Ollie's Bargain Outlet (OLLI) 1 Sep 222022 Q2 Earnings call transcript

Company Profile

Participants

Lyn Walther	ICR
John Swygert	Chief Executive Officer and Interim Chief Financial Officer
Eric van der Valk	Executive Vice President and Chief Operating Officer
Peter Keith	Piper Sandler
Brad Thomas	KeyBanc Capital Markets
Randy Konik	Jefferies
Anthony Bonadio	Wells Fargo
Jason Haas	Bank of America
Jeremy Hamblin	Craig-Hallum
Kate McShane	Goldman Sachs
Simeon Gutman	Morgan Stanley
Scot Ciccarelli	Truist
Matthew Boss	JPMorgan
Paul Lejuez	Citi
Anthony Chukumba	Loop Capital

Call transcript

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Operator

Good morning, welcome to Ollie’s Bargain Outlet Conference Call to discuss the Financial Results for the Second Quarter Fiscal Year 2022. Currently all participants are in a listen-only mode. Later we will conduct a question-and-answer session and an interactive instructions will follow at that time. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without expressed written authorization of Ollie’s.

Joining us on the call today from Ollie’s management are John Swygert, Chief Executive Officer and Interim Chief Financial Officer; and Eric van der Valk, Executive Vice President and Chief Operating Officer. the to turn Walther host, now ICR. with will conference your over Lyn I ahead. go Please

Lyn Walther

contain is Good differ you. forward-looking Ollie’s call. limited this was not release to and XXXX Any to factors statements, good financial estimates with of company’s considered materially. second including conference risks, A results the remind that meaning which call intentions. may this predictions, this be covering should that objectives other the on Act to I include, website. and in but note our our performance, statements the Thank Please to of be Securities everyone management’s in on items, respect release within to forward-looking – remarks that the are quarter and and afternoon subject morning, may XXXX. morning issued copy recorded. uncertainties the to, Private of found not press call such actual our company’s control Reform would can being These that and are statements welcome a future cause Investor Litigation results section like expectations, Relations could

reliance SEC filings. and XX-Q report you Form not may as affect undue revise undertake that place forward-looking our not earnings certain meaningful speak any these may financial annual quarterly as performance. are encourage in President, Reconciliation earlier in our we We statements are may well new on the measures in non-GAAP be that, CEO our referring review and as will closely reports forward-looking XX-K GAAP a including to financial these of to control to issued only Form for them be should John on CFO, we You obligation release to our now which call filings, operating call, discussed earnings events. be our most these future I of factors today. release. Certain turn statements, investors will measures that we and Interim or today, our to on no financial with update Swygert. non-GAAP believe information On for earnings assess over measures available measure comparable this our the And and to or

John Swygert

Lyn, for Thank our by to over Once will performance discussing you Thanks, is everyone. review call hello, today. the the and Eric and outlook. and I joining second then call will quarter for financial finished, our results turn begin our I highlights, quarter Eric.

dynamic reflect Our improvement in and sales backdrop. second challenging our results against quarter economic meaningful a trends

to a XX deals our and our results celebrated the line automotive quarter sales we of during X.X% compared and aids, and comparable this Days sales expectations. milestone, were annual XXth the lawn garden, Ollie’s We this birthday year XXXX, store honor beauty offered customers special Ollie’s we generated as this customers to For in and food. deals. to hardware, with strong increase our event quarter, with our during responded health our great Days in We experienced our year. in We pleased

real providing prices customers inflationary for these during real brands on to We times. at focus continue bargain our

offering to believe positioned I great committed are We win. to deals, we are well and

lower We consumable products, drive into we more proposition, carry to margin slight stronger impacted to back mix During experienced product a gross our the profile. in reinvested quarter, which value shift margin. which price a a

a to for market we are a inventory value have merchants merchandise is our on to environment chain for not the what with broad of deals. and being the are with are planned, on and and get year. half inventory of second and know-how we assortment was the customers, orders, to believe seen we have our quarter supply an seeing the end Canceled pipeline to the opportunities never market, There products time. supply built of chain we back led than materially the but abundance in we be the is Based our in gross expenses plan, have positioned offer long the deals customers. expect type excess closeout sooner disruptions of combined available This we we of well the a market. continues right of like can The improve of in shortage today, easing favorable very to the originally year. Our of at the position deals for the margins half the we for

consumer prices. ahead gas the faces we recognize us, several of opportunities by we excited While especially caused about headwinds that inflation, higher are the food and

to that look be for encouraged half our to deals have they that starting pressures. inflationary see of as offer signs the are we down value in will too to amazing Ollie’s we are drive back believe trading year will consumers of We offset up to stores. to We and the pass the to consumers good

call Now Eric. the turn to I’ll over

Eric van der Valk

other. would Ollie’s start like thanking I team the John. customers each serving you, for commitment entire and to and work hard supporting their Thank our by to

an You Ollie’s supply our our on will chain. share estate, and are update real Army appreciated. I program, store remodel

second XX we with opened ending quarter, quarter new the XXX stores XX stores one, in During states. closed and the

of performance We are stores. pleased new with our the

continue between for on stores open in one XXXX. construction in fiscal open to of for experience XX have less and XXXX, to in XXXX. executed two we we planned XX and and this, the to XXXX relocations and delays fiscal closure While stores, plan several now XX fiscal expect leases permitting we Based

in We are these intend XXXX. our and to to cadence working mitigate challenges return to long-term fiscal

test program. are we the remodels, and learn of terms phase of the in In

remain remodels track eight XX the results. by on with remodel the approximately stores year. We pleased end the initial of are and to completed have We

million Army loyalty remains XX% loyal our customer our Army grew to we Turning appreciate Ollie’s over reaching driver most program, customers. important X% to XX.X Ollie’s sales an penetration. sales active and members,

build civilian We collect Army continue to our data non-Ollie’s shoppers. for to database

them opportunity the various encouraged to to Ollie’s by we customers the connect Although Army. convert are with channels it’s through our and these still early, marketing

Work quarter, in America’s recently We addition the milestone tuned our in During to events won celebrate bragging announced event, from who, details. to Book received the We several winner thousands cheapskate. we our applications Ollie’s the of biggest XXth anniversary. be is people looking Records, held to for which well next more of underway stay rights could Guinness World for put $X,XXX. crowned

supply Turning to our chain.

peak have well our We Distribution through transportation season. supply year. infrastructure our to and business improvements to are over significant made our the past the chain positioned throughput holiday service

fourth We we XXXX. in are improvement also in center support transportation To open continue costs. Midwest growth, experience plans to in to our the distribution our finalizing

DC of our Pennsylvania next year. We also plan to complete the expansion York,

and the of facility our York discuss I our facility, to support back addition to the John be expansion over now new turn to will to of DC our our financials. will over call stores. the growth XXX network With able

John Swygert

stores with profit decreased million, in X.X% from end compared to XXX due of expense in prior was margin accrual SG&A. in in XX.X% million decreased decreased basis year-over-year the the year basis remainder prior XX the a timing import labor lower basis net and Approximately compared adjusted For year. ago. supply number due X.X% XX expenses the quarter. slightly result year. decrease as to the for in the in a chain share leverage expansion control This sales a our of in the continued supply bonus Gross Operating to adjusted maintain the related to mix net of in was and in new in decreased and states, Adjusted a to primarily existing opened per margin X.X% primarily to X.X% the quarter, Operating margin offset store, into income net and SG&A prior quarter lower point points increased the sales is XX.X% XX.X% investment and due closed In by cost one for and and $XX.X $XXX.X earnings transportation year. EBITDA expenditures the count. costs, XX quarter, of Adjusted year last compares store from was to was York margin Capital chain XX.X% to distribution XX.X% additional X.X% stores shift XXX related gross $XXX.X increase one same ago. center. partially the the compared of stores. controls. $XXX.X diluted gross payroll XXX well was stores of stores higher as period the primarily merchandise and of three we’ve costs compared decreased sales value year. margin ending to XX.X% increased the $X.XX. increased expense quarter store million to opened $XX.X $XX.X new as increased quarter, in to to gross EBITDA totaled margin product percent million totaled tight the $XX.X tight an and increased increase million to Comparable $XX variance million, and prior quarter proposition. The and points price receipts. The the second by driven million, year. income in points of continued extreme merchandise Since $XXX.X to a compared million to totaled we million basis Inventories the $X.X with decrease million XXX to to lower

had At XXXX were of borrowings outstanding no cash. the the of under and historical $XXX inventories revolving end we fiscal the addition, our In million of at credit second in period, million quarter levels. $XXX than facility end our the lower

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

outlook Now I fiscal our discuss will XXXX. for

million. stores $X.XXX we store stores, of gross opening and sales to net $XXX to expect million income Depreciation approximately adjusted between XX.X%, stock-based benefits full $X.XX XX the six million, runs the closure, income million including in of XX.X%, approximately to net operating related tax X.X% of stock-based third to and amortization we XX approximately related $X.XX, between adjusted to Full shares total that two diluted range and relocations less million through expense tax of rate outstanding $X.XXX fourth X.X%. which margin For the $XX four quarter million An of of goods XX and income $X annual both expect to now negative quarter. excludes comparable in to the in excess $XXX new $XXX to and of year compensation. billion, to new per million, of open compensation one of of tax net exclude year, XX average billion approximately the of negative weighted sales The to between benefits $XX cost share XX.X% million $XXX.X effective diluted to sold. and which

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

million, $X.XX and to comp and and $XXX income offer thank we sales For to to like $XX diluted of In you $XX.X exclude quarter, an of to margin amazing operating $X.XX, XX.X% dedication. which experience done million excess to expect between share and gross the $XXX and third the hard approximately our entire and X.X% adjusted adjusted appreciate for of store XX.X%, both $XX.X have to of stock-based customers. to their sales closing, all million serve of per net approximately work tax million compensation. income benefits net team We million would that communities net related total I to Ollie’s our million income between $XX X.X%,

I’ll we Q&A back call operator As are, the say, to turn session. start Ollie’s. to the the Operator? now we

Operator

Keith from with [Operator first Sandler. Piper Instructions] Peter Our comes question

Your line open. is

Peter Keith

Good gross morning, the hit I quarter. thanks. second yes, want Hey, for the everyone. on margin to

come XXX nearly lower basis guidance. the than in points it So did

merchandise big seems big guess certainly the with from like – what You period the the the delta is pretty was quarter. of miss just was but down, that margin in short a commented I a slightly guidance time

John Swygert

our margin the XXXX. merch of in Peter, QX the and in Street overall in The expectations from was miss that two-thirds was compared one-third to of margin piece. merchandise the the expectations. Yes. we compared supply the miss slightly the probably sitting had merchandise to the down margin. chain We predominantly was margin merchandise Most of had

Peter Keith

environment. to over want to I then And the Okay. closeout pivot

So closeout I availability getting want I guess to better. certainly makes about is it from both a think sense standpoint. versus pricing it availability an that

deals half with looking should of a product Or is As function a but we out think there we for more there? of pricing back that year, about based going to of that in your much the the lot the is closeouts? sharper be are newness it similar be on stores

John Swygert

right new I deals see now, actually product. the lot starting of lot deals we’re item would well going of The newness. strong the gate true new and quarter, a And our and here say, hands out our be third pretty were a a seeing that Peter, you to we’re closeouts – in on, should come it’s getting of getting that way. the

going to So I given product and our we’re price, margin you’re great a say give very the with now, new and see for we’ve where consumer would in the lot confident right of to a we’re out. we’re able QX numbers sitting

Peter Keith

Okay. very much. Good Thank you luck.

John Swygert

Thanks, Peter.

Operator

Instructions] next Thomas Brad question Capital Our Markets. [Operator comes with from KeyBanc

open. line is Your

Brad Thomas

quarters? as sales change few Thanks how go parts there’s margins the guidance just bit about and how in And you’re some moving we half morning. quarter? different good Hi, I is of gross the about explicitly between stores, some margins of today through your of same-store how for John, been my any hoping gross if more Thanks. next the with question. XQ here about back little could and thinking versus timing thinking last was we in you’re talk a taking the

John Swygert

of QX. a the QX of to some we’re Yes. we’re expecting when into out marketplace. higher-margin out is coming secure were able There change Brad, is the there most in deals timing that of

just the so through pick flow we’re feel in guiding come up QX far some we from we and we’re And and deal timing comfortable came deals seeing QX. where has didn’t we they’ve changed actually pace. before, experienced get done were pretty So in actually to in. just the when them QX, not were we hitting and in QX of – really QX where QX,

has Eric been the the bit from little seen of permitting construction business. had and New most slower, of delays we a function recently store the have that’s as process a just timing, some side mentioned,

HVAC able the on Specifically to put new availability get to the HVACs be the stores. in

take we second-generation As sites. know, you

put are luxury what new don’t and deal we’ve all the those to got, building us, on we’ll with slipping some and of work and we out we year. the early them just So got store have time, next to

Brad Thomas

there think Great. an about long on annual margin have margins a of give Thanks. And Could then, something gross you’re where and about trending steady very John, update how gross the has normalizing? margins having of as we planning late, just of an basis. been thinking history just you on gross

John Swygert

Yes.

XX%, and living I gave for would we’re with we’ll pretty with but out to little it’s for I normalization we lower think historical the it’s guide say our XX.X%, – close QX a XX.X% to bit happy increased I’d think I normalized, to there supply QX the call and today, very pretty that would and world in get I say chain in be the XX.X% QX. than

our all margin be So when normalize. that a around to supply when start And our for is by timing control function supply see think our and start able normal to chain new the I chain, we’ll we that’s of of it. QX, to

Brad Thomas

helpful. Very John. Thank you,

John Swygert

Brad. Thanks,

Operator

Randy from Instructions] [Operator with next Our Jefferies. comes question Konik

open. is line Your

Randy Konik

on about X over the about Thanks, how consumer? months? penetration business that just let’s your stores, or around Yes. the in the thoughts good are shifting Just last And just increased highest and seeing is changes You mix us the you you to how perspective? related the a guess you’re with quarter. an I your Maybe just Thanks. level some change coming, what you XX most morning, to little bit of for the talked towards the shifting witnessing John. everybody. say, you that, months are days? question penetration consumables what thought and during more Can besides us key give consumables change give in XX the consumer think in

John Swygert

And something – some key that thing But would in. bigger I’d definitely I in consumer the that Randy, that’s to quote, discretionary normally ticket don’t you the items. historically with is away had, question XX had we’ve the are play we from say we last we’ve say the items shying have regards last seen bigger the days, nature. ticket

as anything the in items would our we’re in freezer. emphasize at worth are regards point We perishable think XX% going In in those consumable So that’s the don’t of that’s we that’s to sell business don’t consumable, what time. business, or to about consider to anything really is it XX% not know, this we you stores.

our individuals. So self most snacks of the for and supplies HBA cleaning for is

So driver it to is but the of can not people stable our business a that get in the store. part part, be

We to necessarily we’re products, consumable are focused that not planning advertising category. on these expand

capacity where sitting overall and probably think max the that allocation carry I is items. we’re our do we stores these our from right now load our space in to

the for been I So to get we’re stable front the will names offerings the compelling I tell our consumable very we’re getting we’re on has on think is the the the powerful, for offerings. hands very able on pretty and consumer brand consumer. you

that will the important the win. most get the piece the in on to So where think we they the drive. in that’s see them store have I we you that’s front, And customer discretionary Once to and continue get store.

Randy Konik

Got last it. And quick can one I ask question.

around In guidance I the about That terms margin, elevated. rate, come quarter. in towards, levels makes I to guess, gross starting guess, implied starting the third more you more of I the talked guess, back little normalized it’s a SG&A

So just of normalized kind about you given have takes – to like environment, the puts where may sit giving gross just and guidance, of kind sit the rates and gross thinking to forward kind where without of SG&A feel year trend? different kind feeling maybe relative margin of of kind like – going historical margin next qualitatively Thanks. but obviously where and of SG&A do

John Swygert

until supply back would just little a norms. historical mark I gross bit more margin say we’ve a Randy, XX% that sit bit the probably we our get established chain to the little Yes. below would can

of consumer. continue say to the we be but we’re careful but is to give historically out make may bit think has process in got it but to value little XXXX, I we nothing off, that bps far XX try SG&A been continue just not be XXXX XXXX, period. to would we’ll higher get back work on down elevated, XX, material, what the and to than slightly sure SG&A coming to improvements So I to a

Randy Konik

Thanks, Super helpful. guys.

John Swygert

Randy. Thanks,

Operator

Ed [Operator with Instructions] question Fargo. from Wells comes Kelly next Our

Your line is open.

Anthony Bonadio

This Yes. on for our morning, for Hey, Anthony is guys. good Ed. Thanks taking question.

even to expect QX. walk So XXXX a color is driving we through should year indexed us to some seems then numbers on assumptions? in comp I soften then in what’s just for as improving. some just QX it softening And you on ask those the why reacceleration against the Can to and product sequential I imply guide, those comps want just pipeline as

John Swygert

Yes, market Anthony, lot there’s uncertainty a the obviously, in of today.

So We we’re just we taking to going necessary marketplace. that don’t to don’t conservative feel approach. when it’s what’s go know a out exactly the and happen in really stretch

So how that’s And just our business. that’s the nature. run we

to sales basis back regards So different. that’s and of three-year confidence how the we infrastructure With the the for ahead QX, basis, they’re lack the plan make don’t is – three-year our get we of that we QX relatively much not sure business. overall the close that’s of buy a and not a geometric ourselves on how – inventory half, to just there

or not in pretty expecting QX between stable. real a deceleration we’re So acceleration and much QX is

So doesn’t the really guide there. much too change

Anthony Bonadio

differential like composition to level of of that chain think It would And I wanted XXXX. supply but just I color per you looks this is about incremental you things mentioned mentioned on feeling up you know at as unit the something like a then inventory ask inventory on you comment how this piece, there’s Can just inventory. I And point? like you’re about growth. any inflation term freight. X% imagine Understood. amortized store then your versus about

John Swygert

our a stores felt over too I to XXXX, December one to we compared Yes. stock inventory of levels when in in big my stores. of much. of I inventory, had was pushes because carrying We top to With lot regards the were XXXX, the reduce Anthony, took in

– the are sitting a think which helped give XXXX. see. what than stores our part our So get chain, retail our I your was actually our at stores levels initiative. with to XXXX, we’ve in it plan. overall there for inventory would me inventory than levels numbers to I’m elevated call With the I With me you pleased faster in Obviously, looking we’re always very lot at. higher fully run stores, inventory to where to expected. I compared down question foot square But on regards and in we’re would would of supply be that in XXXX, spot like COVID my the catch I regards versus where on on per again, average we’re I to please? can we didn’t inventory And

Anthony Bonadio

components supply just chain I to the mentioned know that I different was number. differential. trying the of understand you

John Swygert

last Yes. before. The it supply has been sequentially, about quarters three we chain for and the increasing talked

been run a double in normal were digits, and running we’ve high the they for digits Our single historicals – the here while.

do down. that supply our that working margin old the XX% the what will X%, we’re XX% is So for chain to which closer X%. We new here while we’ll be call probably cost to get believe of it, a seeing to norm, versus in be

So that. that’s margin just to through merch us working overall the offset

Anthony Bonadio

guys. it. Got Thanks

John Swygert

Thank you.

Operator

comes question of Our from next Bank Jason America. Haas Instructions] with [Operator

Your open. line is

Jason Haas

morning, thanks taking good my and questions. Hey, for

John Swygert

morning. Hey, Jason. Good

Jason Haas

it John, the in just more of get I the mix talked to you a the what last potentially about I investment comfort timing like in reflection think buying miss. a around products just said having put lower-margin consumable drove? flow? bit overall about of given know margin. competitive little of mix gross talk in merch that Can environment? you some shift? the the two-thirds Was terms Or you call, was the to consumer of just was in deal a more price I the want had of margin

John Swygert

and we coming we’re Jason, present deals deals of in little in. caused was matter of just was QX, but we material. of that lesser themselves, a nothing pretty mix, deal really some that a timing a the The of of just To we Most of the expected done a it’s when Like to the mix price shift the timing deal the that just the I QX, when they’re QX it didn’t needed timing bit the the deal be that’s had rolling flow. flow slowed to get of larger on thus goods. pressure, and up to time bullish to able degree, get a and degree, said, was probably of the for

Jason Haas

bit Thank talk wage to a And you. Got in $XX minimum then it. an about there’s going hour of little follow-up, as a been Pennsylvania.

broadly, wages going we Just know that are up.

So I’m curious sits today you’re And where minimum of in would just need wage up? if business of effect terms the wages have to the go that sort that paying? what

John Swygert

Yes. And level we’ve $XX, always as if minimum our But store said would is minimum, some and most of folks, goes it’s overnight been pressure gap obviously go definitely discussion, but a gotten on. closing. the wage with years up lesser that of and Jason, lesser the to has significant create

average hour an rate store $XX hourly at now. are levels Our sitting probably the at

started is dollar But every if we’d fast think if EPS big the I I as that. have stepped had have not go up would that. cost through fashion, would very it – a was a it think that of through we the discussion. – in about be navigate $X.XX delta first it into as to it’s So But it’s when invest we meaningful change, you to to just

do you can kind math with the that. So of

Eric van der Valk

Eric. Yes. Jason, this is

our wage offset well, to store we level. to super improving focused be operation to $XX. store could But continue to to of we as productivity do and our improve opportunities see at not continue that improve We a minimum productivity try level at indicate on

we hard along. working pressure wage move to we’re So offset as

Jason Haas

you. Thank it. Got

John Swygert

Jason. Thanks,

Operator

Craig-Hallum. Jeremy with next [Operator from comes Instructions] question Hamblin Our

is open. line Your

Jeremy Hamblin

the to XXXX. FY push of locations wanted some ask into about I development Thanks. questions unit and sliding out

Just total year. if five going wanted to of XX%? to year? locations other to locations were XX the you now are that so or of to year this to next be words, mean next Is closer roughly for be going that Does in In into additive understand, it’s that next roughly the terms previously. sliding targeting all

Eric van der Valk

from the based Jeremy. a the operational time, XXXX. stores standpoint. additive push we and built Eric. Hi, question. this XX That’s point to XX at how to least don’t We’ve I’ll built, to an out. to intend It’s take the at model year exceed not open It’s it’s on in

don’t XXXX this also at visibility have We clear point. into

to your opening the exceed We’re to XXX% point. But this in cadence. is be XXXX question. typical visibility certainly committed not we not our stores But to clear answer on would at

Jeremy Hamblin

then question. another And kind unit system it. as of just Got development, development

what from the noted I open for be a the potential that? XXXX. margin expect DC that impact you You might to to FY wanted get sense in

John Swygert

Jeremy, think we’ve historically, as and impact new opened start-up the a perspective. when get becomes from more a I DC, scale, up we lesser margin

is in of would expect think we’ve historically, I than putting play I we’re year So the into in on pretty recently most XXX that fourth to had the it Texas. or eases we’ll and basis buildings rapidly. less XXX points what our the first then DC of pressure because the same size, something the building, for size be just historical we’ve done

as in drag easing in I year haven’t big I probably, the three. one call for quickly the for years pretty but think far to don’t bps that drag was potentially in would then it, the numbers at yet quite and two XX past, looked out be it probably and I as plan probably and us, but So we’re XXX

Jeremy Hamblin

helpful That’s Great. context.

other the on don’t strong as higher, up last – and the be backing cadence to a just you you provide here just your playing of here were the May August. little is few But one what a maybe quarter saw bit If kind bit not follow-up inflecting maybe and a sequentially terms is context out. you mind, and pickup sales – month able to that my trends or over in little near sales or the how played just would term of whether June bit softer of the sense how Did cadence a and out little you’re seeing you’re around the months? July seeing in a

John Swygert

Jeremy. comfortable don’t give month color. where we’re thinking. comparable this, on give obviously, little each inverse weaker to to July were the We I a what to our other. too I’ll there. of guiding say, would going you into we’re comp, we’re the And just of and bit normally June X.X% a much we’re in quarter. QX, you’re May very X.X% at was

Jeremy Hamblin

for the color guys. Best Got it. Thanks wishes.

John Swygert

Jeremy. Thanks,

Eric van der Valk

Thanks, Jeremy.

Operator

next Our Instructions] [Operator question Goldman McShane Sachs. Kate comes with from

open. is line Your

Kate McShane

Hi, on thanks. do detail little discount We the to We relative more broad-based for ask is wondered Good price during it currently? other the to low was just if And more think your you bit categories? price pricing how quarter. a morning. on you wanted retailers took particular or investments

John Swygert

about, Sure, Kate. as is existence close-out and goal a for what price Ollie’s and all what exist the retailer. the our lowest reason to in is That’s market. Obviously, our be that’s we

be each it tell we be answer the expect comparable the be low at you or do for market can very a always the where for would We other categories, buy lowest detailed not by we we you, to With best every it on as but to as the we I price able that we in and a the the to question. consumer. – find would item. I and specific same we buy as item to that try going can. it and So price we would to retailer give invest look to in compared try regards we you’re to plan price,

confident we’ve a we’re in And themselves [Technical the that’s that’s into put we why in from QX, the some there to that QX presented overall with drive think in asked pieces up them and more deals before. that timing were of it Jason’s seen BofA, reflection putting he our of the the investment little themselves, present that we the margin. step earlier the point of is from So Difficulty] And out margin QX, deals and we’re that are we margin. the

Kate McShane

Thank you.

John Swygert

Kate. Thanks,

Operator

Instructions] with Morgan Stanley. Simeon [Operator comes next from Our question Gutman

Your line open. is

Simeon Gutman

and the dead I mix, horse cost changes guess the walk It Not we we guys. QX like do into Is Can on to price QX. sounds back supply to ebb normal? or returns mix the supply like what QX? gross chain we costs, do morning good that beat maybe from margin. that maybe it a investments Hey, to QX some when chain have walk specifically

John Swygert

the well, bulk pressures margin of supply Simeon, the from get – it. a get margin and chain is a ease Supply significantly, pickup pick as we merch chain but QX, we

Simeon Gutman

chain? heavier it direct the that just And it is second during quarter? direct costs came is through in quarter? that’s just cost supply Or the Or was that capitalized

John Swygert

that that both, improvements in It is out QX, we’re not as QX. that us but will QX we’re experience went the benefit in costs transportation quicker capitalized going but to well in seeing in mainly

Simeon Gutman

and see it, Okay. confident regard did purchases price benefit do you top have, the line the that that related with are And to deals that lot consumable the inventory said, discretionary discretionary of in you people some it how reversion off to lot now? that will is investments a you given you the that? a going the to And then think to there merchandise that to then you have too versus get over that something lift these an are What’s is confidence level goods time? of show durable great consumer drives immediate in to Or type not. good we be of right

John Swygert

for. was built we’re see garden. – is department we’re can say, is confident and what would this I pretty That’s QX, And discretionary. you in lawn leading our Yes. this

hardware, it. automotive drivers. were deals that some So It’s drive there

buy. price done in the confident likely to before point, we’ve pretty less are XXXX. the the they careful we’re this I’m of we’re seen putting out price for – and are points we’ve in the the terms it there But consumer, XXXX, we So and higher

continue. see how where and I positioned consumer. value have to we give we And understand QX, to go and that’ll to responses we much the some well and we we’re believe in think So did

Simeon Gutman

Good John. Thanks, Okay. luck.

John Swygert

Thanks, Simeon.

Operator

next our for question. moment One

question comes Scot from Our next with Truist. Ciccarelli

Your is open. line

Scot Ciccarelli

Hey for guess more than this you’ve guess But now. cadence the quarter, first bit we modest but would’ve Scot flow growth I strong John, or maybe expected are a overstock Ciccarelli. kind than geo stacks about several talking inventory in certainly better I guys, deal been quarters environment. of

be can it function it’s bit of timing So us we if start just a to in haven’t or a seen help in we improve, a maybe you maybe different you traffic think apparel, necessarily differences as something even the but sales Ollie’s that’s biggest of lot should understand but just hearing from yet, merchandise which there’s overstock to isn’t a categories, there meaning seems of problem keep area other retailers mismatch, typically sense? are

John Swygert

– Correct. retailer. an definitely are Yes, apparel not we we were

deal Scott, into the does flow, some hands our say the not hands. plays other into we that I that really regards So But play to with pleased results discounter’s with very would were There from to to would QX. our we tell customers going we’re QX which respond me significant in saw change what we was offering. pretty a the step trends what that from and have

before So change a I it’s in terms off we’re on big, chart, big not stack. think the that of three-year geo while it’s running a where

that. flow more year about the we’re QX, on. to It’s become on. think flow to really the deal goes stronger here as present just to QX. year deal The get is But we as powerful even very going said, it’s as goes in I itself excited So starting believe in I going this

to going So Ollie’s Ollie’s just more opportunities customers. add for and that’s

Scot Ciccarelli

But little talking I on it’s kind mean, the that. about seen activity, already? your liquidation of you’ve target markdown of Why activity, would’ve follow expected I had, think whether haven’t faster if flow to a massive channel you I bit I up you sourcing? in guess Walmart it, terms could whoever do more into see

John Swygert

the Closeouts don’t many our to for take time at that be pay it and and for we’re times. Scott I many, what willing us to consumer. become said able way, Closeouts pricing available work to

become, don’t not every market. I’m time liquidated, it you the clear think to like takes speak And in very closeouts immediately that themselves present we normally would those for So so. with time they’re

Scot Ciccarelli

it. Thank you. Got

John Swygert

Thanks.

Operator

question. for One next our moment

Boss with from comes Matthew question next Our JPMorgan.

open. line Your is

Matthew Boss

thanks. Great,

towards did just you’re category And talk discretionary? So that changes shift really during August? trends John, trends, exactly notable versus seen in consumables deal And last top have flow, any I on then guess you see about on relative line excited any you as then on specifically the the categories when opportunity? you about accelerated that, the the

John Swygert

of Matt, go of tell to at categories in. looking back there’s we’re that you a lot kind a deal how it. flow Well, of I’ll we’re seeing I’ll lot

almost a We’re than other in clothing. deal of seeing every lot category flow

there So and the bed hardware, a out housewares, ton automotive, you of HBA, there I in deals is tell would bath.

We’re actually seeing deal flow in pets, toys is huge right now.

a than deal a it’s other category there’s which fine So just lot we’re not clothing me. that of for seeing not flow,

first the So beginning I was forgot with no that. issue question Matt? What have part. I in your

Matthew Boss

that? Just you that shift did exactly change see August? consumables And the did into When as you towards versus accelerated on moved discretionary?

John Swygert

to the consumables sitting We’ve QX. from gotten there in in to probably haven’t seen we started just HBA part in we shape. food has see shift started saw and We Yes, QX front [ph] great an started, in that better that lot a what right change of the in be of much in items the after in consumables on its deal non-discretionary some got we’re the the flow acceleration Matt. QX,

pretty, a which handle major in those so really we’re some drive into got much great QX. consumable, not seeing is consumable shift big a as So deal seeing steadier gotten not the manufacturers, that. seen items, and we’re of helping some flow but a it’s think for on the I we’ve little shift We’ve

Matthew Boss

value And if time into made pricing the that we in on bit last or competition Great. changes any when a an was Was on you trends? investment similar then this? the investment it into just it value, elaborate decision, was to traffic

John Swygert

below we’re it going pricing retailers. every try or to aggressive promotions, day. Matt, the more aggressive I always retailers think more to other we get as the be do on on

change look the So individually each make at have our item if every and they and they to. merchants

market, as we it. of the can up customer lowest for business. the what’s how we runs sizing a best and genesis So price what’s when the merchant And it’s looking deal, they’re what the – our their they’re that’s the at for pay

Matthew Boss

Great. Best luck. of

John Swygert

Thanks, Matt.

Operator

next for One our moment question.

next comes with Lejuez from question Citi. Our Paul

is Your open. line

Paul Lejuez

why guys. your way? thanks third deals such quarter? of curious, performance. ticket gross And – talk assumptions consistent your just just shop historically customer what ever traffic you maybe the shortfall Thanks. Can your given you the second gross impact as couple one, about a are? What Also deals Hey, understanding not in would your your that percent of quarter a have and margin what last versus quite opposed I credit/debit? guess cash the with I’m then had timing cause margin curious to

John Swygert

supply Yes, margin, Paul, to know, been a and chain. of on there’s the with pressure as you deals regards ton the

large initial or had deals to plan drive two the to we’ve get margin merch quarter. markup and higher one a do So can a markup, the deals drive overall and for

we’re when you chain X% than supply the flexibility world, normal on the more pricing flow a X% on a sitting XX%, at the versus in you do have deal item lot of XX%, So now. XX%, or cost right

that? have do we pressure have either. don’t So normally We No. have the

there. we’re the deals some time offset – up these let present So it to The supply is is need themselves the and to a of starting reduction chains little to see costs. period bit, a margin where starting a we

So a we the margin going and have our more mech still shareholders. and deliver goals margin that’s hit lot accordingly opportunity give the to us that to to price

rolled deal So XX.X% notice before asked I’m that’s that. just well. how would’ve deliver it deliver strong, QX. as out don’t standpoint. we guys us a we outsized it you no And pretty confident in but margin, And quarter one of we done and a have a that’s from And pretty that probably in it that’s just seen when that

handle got think a I we but on – good pretty So it.

ease and it to the we’re seeing starting chain see definitely supply We’re stabilized.

of have for So I of the sight half we the line back think year.

versus we’re We’re We’re sitting. cash plastic, what paid regards to cash. XX% credit? much how With pretty our comfortable customers, XX%

Paul Lejuez

then And it. Got just traffic ticket… the

John Swygert

on second traffic the ticket piece, here. Yes, one hold

– ticket. then on average double a sequential up and quarter. overall, I to digits actually Our transactions was we mid down us The last digits. improvement to were And And get had X.X. were call digits the mid-single basket a transactions our mid-single they

Paul Lejuez

are Have in to that come XQ is Okay. that The you you margin still already gross one And got the that product then third expecting merch to the were it’s deals. in come? favorable on follow-up anticipating XQ to you such just or just quarter going margins. tied

John Swygert

We’ve got it we’ve of purchased. some it in some and of got

sitting of sight with we’re the we have where to line So margin.

Paul Lejuez

Thanks Good Okay. guys. luck.

John Swygert

Paul. Thanks,

Eric van der Valk

Thanks, Paul.

Operator

next question. our moment One for

Anthony from Capital. with Loop comes Chukumba question next Our

line Your open. is

Anthony Chukumba

from missed take can Good is for quarter-to-quarter I This quarter I row kind expectations in shift reduced to you’ve Thanks XXXX. guess this back a like quarter I great that’s row but doesn’t just your Like all the second out all environment. figure morning. all things that Because that, seem and here, certainly a macro around And to understand taking wanted in disconnect is, of about it the that guidance everything that for flowing here. consensus get just talk inventory my a through second tough you’ve but step is this trying a in the out how numbers. we’re right? it’s and what I’m I there your question. there’s

to same it problems? execution figure Because trying just call seems Is going were we disconnect of quarter. I’m So there Are exactly thought like the out good a quarter happening? it just the you and this it there’s mean, after have as kind is consumer? big after be? deals there quarter not what to I as like are seems

John Swygert

you Yes, that. I with on think I agree don’t

I there’s been think no disconnect. that

on been given stronger we’ve I that never flow very and the we that it to had working become a We the was the much through And QX. deal going supply in clear of we’re very, strong a ton of to be that in we headwinds, think chain pressure clear we to was margin. believe – back XXXX. were very that half had going going illusion of lot get

item The we’re happy But of and availability So of perspective. product there’s that with. issues. not misexecution control can’t from COVID timing stores supply been to we new think step related a chain definitely I our don’t

flow and I thought that explainable something half deal very the the guidance. There’s to margin QX gave most break out would we that have have until XXXX. that’s the when a not pressures back item. we So That of not into and clear going in it missteps to of this built be a been set would think we was timing our significant loose But year up been that and on already went I’ve easily something understandable. be

Anthony Chukumba

for Got the Thanks it. clarification.

John Swygert

I’d am to like remarks. I time. over And at the closing for any questions showing back no further call John you. to this Thank turn

John Swygert

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

Operator

today’s Ladies gentlemen, presentation. concludes this and

You And disconnect. may now wonderful day. have a

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