OLLI - Earnings call transcript Q1 2022 | Ollie's Bargain Outlet Holdings, Inc.

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Operator

Good morning. Welcome to Ollie’s Bargain Outlet Conference Call to discuss Financial Results for the First Quarter Fiscal 2022. [Operator Instructions] Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from Ollie.

As a reminder, this call is being recorded. On today’s call from management, we have John Swygert, President and Chief Executive Officer; Jay Stasz, Senior Vice President and Chief Financial Officer; and Eric van der Valk, Executive Vice President and Chief Operating Officer. to Fontana conference with like host to now Jean today, ICR. would hand over the your I Please go ahead.

Jean Fontana

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

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

I operating financial included for measures turn comparable that the over to investors John. financial to the most financial that, we important closely will call maybe release. in the performance. the referring on of non-GAAP call certain be non-GAAP With earnings are will Reconciliation We to to our measures assess our GAAP believe measures

John Swygert

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

last stimulus-induced up year. we first are sales We that strong pleased results, quarter against given sales were with our

the weather on were product pressure impacted negatively cooler inflation, sales During and particularly quarter, gas experienced by consumers significant and food. of seasonal from

our increased and are results, and with with We seen terrific position. continue for inventories our our meaningful across weather improvement brands see our on shape in business, categories, and products are conditioning our deals have those warm and compelling HBA, second that combined Currently, pets. to to we incredible in housewares, key great garden, deals especially strong seasonal merchandise quarter inventory demand including air lawn

goods into addition, stores In our and are on well running our are flowing timely basis. DCs a

trading full seen inflationary feel due efforts yet to we down as consumers we doubling economic pressures. are consumers great of not While to have to pressures, benefit continue our the offer values down

softer compared back lawn XX.X% This first our as seasonal items. in been to assortments. comparable have pets We sports-related quarter, saw our garden we our and Looking the performance to largely store at such due in decreased as XXXX, as building slightly well where expectations. was hardware, conditioning HBA categories, weather-dependent air below sales and strength pool

presented being the brands more opportunities even categories. currently across and better of to merchandise enthusiastic presented many quality with will our great and deals of we – value us across We customers. closeout are quantity are great deliver enable being our to even with These

with it we planning believe an see inflationary our reinvest With so to pricing, customers. are more We is us opportunity the margin increasing into our pressure, deals extreme even emphasize for proposition. some we to of excitement value for to our aggressive back important generate

stores far well with underway is and pleased store we X remodel program completed initial the are with Our so results.

sightlines merchandising. XX respaced and remodel on a the year. stores of merchandise more exciting categories, are shopping impulse more approximately end through by track experience this and We compelling remain delivering We improved relocated to

estate. real to Moving

in X first the quarter opened During quarter, stores XXX the in closed we relocation, states. new with XX ending the connection and stores with X

one with store line new levels, We are year with our targets. are in productivity which sales store our pleased

We relocations. are open XX still to expecting X XXXX, between in XX new and stores including

seeing our and that our over delays construction nationwide. new related are to and at remain quarter. grow, Army X,XXX the sales to over confident We of However, XX% prior penetration permitting X.X% the stores. support least members, active in Ollie’s continued continued model we million XX.X stores reaching can year growing reaching

information well card as this to quarter, information. we efforts to better in enabling us we direct our We part acquisition non-Ollie’s out via our plan shoppers expand credit digital Army what our in look-alikes the capture the to mail our of customer to customer based for call target civilian leverage began and shoppers As on strategies, as database, new advertising building first future. information

including Pinterest. During and by we data TikTok, personalization social is YouTube, second the engagement. continued analytics quarter, to create In targeted adding more to media, Yelp advertising we leverage improved on tools, social the to generating marketing be other will testing media which quarter,

testing our We strategy to reach new potential are customers. also to broaden an influencer

are We to XXth everyone. with celebration our share excited anniversary

with will X. special cheapskate began through kicking on contest, run which America’s We May July off several planned have events biggest XX and

Days are years planning our year, highlight for to we this XX XX deals in business Ollie’s milestone. During great

departure continues Eric Supply support received throughput center needs are SVP timely being efforts by talent and a our we meeting of will pressure summer sales distribution believe drive to these a and we exceptional work encouraged significant containers business. feel have are Turning progress our we expectations and seeing pleased continue to XXXX. operating we really chain we position about the remainder consumers be trends across will to said, – important supply heading The are have of uncertain quarter-to-date overall become the chain. to begin to the which operations, basis they lead in off. Distribution der we what the Chain. focused which good our and remain closing, That build network value, is trade as done season offering and Valk is on on deals control, made the of we our are inflationary great are In will supply the center import highly we the efficiencies and we can van the and and coming with down. to into inflation on at paying recent of following environment increasingly

long-term Our remains outlook for this business unchanged.

work I like Before take the him a will a I today. company turning release management and team which to is the his announced which earnings past grow the dedication over He X years. we helped in our to call Ollie’s it member over personally into of moment want partnership, for key been Jay, discuss morning. our thank to departure, hard would Ollie’s to has and this his plus be to has –

We well will miss his new in him him endeavor. and wish

for interim a new CFO updating on thank to held XXXX CFO, team search Thank forward our national is who a begun like the you from have Ollie’s additional and you. members In which XXXX. the progress. role on work to everyday hard our take a look position will great. of to meantime, We make until I would I I Ollie’s

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

Jay Stasz

everyone. Thanks, John good morning and

in the from decreased quarter, the year. the with XX.X% XX.X% the prior net totaled year. quarter decrease sales For store Comparable compared prior a million, $XXX.X sales

result primarily EBITDA This this totaled and the X to Capital stores XX.X% ending categories. costs cooler deleveraging As impacted SG&A the weather Inventories period Adjusted million million was year, the partially stores, Gross million In of earnings for our from existing in a new offset primarily relocations. prior margin to a as supply costs John to the we Adjusted in compares a EBITDA we increased and up higher quarter the margin with fiscal product stores. opened grand and sales. margin in million margin. compared XXX quarter, merchandise expenses the are quarter. fiscal was of The of XXX first for ‘XX. first points of million year-over-year quarter compared receipts. $XXX are was of opening to to million fiscal of the lower X,XXX end including unprecedented remainder same as decreased point $XX.X stores, expenditures with Since percentage to with import seasonal the Operating XX.X% to margin X totaled a first adjusted in XX% in sales $XX.X year. quarter the one-third driven XX.X% to basis having net XX margin costs X.X% opened net stores number year. ago. decrease XX.X% that the and the the as to X.X% result decreased decline in their points increased lower $X.X X,XXX new XX.X% $X.XX. sales. million XXX to $X.X by per year mentioned, by basis supply attributable share, basis income Approximately due $XXX.X timing the we including a increase compared store against income the profit million increased the diluted variance merchandise chain year, and have deleveraging period of year improvement prior stimulus ago. in XX.X% decreased first increase chain gross quarter, SG&A the while expenses gross this and in count. in primarily decreased of and XX of adjusted million The the $XX.X sales open of basis to and a states, was $XXX.X last ‘XX in result in to increased plan points due increased was labor week. stores X the Operating of of $XX.X to was to due gross additional XX X We

of to we of spending million sales invested were as and heightened of inventories end had facility we with $XXX of consumer end to million stimulus. shares to associated revolving lower At addition, due of quarter under the stock. million our increased fiscal the quarter first outstanding credit ‘XX levels no Subsequent the end, period, cash. of our from have $XX productivity the In common repurchase in borrowings $XXX.X

for discuss Now, our I will outlook ‘XX. fiscal

opening reflects slightly as outlook results, stores half. Our the in revised sales our later to quarter delay the the as second our of guidance a in well for some new first measured of year a more

great reinvest moderating continued mix as for a we lean are in outlook and margin In into to gross reflect addition, our deals customers. to price shift we the our potential in merchandise

new year, $X.XX X of relocations. full now XX to to XX the opening of store comp For the billion of total X flat, net billion, expect to we $X.X including sales stores, negative sales

$XXX to to gross third expect operating $XXX net stores net of quarter. We in and Full compensation; XX.X%, of approximately benefits $X.XX, $XXX of excess in million fourth in the and rate adjusted $XX to runs million; million quarter the X the cost XX.X%; and to exclude of range which stock-based between XX $X both of the in year XX income XX approximately through effective income between to compensation; open of an tax per that approximately million; depreciation diluted the between weighted $X.XX sold; to average million. which second XX.X% and $XX million, million stores of quarter, of share income margin diluted adjusted and approximately XX expense million to including benefits stock-based shares to related excludes related $XXX goods tax tax of amortization outstanding

expenditures We new our projects. initiatives, to and $XX level million DC expect York $XX related store expansion to of capital IT million stores,

and Eric $X.XX, and of believe company accomplished to benefit during here. some proud net diluted time lie In growth million and remain consistent operating I unique strong this further highly and confident our $XX and sales recovery that are entire management up flat model of quarter, as quarter, down the the to now second reflects to inflationary am margin and the the be benefits closing, related second and comp on with opportunities that Operator? will I that $XX sales items we million expect I for of income stretched to team have of environment, believe $X.XX focused turn to would business the the customers to the of everyday seasonal they thank to both and stock-based consumers’ adjusted between we values of dollars ahead expectations; leaving like a support. income in I exclude adjusted to million This we start of Ollie’s offering remain store of excess with compensation. call to income am increasingly $XX the to back $XX prior to session. net I approximately of X%; price well-positioned each trade becomes for all gross compelling which and Q&A million; my operator of between $XXX We For $XXX continue Ollie’s. per we million; In important. their tax team. sales a John XX.X%, total this our to share the million. approximately and in

Operator

Thank the first of Bank from question line of Haas you. our with comes [Operator Instructions] And America. Jason

Your line go ahead. is open. Please

Jason Haas

morning good taking for thanks Hey, and questions. my

John, some are in more Thank you. helpful. to they are could on with The you regards from there. And coming seeing provide first, what was would I color any these this sources that can days? if what on provide of opportunities opportunity? the you are curious be What categories where you sort seeing closeout are if That you out color

John Swygert

obviously, the That’s a flow, been general But of you with getting times. all product Yes, and lot regards Jason. – know what lot categories. stores we the I do. of source divulge you a But We have almost getting pretty never we in our in to the are we not from. would it’s who

We push houseware are we pop goods categories, to in in starting good. flow but some pretty now seeing the and starting see an sporting the to goods are HBA outsized categories that’s right

so bath some flow Lawn to the this in breakthrough has for in embedded see year categories food see garden some seeing special to far, some are the goods category, starting starting so We been domestic toys. in some and area.

marketplace the and are to changing we and everywhere. surprise probably think And starting the some So things to call we customers. a anybody large us that to are that’s our are for see it in pretty see starting on I opportunities not

Jason Haas

great mentioned a I then as And you That’s a Thanks. know hear. to follow-up question, had trade-down.

yet. not seeing I are think full the you benefit had you said

you am starting full come? down So and to a trade you are into evidence yet it there I be not channel are or benefit your that seeing starting see any to are should curious, to customers

John Swygert

seeing I see yet. do bit, think think, are I we we to a it’s perspective, but Jason, think we but to I don’t are tell hard what seeing expect with that not little would

I more think to there is still come.

– too but I the of months it see before think benefit probably to sometimes another X another are X through. probably we far, there months is we ahead and full come

Jason Haas

wish luck hear. to opportunity. been just the you with great your wanted best I wanted next it’s That’s say, Thanks. And you work pleasure to of a to Jay, and in I to

Jay Stasz

you. Same Thank to you, Jason. Appreciate it.

Operator

of Thank you. And our Sandler. Piper Peter next question comes from Keith with the line

ahead. Your line go is open. Please

Peter Keith

everyone. morning, taking good question. Thanks Hey, for the

same I months like better, John, a are taking sounds half like guess So that trade-down, kind half second more right just it closeouts are frame the at you Could up get seeing to the in you’re back of getting maybe it cautious sounds X the X guys results now but outlook? you time, year. view what lower that comp the in of to

John Swygert

it manage that an to we rather ahead have the Yes, of chase and issue be than I not the be just our we how We’d get we want ahead in think, rid far of skis Peter, with business. – then it’s be something inventory don’t would to able get want of. to We ourselves. conservative too

when and So to push push we’re hard. going and we’re easy just the comes time taking it push to

the there and will to had, it’s on when able So our time. be out opportunities and merchants deals are to the be be patient, close will we

Peter Keith

and environment? of bit activity are promotion create retail retailers now just to highly seeing quite But that’s landscape this the Okay. a Obviously, competing out you. across against you lot of as closeouts competitive and is And there for a for promotional what’s probably you’re going there, as markdown right over-inventoried.

John Swygert

they out. that or And everything every a value have inventory doing don’t our is been anyway. to of reductions prices merchants some the nice what we price what moving issue Yes, it big reduced have we have looking look and their move their to at watch retailers proposition of that the non-competitive a product we through the been and have try with box some at same still are Peter, day, to compared we each

If our markdown any always price, who yet. as they we’re the and someone price take is finding So beating will the item that there current leader. are a not that but seeing we’re accordingly, same pricing. we be do will low us on with not we we problems has But say, we

Peter Keith

Okay.

I you Sounds luck good. but good best. Thanks, and wish nothing Jay, the

Jay Stasz

Peter. it. Thanks, Appreciate

Operator

our from next with you. comes question And Thank Mark line the Carden of UBS.

Your line ahead. is open. go Please

Mark Carden

shifts guys morning, thanks your my shoppers? behavior, are notable another Good you ticket lot one traffic seeing a Army or questions. for non-Ollie’s taking and consumer To on Ollie’s start, between any Army

John Swygert

Army have shopper between the Army to regards Ollie’s basket, shopper. the or notable difference a seen non-Ollie’s ticket we’ve always the With the

think greater Army non-Ollie’s shopper We been are. Ollie’s in versus I consistent. know the non-Ollie’s that’s shopper, know and for Army number the of don’t transactions terms of the the – that. and about who we Army we shopper, XX% is visits spend for What don’t they

we Army but couldn’t for the we So shopper much much, the stronger. is know Ollie’s spend

Mark Carden

And of unanticipated what the this And you’re supply do last at quarter? biggest what are pain guys chain, with would how say you just points the point compare in Great. then terms today? anticipating they

Eric van der Valk

This important serve which our in Mark. especially this was our capacity continue distribution have pain the to ensure time. I’ll year. international can three business, at transportation to needed where to I face, that business be last we that centers, we problematic do think unanticipated flow businesses business, all have point support we properly goods is the seasonal but to and point have – Eric, and don’t answer. we is throughput an our in We challenges we

to it and of kind building with be getting more any be to our need Texas we Our throughputs challenge consequence last opportunity. where remaining is efficient of efficiencies

Mark Carden

luck, best helpful. That’s Thanks and much Jay. of so Great.

Jay Stasz

Thank you.

Operator

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

ahead. go Please open. is line Your

Edward Kelly

I you Hi, inventory. to wanted Good about morning. Yes. ask guys.

amortized been opportunity inventory this you of some comps store your probably has overall? of impact a does there about after this morning volumes up the year-over-year. ahead? your inventory closeout mid-singles XX% up go so, But you’re costs? or and lot ability feeling inventory How to is And are inventory? sort How chain you How level are is XXXX per talk about like only guiding So here up the thinking just there. versus about maybe increase much supply unit about that’s of from

Jay Stasz

good To chain in feel And supply increased levels. inventory bit Jay, QX this. this from sales we in I’ll shift inventory standpoint. of Obviously, point, our look and is shape level costs. is that chunk a we an Ed, to increase the from at We on start we’re about when think a of large ‘XX, little had a your QX. we good

step We expect normalize And where we’re fine QX, going really sales expect the levels of QX closer we down between as the QX, the kind forward and then of QX feel inventory be at. sequentially strong. we But now. overall to kind of to and would in, to end

John Swygert

on it’s to ‘XX, in what’s Ed, inflation. and stores right inventory in for to what per ‘XX inventory the the to add With capitalized is statements actual hard and in on that. DC I’ll to store guys a look comp the in-store almost see costs the the the you versus obviously, are. not little color regards an adjusting we what are financial for line from in ‘XX, – Compared about

year, And as pressure through heavy still opportunity to Jay we’ve seen. changes as will see XXXX adjust price with a have we won’t disparity when think think for large the all us, you you get for inflationary is I mentioned. such the I I but – stores the move at we had we the there think that are sitting So in don’t occurred

Edward Kelly

How to think, perspective. and an the to it’s do I right? capacity orders. you interested Okay. of from art the of from flow the thinking opportunity? this feel in a taking is like seems I’m appropriate it we’re you leaning for that? business the large how that’s canceling then positioning and about And open And sort have about follow-up, a standpoint? deal think all for I do but be component yourself buy obviously some But you’re you, is very there like There into do where big about how hearing opportunity to opportunity John, just risk open-to-buy is mean retailers going you now Clearly, of running do an that? ahead

John Swygert

Yes.

thing the merchants of very the the concept think, big that’s dry deals that A++ going back that are back is confident to I our spoken sure powder, is absolute make are deals. merchant year. work Ed, how that to the is come patient half go and and aware wait they and severely we today, and being the focused fully for every are going they of in to, been has this we and And of the on to

that So because we’re being dry to and they great is a going if I to we keeping resist, key main consumer offers value value. and and on our also have to being compelling the give basically are our is what buy money. from store selective to powder, save they aggressive perspective somewhat can’t keeping to assists, give we the the effect come nimble are And very the trade-down going on

nimble. where lot the of business. we’re deals science we There to art is collapse way is do are believe the ability have our has puzzle. But very home always your the and we on a the at them than buy do parameters. DCs, the and of we the more have open operate We point, we ability in our runs hold that’s fluid Ollie’s are to have the at to and in here So But that piece been. to

So pass gold, I working deal not accordingly. what if call are we will and on we it’s the

our And years, you many over Ed, to we’re fast So for going know, following to their skis. as the us are we merchants but pushing hard not are on open not buy, get fashion.

a of in of We’re items. cycle for the lot life end

a So of lot not we’re what with there buying. risk is

are We’re not general that last and goods year’s merchandise, we’re hard buying fashion-driven, model. already buying

operate. we how into plays that So

Edward Kelly

you. And good Jay. luck, Thank Great.

Jay Stasz

Thanks, Ed.

Operator

line Goldman Sachs. our of Thank question next comes you. Kate McShane from with the And

ahead. go Please open. is line Your

Kate McShane

the into we Hi, wondered just just represent half? the our still question, going guess I to going for the could sales about back more the out to maybe be circumstances taking are if of closeouts or it for year round XX% thanks last given questions.

John Swygert

Well, possible. If Kate, that we very We’d XXX% to XX%. would His it’s but about got be would would XX%, be big with pushing in closeouts history the we answer I that’s a we know tell move, hard. love Kate, question are Mark always this past. to not big, but you,

are definitely sourced domestically We favoring import. versus product

buyers So on diligently the are working that.

be as find out So the we lot it closeouts canceled of won’t become more them domestically, lots are from great. But that closeouts that the stock there other call to here even going that a can in would retailers well be closeouts, from have we what will as well. make cancelers Asia the yet

So wherever we’re hard. go located, after after and go to the going closeout is it

that the everyday are closeouts second. first run value always are and we’ve So then business goods

mix will in accordingly. we So that

Kate McShane

how the Okay, question cadence our maybe month us Are you. quarter. by through was then improved you how and thank to second in And able just traffic through the walk May? about that trended

Jay Stasz

first transactions. we The is really the that improved against but this don’t say AUR so that the trends inter-quarter shift items, Jay. can I have not was decrease obviously some ticket out driven is really average by XX.X get to About in Yes, driven into going and comp a basket, was to Kate, with of driven get materially was higher XX% negative they rest in of And And decrease stimulus. a across our we’re up trends. of slight the quarter, of XX% all a in far, that those the was then specific, seasonal going QX. fronts. But by by and items

getting the first with of basket second for X. to cooperated, average weather both – and quarter sorry, So on trends we’re seeing, the as guidance the comfortable a and the stronger, quarter we’re transaction are our has I’m positive flat

Kate McShane

you. best Jay. wishes, Okay. Thank And

Jay Stasz

Thank you much. very

Operator

question from Simeon you. next line Stanley. Morgan with Gutman comes the of And Thank our

line go Your is ahead. Please open.

Simeon Gutman

It’s Gutman. one. Simeon everyone Hi,

in that ticket we’re picture the buildup mentioned seeing it’s point? trade-down like, items you us why What Can yet. does are getting what whether You looks buildup to the give traffic of the a you basket? mean? that signaling not the And we’re clearer

John Swygert

the the an effect know really when Simeon, historically. part comps our the It’s gotten we is of will full basis business. to exactly start of driving the has The as able what’s obviously, reality know will be to to this not have on is here trade-down outsized art they science force all because happening.

several last I here it’s this knowing that that, the I with early next tell view to to to forecast it’s But coming months. anybody to everyone’s benefits we’re that will it and was pressures earlier, as for I are did we coming, seeing year it I that think where and regards well. now else something the probably starting you in we We in So see and now. come me before from how think earlier actually just too saw see

much in start week the And disposable more income pressure they are. that. So math. Consumers single to disposable store, every income gas it’s to they the less go And so to have car. you and who in we’re towards only have grocery they strictly moving I think of just regards feel the put

the around right deals to compelling the give them think, is and us I they and where importantly, price that a is for opportunities can’t the coming most I So corner. believe resist,

Simeon Gutman

two Fair Okay. follow-up parts. enough. A and maybe

on – to to back and to why back on First, means price. you’re to or markdown of The And that which about per going inventory. raise rest the for dollars a the second guess, you to as the is the much basis, going why going adjusts the a for up in Can you’re I risk acceleration X-year significant lot, elevated higher a costs pretty out QX. store going there have this inventory basis. mentioned, part probably not are talk the Ed And year? of risk isn’t the question, stimulus for stacks question from is QX

driving is that what So sequentially?

John Swygert

two Simeon. a was boatload. than That was a That questions, that – mouth lot was more a

Jay Stasz

– can they those are I Those on forward our those talked because costs. are during and just But de-levered address in margin Simeon. sales I to QX, margin on increased we’ve margin the we’ve couple on headwind the little the a things. mean those because had chain guidance given right, going about cost in even of supply piece, import baked a came I think the We drop. estimates. costs line. and look, of cost gross

but think We we in I we the age Days with to inventory. I on a of point, risk, happen with And have we environment, our there. promotions any feel don’t know other we in at your the I XX coming we mean, good clearance our detail cadence To events. and Ollie’s the quarter. every in review what’s environment So look, next problem. the feel with we’re months, markdown going mean, shape don’t promotional have good standard

I starting we don’t I to half And basis. the generally bit about slight that we’re seasonal comps higher normal as time. and about X we our into we stack built way we’ve your to as But X% QX. expect say in for shift because the a we gave like do we’ve far than it an going at back significant is then had digits. the X% in of And uptick we call talk now of the And a would the mean, QX there QX. shift QX. of markdown acceleration out inherent actually last by in normal QX, geometric And a in of speaking, this and half into to we talked to we’re in And – a X-year QX anniversary guidance about time, the little point. tempered on So forecast with back mid-single a the have point look when kind then way that, and forecast last again, QX comps, a seasonal incremental risk sales be for forward. – the then

QX go if a as we we And key better We delays of in through overall inventory year, late categories, have for position even timing of QX that QX in have shipment categories, and both QX. some recall QX and and matter. seasonal last did you

remainder positioned of the it’s the we well that think – So aggressive drive seeing, deal don’t we the just what for flow and that’s think we’re are we year. we coupled think overly very and to these sales with and

Simeon Gutman

you luck Thank Okay. Good Jay. both.

Jay Stasz

Thank you.

Operator

from And with you. of Boss Thank Matthew next our JPMorgan. the question line comes

ahead. Your line go Please is open.

Matthew Boss

Thanks. Great.

you maybe Where about June level, John, second relative have improvement line thinking relative sequential you and how just you the pre-pandemic. just category that at customer, on question, to seen performance May if So, little exactly? under on are are Simeon’s then in to May? top And maybe pressure And we core a in elaborate quarter thinking increased then July outlook? your the could are clearly comps they about just

back Your to a mid-single stores giving comps half a gas the full higher algorithm? digit a for in this I you confidence guess over or given prices. return – the are destination, what’s

John Swygert

customer I our Matt, think, a yes, the not misnomer customer income to effect. going definitely core the our about average where is trade-down our biggest is a fixed core part hand. side. That’s – The $XX,XXX. into play That’s on house is

that’s it’s that do So, not can’t who or somebody poverty is level a at they strapped anything.

the all deal building, there seen and portfolio, us on range deal comes So, we of that we doubt, it wide that a believe motivate have the historically the them, out there trade-down are piece a its But that I have in lot strapped, the based effect big we there a is when on – a without have but consumer And to we portion is with. us. in get that is to ability able customers of that think a to are the get. way. the of it And flow people we to come of

right the some are give to that for and retailers the is is value see aware great struggles product now some great think to consumer. ability the that a I having struggle, us everyone retailers

timing. we when happens, So, with. results, the the see will the it know and we we know I pretty time will But good that and will to feel don’t able I piece, be deliver.

that Matt? am piece, with. So, question, What I was your comfortable other

Jay Stasz

the not on in cadence pretty Matt, lot the Well, difference quarter, three. consistent it’s a by whole of those the comps between month, of

Matthew Boss

And Great. gross as margin a Okay. on follow-up. then Jay, the just

just year now what the accounted think distribution for we walk versus merch points margin on for quarter, So, was And I versus forecast. the about thinking through if you about distribution – are the second missed embedding the it could basis headwind? XXX you we about quarter? what And then first as are think

Jay Stasz

Yes.

that driven point, about So were was merch we About of Matt, to margin on XXX basis XX% forecast. points your off the side.

margin we we from So, in miss standpoint, improvement was costs chain even headwind, side, we but didn’t our those that said, supply forecasted and a the had right a in on but And basis line. year-over-year, a point had We sales. attributable did have are deleveraging merch the more. dollar XXX then I a on have as we really, to primarily just

expect the side we forecast year-over-year, net be the in to it’s of in we quarter, about about margin. by been. it that XXX first becomes like gets QX we then elevated was our basis points. to on much point degradation that really in have about it that it QX from I probably supply you a more So, given And it XXX would we the a just we finally, then, about, looking And basis mean, talked to forward, haven’t about in QX, normal. We But year-over-year – chain going half basis things. year-over-year, has XX of points that guide. get think headwind. back better is obviously, changed as way year-over-year

algorithm. closer little above QX haircut on different. long-term is maybe expecting expect from the were are And kind the we significantly where across and not board be normalize to really, when XX, to call, a to the of We but get last we

Eric van der Valk

driven a under The add moving new by just improvement forward better expense contracts. Eric. chain imports for to primarily container Matt, is comment, supply it’s costs our

Matthew Boss

Great. Best luck. of

Jay Stasz

Thanks Matt.

Operator

with Citi. line Thank you. Lejuez of comes Paul from next And the question our

is Please line ahead. go open. Your

Paul Lejuez

guys. Thanks Hey.

And feel given now? have then also pressures line, not you categories if right inventory. to am inflationary any I as of come beyond above have some Are the line, is second, large do than out curious you SG&A SG&A were the have planned, what like any. that flexibility feel any on in how hope? and on results the you that on as like just availability would you different you if you. the to would What there much Just understand you there? Thank you increases good

John Swygert

in bit yet. in much still the there There seen flow, food see we not area bit better it of don’t would like but not to to one any getting areas other our more any With right are Yes, share, category. lot but that probably packaged we a that pockets as a be like weeks, am not little have come, position a regards seeing is are that, think right fair company it. There will the only and we would improvement a is today of with is are to that see of regards tell several where are Paul, there now. would last we don’t get of would over-inventory I to we still think we with say still have to what than it and risk And carrying I great no but I you we more like how with would areas But there is today. breakthrough the we concerned we risk but inventory, will exists, flow, getting now. sure the we little we it’s it’s

Jay Stasz

is Paul, And this Jay.

we we are yes, some what would of obviously on impact expenses. we all Obviously, tell be run it lean forecasting, attempt That’s in the we the biggest get look sales I pull. payroll. would we back. the recover I think Otherwise, already. pretty to just run On you than payroll can’t our to portion are that lean. would lever would pretty SG&A softer We If side,

up We some standpoint, cost And our of on cost then From a year-over-year. significantly are also are advertising. up. the printing seeing print has pressures gone utilities

our those little adding it’s have of got huge things dollars, headwind. not bit we model, into and So, but embedded a

that. think I So, that’s how I answer would

Paul Lejuez

you. Thank it. luck. Good Got

Operator

with question from of And line Ciccarelli the next comes our Scot Truist. you. Thank

ahead. Your open. go line Please is

Unidentified Analyst

[ph] good This morning. on for is Very Josh Scott.

question on results stores? detail terms lift cost the you Can Our the in early those the maybe any there is in from seeing more comp and are on remodels. provide guys of you the

Eric van der Valk

Sure, the I Josh. This take Eric. will is question.

into We lift. go to on are only going the It’s not six stores. comp specifics

that in keep completed. we mind that So,

investment And We on our six with expectations are stores those our complete expectations, of in an will stores and expectation. in that meeting are XX or stores. meeting less, are average a XXX,XXX get six are years to the X track return expectations. And our line

going are and read and to in we to feedback So, move the customer quarter. and results update again forward continue

Unidentified Analyst

Thank you. it. Got

Eric van der Valk

Thanks Josh.

Operator

Craig-Hallum. our And from with question Hamblin comes Thank next the you. Jeremy line of

open. is line ahead. Please go Your

Jeremy Hamblin

margins for come for taking Thanks second. want I a questions. the the to gross back to

the also was negative basis out. that. that point shift, change in of basis called a noted about points, guidance downside? chain, Could product be particular between the worse Supply a factors those split than little but categories think product shift the So, mix that that driving quantify maybe for expected, bit which mix you I XX year? couple still you XX that – the change two And would and in a

Jay Stasz

Hi can Jeremy, a point our we model, I internal about XX start I had basis address this for is mean that. and to change. Jay,

mix and And obviously, those components. half given of component it. back little then but say but it’s and would that between two forward, basis a that, of actualizing part trends deleveraging that’s points that is the is I John we – to in probably consumables. so well, this half also and There might going to and the the sales we about QX And on point the speak then Eric we your absorbing are half, forward as took XX going seeing strong in down are or estimating sales

on So, equation. same that’s the at right, mix. pressure putting of the And time, the other the it’s side

point part we will environment, this out. whether moving or books forward. on we categories guidance typically on, Some that products, aren’t as At domestic, this our provide of that’s we consumer. of critical the margin have shake that strong that that making would is a think value margin all focus in And that’s higher eventually, the the the to moving sure of

Jeremy Hamblin

now That’s of terms normalized that or in year? you product back normalized a your And you are return typical If that about you presumably there above and on there chain throughput, margins obviously on going now deal a gotten slightly by normalized have look like to the then are it that thinking back it. helpful. a XX% sounds ‘XX in ball see QX to in more be from pretty supply Got be you a ahead the is to maybe gross little the so returning you gross to But so flow, feeling good margin that are levels just of that, forth. levels, are maybe we XX% what can mix and margins. would lot bit, noise, better full than of seeing be take that better wouldn’t sales XX.X% go-forward where kind crystal and anything your a for more your standpoint, is levels XXXX improvements basis, seeing

John Swygert

the pretty would I we that import a as are normalized John. is costs confident pressures we XXXX, the load in XXXX, and I foresee heavy with early rolling QX. feel I increased tell supply don’t once this for margin see you, too whatnot annualize Jeremy, would we carrying and out as the gross right chain. much now

see we and to be in think start year to So, I levels think in you full normalized will will QX, XXXX. QX I benefit the in pretty much back

Jeremy Hamblin

the questions. Jay. taking for Best wishes, Thanks Great.

Jay Stasz

you. Thank

Operator

Jefferies. from comes Konik with of Thank Randy line the you. And our next question

Please Your open. is line ahead. go

Randy Konik

us Yes. guess earlier and in how some take have give call you? rates? and contracted when I hold, was around I start those rates How you the just before on it expand are much think mention Can in a you seen improvement container bit to that Thanks improving. the improvements guys. perspective upon little

John Swygert

– Randy, The start first. Sure. contracts, most of our

the And those so June. which when incur they is we of benefit begin in contracts sail, to starting

didn’t peak really the import the market, peak say, absolute savings. had last rates. are October. the to realize kind on September, August at we right some the around of into top of look starting of So, in it of And at of of spot year, you some stop we kind When rates market peak beginning

timeframe. We right September, that are at October

when rates when against – up we peak versus hit you are hit we contract. So,

year rates on but at spot also many move have We flexibility our leverage market the are paying. into to rates market of to into of specifics were rates, too the know could we as contract contract spot am the half approximately peak we year. least spot on going XX% favorable versus less that back not get some we I lost with that be some expectation this some

Randy Konik

helpful. Super kind quote. wages press then the release talked of exact guess also in select higher about was I markets the And

outlook us give – an market see labor to of wage in the Thanks. and maybe update wages you labor forth? can we start increases? Are on to there peak out areas? so and that what’s starting for So, kind Just on so

John Swygert

said, always wage I from have we – adjust a we as perspective, as by think Randy, wages by market. we market market

So, to in, markets we what going are whenever existing are market, pressures seeing adjust other today. start we we retailers hiring, Not accordingly. in existing change see a adjust to we through an are we we see especially ton that market existing new paying. will according market, with – And in of for the

wood, been change working are we them. go markets, we knock have could that, as stable. on DCs, But The pretty tomorrow. when New it say through I through

hang the hat as every that each wages world and DC I is day. So, my on evolving don’t

watch So, have steady but pretty been it, we for we while. a

supply keep we because it’s to the And at make we to will chain working So, I it leave stable have adjustments make, not to that. just need not. if more will we costly them accordingly people have than

feel we So, good. pretty

where changing I We are think in And still are world. things pretty the are good we sitting.

to and able competitive get So, going are properly. we will be run to be see continue to where it goes, model workers the but we to the

Randy Konik

at towards visibility Is make more There there there thing then fair? losing freight versus just that talked it kind have sounds is like more guide the that what last of wages. but there I spot the guided this kind more about you clearer flexibility sounds there of is the is kind visibility costs for in market, or beginning ask the where at to Jay like trying what you around is, able the just when am of in does annual kind obviously point is I is guess to think on more I and of guess I year? guess we year picture more to labor what being – it to about of a and ask visibility, you stabilization just maybe is of the model.

Jay Stasz

Yes.

a on think of the I think supply side comment. that’s fair things, I chain

think – would to and I on the to still about And do, front, never board, labor a which big dynamic call, bogey talk but that’s a had hour across like if we a have an big store it’s adjust $XX every nut. obviously, have that, the we wages visibility we on too, we we if market.

– already with would the my uncertain more So, bunker and rates. fuel, be little are our side component a on in that consumers yes, components are out talked that’s of do then merchandise Obviously, a you, best, would are a that but fuel and to to the couple in on we the that we doing how on diesel I have I forecast, agree what we buying got Randy. a maybe that and plays mix market about future come mind I have volatile think we and lean say what what price.

Randy Konik

guys. Thanks Great.

Jay Stasz

you. Thank

John Swygert

Thanks Randy.

Operator

conference showing I questions this turn Swygert And back regard. you. for And John no further further at I the time. any am like to over Thank to would

John Swygert

for results call quarter today’s on call. Thank continued to participation you and everyone, Thank safe. earnings on second We you, our next our support. look your Stay in updating you. forward

Operator

for participating. conference today’s Thank concludes you This call.

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

Ollie's Bargain Outlet (OLLI) 8 Jun 222022 Q1 Earnings call transcript