best XX:XX Understood. and Thank luck. much you of very

John Swygert

XX:XX Thanks, Corey.

Operator

XX:XX Thank you.

comes of Hanlon from the Jeremy line from next Capital. question Craig-Hallum Our

please. question Your

Jeremy Hamblin

the questions. better I starting first cadence QX store year? the the the of your kind expectations taking wanted of first openings with the the Thanks of of half with the around understanding the through and year start into XX:XX and openings to for half back moving course

Jay Stasz

we XX:XX the Yeah. by talk And the Jay. Jeremy. about openings in prepared quarter this is remarks.

Jeremy Hamblin

them. just Can refresh because didn't you XX:XX of I capture all

Jay Stasz

Yeah, for sure. XX:XX

in between stores the in quarter, in XX eight planning XX nine we're quarter -- the have and quarter. second third the and fourth in We XX quarter, first the

Jeremy Hamblin

of looks guess you by you. margins December, to back be in expecting it rest helpful. type think of you're great. a expecting improvement sounds that margin color to Any QX, so like the And year-over-year it QX? I is you be just share XX at then I in bit And in kind XX% of significant be terms a of second, to range, year, I looking Okay, would still but think going Thank decline there like there down about QX similar XX:XX like better then coming could gross than that at plus in year-over-year. a by thinking it little gross the QX, back you're back now flat for the XX.X. were But

Jay Stasz

XX:XX Yeah.

to decline expecting be are year-over-year So consistent. QX in margin and in gross we the QX

then in normal improvement back QX, that it's to sequential and QX. half in of so some about expect maybe We we get

Jeremy Hamblin

last Thanks. of Got you've pressure Can on increase pressure feel there, you me provide And wage seen, but it. the hourly wage it side, plan? or or need cost the higher to some your kind wage not the in also year and of year within the the employees. of whether that's retention on what's out you the like embedded not turnover just one you even rest take then of over terms year XX:XX color labor from

John Swygert

worker, I versus said this we're regards global part we've certain react was the very we don't don't mean, make we at something necessary, thought it have we investment, but be market. John. hourly of XX:XX time between We market making level happen. year full-time the every change. last shifting and markets at to Yeah, in market it a but the our lot has Jeremy, in overall terms we a blanket to by is XX:XX some in time it a With adjust just of make employees, employee investment the just in changes and look in always process -- We store by a stores that transient adjustment. where made hourly continues

[indiscernible] So just and not anything. we don't do

our baked don't we like incremental plans. have we So expect don't level that major store at any this shifts and and into year anything pay

now, is has done say be our bit it historically been much stores perspective. as well. to the the whether it to through be at in moderate out increase that, are of looking turnover the for to and think from going in market, different well what level of efficiency lot unemployment harder ROE be find as for Little I the have associate the not we than a that's people work changed of here in that people but we're pay we're a what have I what XXXX changes and XXXX able as DCs on already as We that to increasing some we're we've but and to carrying working that's

Jeremy Hamblin

XX:XX wishes. for Best Great. color. the Thanks

John Swygert

you. Thank XX:XX

Operator

XX:XXThank you.

Lashway Our line next Citi. question Paul the comes from of from

please. question Your

Paul Lejuez

Can thinking closeout of a just XX:XX And talk ‘XX about of percent your What goods are How ‘XX you're similar of the that thinking like in look are does terms on it XXXX how how kind are ‘XX look what ’XX. Hey ’XX. Thanks beyond? in product? that you then you that your guys. versus question imported. currently that in versus and in of and sales about does for And percent about

John Swygert

to closeout to ‘XX will in in XX%, probably XXXX to to strive in in at everything historical at was that be tell our going Paul, would XX% our Yeah. a closeouts power average closer to I be XX:XX versus as at. XXXX, we that's you, model rate to closeouts we're were us about XX% with in our XXXX. because we which be a XXXX, our do close regards company what closeout special. makes

project and change in a component to area, work somewhere I XX% perspective. our there's XX% what opportunity Don't import between would so is on. expect from big think going closeout big I XXXX that in that be in a a

be imports we'll be our of breakdown that see our think to of product in be but Love come to happen, of down consistent in it we but at XX% terms overall now XX%, to metrics able will business. I overall pretty about sure won't the imports our our I'm move in

Paul Lejuez

two then it four. if in Got XX:XX does just achieve the think thinking sorry you you through beyond your about you are much I quarters how perspective? it. And year in for pricing Thanks. a a follow-up. to the I'm missed it, about comp XQ, ticket rest versus the as How that but expect comps role of traffic play from expectations

John Swygert

store. don't we what in think the motivates we and the at I the come ticket, the to transaction if Yeah, look XX:XX the versus deal, Paul, look at value consumer the

that So it's obviously the to to the of able in deals is seasons our another be meant to our think basis the have timely that I need product we to consumer. and ability a get piece motivate talked we've the strength our in about on stores,

them. piece will the business, but that our So value and driver be we the really to drives big that's give it's we a get the to to what customers, deals them that a

toys late well. it and behind when store else in the late, something with help get to doesn't to that's gets substituted doesn't and holiday being holiday sits obviously seasonal business into your late and So with your for as your

that's everything our timely So we're be line. get and going going be being the the benefit to get with able to to levels today to bottom throughput to us bring able stores to

Paul Lejuez

XX:XX Okay, thanks. Good luck.

Operator

XX:XX Thank you.

Our Berenberg the Brian Markets. line comes Capital McNamara next from question of from

Your question please.

Brian McNamara

taking for my Thanks XX:XX question.

contracting comes previous import market that change So in opportune Are than shorter-term such some a I'm temporarily so, and in from dynamics? supply-demand you adapting simply if having opportunistic spot time XXXX. slip what's XX% risk less of at curious, potentially normalized? a And and approach. regions to is you're back the an that as XX% online in ‘XX your capacity to away your freight the permanent

Eric van der Valk

what Broader I doing bet to We out volume there to of answer is this some the is, there. bit future It's We're little flexibility XX:XX on that or a are kind enough writing what somewhat Brian. years know bring. this contracts as hedge think a our market really out dynamic is opportunistic don't be we're to well. our spot bring leaving I there around know. don't to super [indiscernible] don't year market going things your of for how to know, I going question

contract And freight to So, happens. years think that and three a are you're better there to multi-multiple were companies more used kind to land. over said like. to market just is with not no, that a I to in, many, of I'm things significant multi-year until up all I'm position is The XX:XX sure. one I'm of the resisted normal what way the expect I and not a be year look long-term have there see that in and under flexible would to really if just to we question model would that we're deals, of going we doing to not normal to it happened our kind going they're navigate some see the years going know to under It's for many down. I want having we risk about trade mitigating the in moving next going that the pandemic out will if large rates this but we're to many, where work thing sure, closer for the in that fairly future. year. be percentage were and and sure contract by contract we're a two

Brian McNamara

specific trends recruited it. you follow-up, the Thank quarters with better, the speak Got XX:XX frequency pandemic they in Army? rest the think ‘XX the about four of quick million line just numbers. ’XX, from Can Are Army engagement worse in or there to are you QX you. $X.X your of QX Are big members. engaged? And I to a spending still

Eric van der Valk

good those retention engagement, We're XX:XX seeing good from Brian. again, seeing -- is This Eric We're customers.

good, mean, previous years to engagement. when I So say similar I

is good, retention it. our satisfied So we're with

members In consistent pretty the previous terms versus compared it's to overall would previous better. the pretty of years, slightly but years, Army spend, I maybe non-Ali be consider Compared consistent. to to

those like far. the from so of we what behavior we've customers seen do So

Operator

XX:XX Thank you.

from Our Mark the question UBS. line next from of Carden comes

Your question please.

Mark Carden

my questions. a afternoon. Thanks XX:XX lot for Good taking

lot So now the right backdrop. of first There's chain program. follow-up a quick a store obviously remodel pieces supply and on moving macro with the

what to Just is that jumps I right this not to all need though. start program. noise out time the to decide you given the

John Swygert

think the strain in stores, I an in the any it opportunity around product store stores that significant categories in stores we because nine over create the seem possible. should chain readily this, months, that our seem to envisioning contracting have part dozens getting moving of already opportunity re-space begin that or categories. quickly on as XX:XX way, enough from supplementing my to we apparent supply store, shape six and envisioning many in that It expand certain the form other as in experience doesn't we're that we

of no stressed. net most So, the chain. has the supply been impact where Ultimately business

So stores 'XXs that ourselves opened our we we to we some the as and yeah, customers. 'XXs in the recognize and of reflect our we current how walk and get to present don't that just thinking really they older excited super most want

learn. to time to start the -- no start like present So

Mark Carden

a an Omicron much makes follow-up, chain? on just that supply have your Fair helpful. and And enough. There as then that's of impact sense how

John Swygert

stress, of more relatively it middle the experienced impact give bit added short have than in actually well. we XX -- terms painful all also reality I’ll on impact in in bit was was in was buildings, more moment. managed it which so XX January the of of November, where as some a of also it. which and I and the might It for the we immaterial beginning XX three in our and for felt XX:XX center a taking little rate. days but period Pennsylvania like immaterial, color, impacted felt our It was the you, felt impact through It are January, fairly of point significantly about was days. at impact but it was we beginning most at cost But didn’t Omicron the our inventories that daysm, little significant season, absolute you distribution helped is of a a which we happened in story quarter. low primarily If different middle maybe

Mark Carden

Thanks much XX:XX Got best it. of so what. and

John Swygert

XX:XX Thanks, Mark.

Operator

hand the program any remarks. you. session Swygert Thank conclude back I would This the program. for does further of XX:XX to question-and-answer to today's John like

John Swygert

earnings We for XX:XX next call on and today's call. to quarter first look Thank in Stay you everyone you. updating participating you in safe. continued support. Thank results forward our our

Operator

XX:XX This Thank you conference. in program. ladies today does conclude the participation and gentlemen for your

You may day. Good now disconnect.

Ollie's Bargain Outlet (OLLI) 24 Mar 222021 Q4 Earnings call transcript