- Earnings call transcript Q3 2022

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Operator

Good morning, welcome to Ollie’s Bargain Outlet Conference Call to discuss the Financial Results for the Third Quarter Fiscal Year 2022. Currently all participants are in a listen-only mode. Later we will conduct a question-and-answer session and interactive instructions will follow at that time. Please be advised 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; and Rob Helm, Senior Vice President, Chief Financial Officer. the ICR. over turn Lyn your now with Walther will conference to call host, I ahead. go Please

Lyn Walther

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John Swygert

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

I the to to valued our consumer Rob him I in for Officer Chief with a contributor years. strong track to am has his like record forward new to be and Financial Ollie's ability begin, would sector family. look working welcome confident we the and Helm, Ollie's Rob Before many to retail a

over X.X%. third comparable increased and X% total sales sales increased year store last Our quarter

we our for to business in the were our the overall While two with softness pleased quarter, experienced comp last were we results end until the October. sales weeks low we tracking of guidance of during

the goods. beauty quarter, significant lower garden, and in positive During particular quarter. rate, driven We than sales. to sporting improved our last strength comparable chain supply & more We gross This aids was pleased generated lawn and were with departments compared & merchandise margin. by margin health food, of saw half in the our store costs hardware, improvement

highly competitive is promotional. to as to invest motivate consumers price continue the environment We in

and As we extremely consumers positioned essentials, save deals the well strength continued deals. The are seeing we categories. in current are the remains market need pipeline. deals to on and and tremendous in with closeout more we to consumable environment have in our favorable stores in deals, believe our everyday We thrive

compelling allows good availability incredible see we At value and We slowdown seeing this existing and consumers. environment of sight, categories no of are to to all in opportunities new us vendors. point, emphasize to this our proposition of we both continue from cheap the grow across sell and type deals stuff our

the We busy closing XXX stores estate, new to had XX real the fourth last in stores XX quarter reopened compared one a year. quarter. relocation, opening ended which we quarter states, XXX with early in due to Moving a to and

new the stores a today, opening store additional us XXX plan January. with remain opened to stores have of levels bringing XX While We store overall. in of with pleased store opening challenges of persist, our count we as one productivity

the stores our for growth. engine New are sales

to XX XX as approximately stores our and can X,XXX to total. in a in continue and our are we long-term open XXXX, result, challenges stores today We over annually that expect construction XX open market stores and between and model confident the permitting stores plan support with face in is to

In remodels, of the we program. our store terms remodel of with are pleased results

tested continue have several We for and learn different what best layouts works to customers. our

plan to fiscal remodeled five of have We XX year so of to by for more year stores this stores the a far the XX XX to stores. between end and total complete XX

peak next and year. center favorable chain, expansion support of Pennsylvania Midwest last the improvements transportation have York, distribution XXXX. the more center stores. plans to to first our new year well the are our positioned supply growth, Together service in our We're position the on from over XXX will finalizing purchase continues benefit able a network are made we we fourth agreed our To distribution store strong have distribution stores season. ease, year, we during holiday The our over past Illinois. to open land our to be in to as in half the is pressure Turning to environment Princeton, to with chain center in the of to our supply selling support to compared

first second half to We and end the fourth quarter by XXXX distribution the of distribution of expansion expect XXXX. in of the of our complete center center York the the

new made have enhancing awareness progress and customers marketing customers. brand we attract to front, existing the motivate On on

our for X,XXX celebration, bobblehead the XXth TV Mascot won through As generated our outlets. part inche of lot we bobblehead. of a our mentions a Ollie, Record and seven This World newspaper event buzz foot and online, which created world's news unveiled largest our Guinness over XX the anniversary for brand of

over to combined billion America's and bobblehead events, birthday We Harrisburg, XXth X store. enormous cheap at including invite with skate our Our to led display brand. biggest visit contest, bobblehead of Ollie's impressions our our the Pennsylvania our you

TikTok, Facebook by in quarter. to and as the such are test Instagram, from begin seeing second our micro media which on We are influencers will social nano we platforms excited and results the strategy

grew all to invest on accounted the and sales X.X% XX% during marketing. build continue forms perform Army well We Ollie's of of digital and quarter. and in to over continues very our for will

exciting most night and Ollie's XX. year this is Army Night Sunday, December busiest the Our of

are once Army exclusively We to members. again to our Ollie's thrilled open doors

have this night worked fill evening great stores fun bargains. to teams our for and can't and Come tirelessly deals special for to wait welcome we us a Our tremendous our with bargainauts. join loyal of

time If you're hope savings. sharing not and still on to enlist Ollie’s, on We in see fun I you there's the special -- you're not if remember, the to there.

customers our also our efforts which began to we customer In grow. to part -- database, which comprised continues was testing civilian as base. of of to expand Army direct October, mailings shoppers these non-Ollie's Our is targeted

and encouraged focused the which progress facing on control, we recognize delivering we can third are deals that what we the We with are inflationary great to customers. made pressures consumers significant is during our remain quarter,

were Friday favorably environment sales responded as pleased deals. remains our we with customers the uncertain, our in-store to Black Although

store Our in trends line guidance. running quarter-to-date comp sales updated are with our

business the have We and and in the attractive retail, of relationships have in benefit continued the the the a from of disruption we believe are to we value still most of scale, we and know-how in marketplace. the great company closing, one a finish sectors position the in extreme to believe front high season inventory us we In growth lot are strong. in

call believe value you growth long-term We and model to the business the proposition supports plans. detail. of have our now our tremendous in Rob our QX financial runway and footprint turn to to I'll results outlook through we over expand our take more

Rob Helm

of the thanking John. rest and off start morning, the team warm everyone. the for by I'd And Eric John welcome. Thanks, good and like at Ollie's to

I've been caliber While of the I've only of weeks, really few been impressed a the team our and here our for associates. with dedication

prior store compared of increased last in sales quarter, totaled the sales Comparable the to million, For the from year. an year. net third quarter increase X.X% $XXX X%

slightly XX quarter compared half Gross lower XX.X% we During were one end stores XX first stores. quarter, four count driven the the increase merchandise an states, of due profit in from costs, XX margin which we've costs to pleased QX the year gross chain our store, We lower margin. with the meaningfully XXX store and to lower the primarily the in improvement quarter, margin ending and declined second year-over-year. year. basis the supply stores supply an to opened significant higher Since quarter, than X.X% points by closed of last third additional were with opened in XX.X% chain new

timing to XX benefited from higher of higher second percentage margin merchandise to basis to also the net by sales partially our costs, increase income compared expense to last million The compared the XX for of disciplined selling primarily point to We higher expenses Operating and income $X.XX was $XX year. fixed X.X% control. costs. basis margin related our selling XX.X%, to basis points as due a chain costs, compared Adjusted and decreased share deleverage expenses million Adjusted merchandise to a margin slightly higher XX% was adjusted net $X.XX, $XXX XX number EBITDA million stores, was in points EBITDA earnings million, to the last ago, adjusted was chain of costs. X.X% per and $XX $XX lower to $XXX quarter higher with compared increased quarter. to the margin decreased year. Operating the quarter. the quarter, the prior supply a to flat year receipts million for Inventories of to totaled XX.X% due year. increased primarily in due the increased supply merchandise and offset SG&A a

that our the note inventories lower XXXX disruption. end than supply level of at addition, were chain due is In important it the to our to QX historical

credit balance primarily cash prior and no center. million with outstanding revolving of our the distribution compares $XXX with York totaled expansion cash This facility. remains million new borrowings and the and hand strong in $XX under expenditures existing Capital Our stores on $XX year. sheet the for in million

purchased has our quarter, we $XX the common invested During of million shares stock.

Moving for the quarter. outlook fourth on to our

us, have business and lot well of we deliver ahead are to deals Army our of great including We customers. Ollie's positioned believe a Night to

comp environment, flat of $XXX to tax However, We unpredictability to $XX $XX XX.X%, X%. stock-based of for to to of quarter. million and uncertainty the income $XXX to are the share related earnings million $XX the expectations now benefits Gross range our adjusting $X.XX of current of $X.XX, per compensation. total store to million million of exclude we million, net $XX XX.X% of which adjusted adjusted excess of both margin sales operating and to fourth sales income net million, in expect the rate given

which For and comp of X.X%, the sales of opening Full-year two $XXX.X expect net gross now relocations billion, XX $XXX.X income net to XX.X% X.X% and adjusted total to store of related excess billion of XX.X%, adjusted to $XX annual exclude less the compensation. new $XX.X negative million. benefits million, which approximately $X.XXX $XXX.X of closure. sales stock-based tax operating stores, to full-year, of to and of approximately both rate $X.XX, million weighted one we the negative of $X.XXX share earnings margin million XX% An average compensation tax to diluted million and stock-based of $X.XX shares excludes per income benefits of to tax to related effective outstanding

We expect store center, expansion, level the and of capital in the million our turn to operator will the stores, expenditures to related our distribution new I call to costs York now to projects. related take distribution fourth your center initiatives IT $XX over range questions.

Operator

question Our from Thank KeyBanc Capital first Thomas comes you. with Markets. [Operator Brad Instructions]

Your line open. is

Taylor Zick

is This Hi. I then how Thanks. of little you you you on about sales the if a quarter? the up question. holiday about if I was can -- taking for Brad talk Zick the Taylor cadence specifically? appreciate bit the anymore And could more is more during the the shaping talk Thomas. wondering

John Swygert

the had not slowdown way as quarter. looking perspective. out were our in guidance a warmer the the week until each the shaping We cold actually Sure. the And that QX fourth pretty really, a continue business. drag was XX trends in the said locked really much did Friday obviously, for Black and overall strong and in the of With we low-end and to to are with strong we're Friday the obviously end weekend and overall and nice at week some quarter, weather some of in I to line liking said, quarter see at overall was and of time running at of mainly we the cadence as this October had the the weather and Black August regards loaded XXth quarter. our the and September in related we're on up. We But the other business point trends come the quarter the is definitely day initially,

feel So we're comfortable we're sitting pretty business. and obviously the where today good we with

Taylor Zick

seasonal about items talk versus can Got items? one are more maybe I Thank or just the toy it. discretionary the If and you you. maybe just squeeze how how stable more the performing could the in, generally

John Swygert

as couple item, of there’s as just toys seasonal is a Obviously, well questions there, a Yes. holiday.

performing then within the top you can So under and & as have lawn selling were definitely quarter. our we a stores. more are our garden items discretionary is and our in well, Discretionary departments discretionary those two ton top note departments in front hardware

So ticket, offering. as and some the we're With pressure pretty there's that is worried be what on the was last to goods. disruptions. holiday toys, definitely chain consumers People a year well a with regards shortage unique some providing supply value items were are of proposition little higher discretionary strong that seeing believe where lot we responding but are a we're obviously, of going was there to to we're

last forward were sales toy a So little year. we bit into QX the believe pulled

a There's the made We're little go the the pretty shape in feel rest days holiday shopping was good XX we to a of like for bit in tougher period. we're with still toys QX season and of us. it for very So strong.

Taylor Zick

Thank Best luck. you. of

John Swygert

Thank you.

Operator

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

Your open. line is

Matt Edgar

is questions. for Matt for Edgar This Peter. Hi. taking our Thanks on

is closeout you're changing? margin getting is on mentioned the know how backdrop, it. more and more how changing it then is how quickly, real but sequentially? the of, I Just Appreciate closeouts, and closeouts those that changing kind you just

John Swygert

Yes, I getting seeing strong. the business tell stronger, and positive getting deals some overall the are has bigger closeout you will is movement we're there. it been

department, we it this out we timing that not think flow the excited garden, continue or margin sitting think momentum here. to pretty flow. we're nice business expected, we are obviously, going now contributors We're biggest can't & deals, of seeing -- we're lawn the us is good domestics activity on the in had but call real in and flooring of Closeout we're margin had we surprise automotive, the As good deal seeing where to as some a forward see profile some don't year-over-year. I categories housewares the to believe the about. is We feel are right with move profile We consistent we deals. our to in

Matt Edgar

And you but can answered I can't do good timing, on you guess talk That's Great. hear. this to closeout long maybe last? environment this really you just how elevated then think to

John Swygert

have We been never know good that for you. XX-years. answer pretty with to be Closeouts honest

today think the warehouses. overall strong, are you what would the people tell inventory you, and half -- lot business challenges would through sitting the have through I at is that pretty closeout So of of ‘XX the ‘XX. first a I facing that pretty I think good I seeing are we're runway we and least goods the in tell

Matt Edgar

off. Great. Thanks. I'll hop

John Swygert

Thank you.

Operator

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

Your line open. is

Jason Haas

that talked long that in X% anything about and for John, the thanks I'm some seeing XX% gross curious morning we've good around swing -- understand for curious understandable around. we're term the if algo hey year I'm given past XX% algo? margin just you're curious but taking I volatility questions. seeing this here margin. my comps you're anything long-term things in, to year that Hey, think and I'm But there's X% there's the the gross some business? your this can I any if environment the been philosophy annual changes if to changes to given

John Swygert

and answer the would coming is on getting XXXX model get we're to you, I I normalized and back normalized don't pretty that their because more tell can lives excited I'm about I more back no. Yes, be, answer people think normal. to cadence Jason, the think would think I business up,

on has I our and ’XX. changed in XXXX I'd call in get will algo business. that the choppiness be, think but think think may all. little long-term well to than I at to it for I a back I'll the lower else to be for like which don't get us everyone bode by there us algo we'll So, margin normal ’XX bit

a XX ’XX I like to and it I'd growth, think the XX, store call with the XX will challenges, be, just construction said, we be As permitting to stores.

I little to have right ’XX are in we long-term bit algo, of with we'll regards to but that's think So a and intact. it back slowness

Jason Haas

hear. it. performed business benefit under income going That's your low great expect ’XX, remind some some can ’XX and curious just in greater how last see trade down going pressure. -- To forward assuming what customer that us forward? recession Got you potentially to And the period? And the a through the remains extent you do just to be could

John Swygert

are time They've previously spent at obviously, but shock But we what today. in system as period, XXXX, obviously a they sales obviously which pressure -- of XXXX, I pressures the different, the experienced under customer. and lot had to back had pipeline the going strong. create XXXX, store comp pressure to financial the think is the people about had going in the heating very the a to we offered there. a customers long and haven't had didn't little of not it Yes, time have going we much they in than also folks lower ranges. middle put is was money to And had and bills was the an ago, different continued there's significant And responded income annualization we very we are as But financial This XXXX it's real pressure. inflationary think whatnot X% and income think to to the one the deals this a were I I on -- XXXX, like home. at they

to see come back favorableness some should we So us.

Eric van der Valk

income encouraged that income, on trade to It's the Eric, a so seeing marginal down. to see out. the we're a still It's QX, down. I'll customer, benefit similar jump similar is trading We're QX, to just to trend similar favorable. lower trade us, higher income consumers the We're slightly customer fixed continuing Jason? QX. in in

So of consumer hopefully higher continued stabilization down that moving income lower of and income fixed forward. that the trend continues, the see we trade consumer

Jason Haas

Sounds good. Thank you.

John Swygert

Thanks, Jason.

Operator

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

Your line is open.

Edward Kelly

Yes. guys. Good Hi morning.

John Swygert

Ed. Hey

Edward Kelly

mentioned you. that? maybe and XXXX response Can margin you that of like margin I more just QX I should you as in margin down. people the couple Could for about things it? more you then a -- another be. you'd question to but mentioned a gross John, you're on guidance And of you came lower to a the very gross at guess bit buying it right provide what we and thing be product, good and there there be still color sort would expect to whole is thinking yet is provide well that rate, pressure. color how

all So of for those and sort two you ‘XX? maybe QX could together think us wrap in as it just you about items

John Swygert

we're off which we've street lowest was disappointing. Yes, severely margin coming delivered XX% ever was the at Ed. Obviously, a change, the of probably which in to QX,

be quarter to close for So obviously to and number. XX.X% at said expected that we had we delivered we this

we slight our margins the X% really X%. back done lot on should back related to last we've the work X% pull change to get deleveraging on be. we of to sales The a guide the from with a So to QX to to think X% where down from

costs is So in ourselves for can the some I of to deal flow. don't for going I'd nice think for XX% we're up I come to don't let's I we versus you closer we do going going it deal think I'm if have to see I think you're improvement but just love it margin, that chain to now seeing to have give the it, a to great and in ’XX. get will to but ourselves then see if get with disappointment think us. quarter, margin back don't that's to to a call it, little costs we're looking I our under deliver With regards how and And to to get a some a in probably I'm XXXX, in but which upcoming think shake not. of deleveraging we'll XX% want supply want I out we set -- leverage ’XX see definitely right the XXXX. the do I XX%, ahead XX% better -- in the it to time we are will opportunity March, belt the temporary, that regards can here guide be more supply better with get XX%, we chain at QX. XX%, closer a than we than call full-year

Edward Kelly

question mean really I bigger what Okay. think don't expected, And does guess. that flyer case? just getting you, to is Why we today, that even that The that deals great question be you another picture is then for for next would responding historically, do year? your you're way is have a in And seem the though robust. is consumers

John Swygert

lawn discretionary I Yes, & Ed, we consumers pretty number pretty that's think one garden, responded responding are the as that. well and consumers department responded that to the well obviously department a well and they as so have hardware, discretionary total to

a think environment responding, a uncertain so very It’s continue I just everyone's think it's inflationary environment, So operating that everyone's highly environment. for say in promotional they're as fighting dollars. to we're I an we

So that think we keep going X.X% I disappointing our in am I comp didn't quarter? the that

Edward Kelly

Yes.

John Swygert

get was that to those And going We'll we know with cold some sales the weather come. business. had structurally we that back. But not something impacted us wrong is the weather

shareholders. positioned a stable back And operating environment think right I like well and companies we're to deliver continuing and we're increased So earnings move on we feel we're to continuing forward. and the track the to the to more getting

Edward Kelly

guys. Thanks, Okay.

John Swygert

Thanks, Ed.

Operator

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

is line open. Your

Jeremy Hamblin

XX to Thanks. I margins for about to expectation. points QX. wanted to looks XXX points basis to to just understand, the you're it below basis come so gross back like guiding And

just $XX million underperforming you always wanted toys a come roughly Ollie's don't Night? you've that's you're I understand, what Ollie's I ahead forecasted I consistent lower of of promotions QX. have Army that off XX% with So think, downside, of Night. to be running by after in of particular, promotion done Army And categories historically. needed think know, toy Historically are explained for the I some some But would sales where or deal, of toys the talked not as them consumer? wanted well one of as some opposed just of deal is categories, you pressure maybe that brought I to are to was XX% as this but whether you had buyout you that the products prior, aren't being kind of in there's your understand moving toys that that if more in certain about of, understand maybe on like just hoped think

John Swygert

QX expect with regards in the I The margin attributable of deleveraging tell it's that of we to ‘XX. actually ’XX a merch merch be Jeremy, not Yes. QX you, would from to margin, compression to margin, sales. XXX% the up year-over-year, there's so to the

going do margin some holiday to today aggressive really it's million, the advantage period. period sales heavily. volume toy we're what people in we're operating do are impact less given us the for from for environment we're what take is is I to the quarter. So normally all shopping very getting day we're than that's event know, the to the And a very the promotional we're five for implied on the and guide regards overall markdowns that promotional promotional to environment. toys, post have of toy for where the period you holiday nice highly think issue, of million we lower Everybody as related have a trying $XX don't our running we'll now. right seasonal With is being We $XX items

that. too So I'm worried not about

we'll set once think done. dollars it I in markdowns changing And dollars. less all changing all just we're be where think -- I

where we're in position. very our sitting with we're think comfortable I So inventory

Jeremy Hamblin

the the question the or if us give Okay. expansion. York the of half into on just margins impact would And what the follow-up it of then first D.C. on half year Can a year? second potential carry might for a sense the you be and on

John Swygert

the any expansion the York margins. Jeremy, at in In will all. not have the of ’XX D.C. impact on

Jeremy Hamblin

Okay. you. Got

thanks. wishes. Best Okay,

John Swygert

Thank you.

Operator

Our Eric Gordon Instructions] next comes Cohen from [Operator Haskett. with question

Your open. is line

Eric Cohen

Good the very been dynamic morning. for question. a environment. Thanks taking it's Understanding

the most couple have recognizing -- kind comps low-end looking at of relative softness. the the quarters, late and the Just were you QX of in underperformed quarter to back until late last of October guidance

learnings much to you curious guidance? kind execution those dynamics? sort incorporated attribute QX Just would how underperformance, of external the more of, versus of setting the And how you in

John Swygert

Yes.

I regards with to Eric, think, execution, of was it I think don't execution. any

not we're it's think dealing the who's it's It's there. external everyone I just just all Ollie's, out factors with.

So there's The under challenges pressure consumer consumer. with is significant with the inflation.

pretty in I So and real a environment positive I'm a not uncertain two very X.X% we're well. dealing comps. we're just comp quarters ashamed navigating of and think of

So we're just to off going build that of to move and continue forward.

well. we're a So thing where position And before. running guide Obviously, I good execute down from we're environment the a do all it's I just QX. think to we I think very to bit highly in But with little were think we're the the prudent in promotional we're navigating taking uncertainty in.

to go. I come holiday think holiday XX-days ready for to and we're going around we're at the locked loaded remaining the and here at the and I think

I shape. in good think we're So

Eric Cohen

what this this different us, last in the just inventory receipts, this then traffic year? just comp certainly the and was and of year? on sort of, -- -- holiday how store headwind obviously are you going of, timing last market sort was was And remind becoming time, QX year year lack can of cadence And a visibility last you around Omicron season to versus impacted

John Swygert

on to -- for Yes, upside retailers does Eric, other think correct resurgence with regards last the the some in for of do later I season. the us holiday provide you're and year, with that Omicron

in I that So our really point numbers. We've this let just into it's time. of a positive. that at is think We've be kind baked that not something

pretty versus to as a holiday season. finish position in inventory is strong we the much think year today think have seasonal round I an from So perspective we're opportunity last stronger up the we and I

we've lessons what we're where conservative the seeing think at guiding far we're I So be and to with move learned so is and forward quarter-to-date. with just

Operator

Instructions] UBS. Thank comes Our [Operator question with Mark you. Carden next from

open. is line Your

Mark Carden

much Thanks morning. so questions. for Good my taking

in deals you lift already in heavily way see magnitude Or XQ? place? them? sell of start quarter? expect typically for the that tailwinds you one that it you of the see to to of We one when the from the through So of this further advertised bulk the taken take to long much is does How

John Swygert

well. item velocity But sell-through and large life. start than I large, still that total while benefit all -- velocity The from the and good inventory it's of it, that inventory not that very that pretty that the tapering that, with those that bigger exciting, does there. all going a while be sell was No. are got QX But QX sales for it's the deals to It's relative but have total to down. and deal we we -- But but to we're promote make obviously, and into meaningful, shape through. remind combined, pretty we'll end that of our deal deal in not is take they it we to what everyone it taper QX our

Mark Carden

helpful. their it. out we've then Got Thanks. stimulus. That's start seen to states own some And put

John Swygert

Excuse me, I missed that.

Mark Carden

Sorry Okay.

so some small expecting Or So really much own much? follow-up, it put to out that Are their is to comps? make recently. seen for your my too we've the on stimulus states you programs needle back to an have impact of

John Swygert

so move meaningful It's not guess what it's the whole far a probably from to we're My is we've lot that seen needle too thinking. and what little us. for

Mark Carden

and much Okay, of great. so Thanks best luck.

John Swygert

you. Thank

Operator

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

Your open. line is

Michael Kessler

Simeon. Hey, Thanks This for questions. our on Kessler is taking guys. Michael for

John Swygert

Hey, Michael.

Michael Kessler

throughout below First, some curious macro just don't there's your per I wanted guess, been, that base. QX. year. in in guess loyalty it that your just any the about in sales ask I They some broader this years. of levels. the prior how view membership were you've framing a of would sales or know had XXXX know period store volatility counts, expect you context But if I you to per of despite little I'm customer to bit be in I relative because the know the I be uplift a ‘XX of in depression I don't or would great? of two higher foot, around

John Swygert

the on we're at you're think I way Michael, it. Yes, looking with spot that,

dealing We headwinds I it, all with, think from of comparable call macro with ‘XX. basis. we're XXXX there's XX.X% obviously were, that a XX.X%, to regards

somewhere planned been nature two without neighborhood of have last we if off barely had that the maintained call that we've our the in just it, quarter be. velocity sales So to of we something or would through XXX the of, the weeks,

think, rebuilding a lot just all pressure. on of under So is we're going pressures consumer and there's, that I macro to

navigating negative XX%. negative good out a But we're in we're XX%, that. We're coming I So I'm negative don't pretty not with shape. -- X%, through not

I in think move see continue we to into to going as some momentum we're ‘XX. our forward and business go

that So the the the we consumer. motivate flow is deal to and forward have the right so item, we're more right deal looking strong

Michael Kessler

follow-up a distribution cost, Okay, transportation supply backdrop. easy. thanks. It And the chain the is on

expect year ‘XX reduction that, beyond we lower is cost would might play this in beyond lapping just just Is we you out as might the the artificially the kind the Can of or how ‘XX of dynamic? more a easing that. that volatility? last benefits mentioned the through up, something as to see contracts when I guys far given begin the P&L, those the in actual in of guess, of that to some you in roll You size year more move or background that that

John Swygert

Yes.

supply chain. definitely in the pretty gross obviously cost. we're points in overall in some regards But we did from supply see the large the It and XXX a to QX improvement margin with think to I seeing QX. basis -- about easing was chain

to easing in started see the we So period. relatively take QX place speaking, the

and in think four next at the investments moderate because QX cost the two to Qs I -- we is we're walls. just think elevated supply all going year. just of and in one in this it's I make to still chain an happen point time the at operating But big a easing then in had wages is

So pre-COVID. be elevated down supply chain there were aren't component still to an back they going to and costs where there's

I a more is that a of get that nature have bit to little it. in we've got little elevation there merch think all on offset permanent margin we to better So bit the

Eric van der Valk

Yes.

little terms more as the how I the think, favorable we're very on season that It's of much favorable you a how contract transportation we well, like we're lot market year-over-year. favorable a side, structured. international compare been we this like is more for Michael, when structured in and

moving aligning into XXXX So are terms our strategy. stars of well the business real in

Michael Kessler

Thank you.

Operator

[Operator comes JPMorgan. question Instructions] Robert Our next from with Friedner

line open. Your is

Matt Boss

Boss Great. It's Matt JPMorgan. at

comps -- John So

John Swygert

Matt. Hey,

Matt Boss

negative. positive Is improvement seen and next is comps in trend. us improved. closeout quarter what sequential do it third for negative to from with have year trend we and macro would guess, today's a quarter in similar the inventory negative positive maybe so bridge guidance we could need stack, ticket, if with inventory with like then calls help in geometric struggling improve? XQ, the XQ on three-year traffic comps seems it next the broadly with year. Hey, three-year Is something it line, exactly, comps having versus I for improve? Just between Fourth guided the a Geometric bridge closeout you turn negative

John Swygert

have Yes. closeout and the the opportunities closeout Matt, definitely inventory improved.

does trade the I macro consumer. of the trade start backdrop when the the income have think don't down to yet out the is lower timing we on outpace

here in. start, year. So of know believe you that's can't But I going tell if exactly but of coming do I QX, that, seen have absolutely in if we at when some coming. kick to do it's coming end it's -- QX of don't next it I the it's I

We on on are positioned right the from seen the And capitalize from some perspective. cusp our improvement definitely have forward. Friday to believe we're in Black trends We it. I

see ourselves that So to get obviously, going we're come starting see want not optimistic we I this in ahead we're out. to we're think at true time, But of breakthrough. to point And some numbers some we're there.

I soon. think think be there I there, get we'll and we'll

Matt Boss

in to next seems the year? best takes SG&A follow-up we XXs on -- with about year. rate this SG&A How as and puts Okay. high implied And think so think then expenses, be a about and wages to investments just maybe

John Swygert

in higher, do XX%-ish at. than but to pressure, I'm back better XX%, historical, forward. it, this year I probably more bit time. in a at XX.X% think under we're looking I front looking is has going we'll definitely tad SG&A what something Maybe -- SG&A XX.X%, call been but we Matt, with this the is ‘XX and our get definitely point definitely don't it's much, think Yes. not

dealing on have to the the with So and and we absorb front wage with. deal we're pressures it's just utility costs or something

Matt Boss

Great. Best luck. of

John Swygert

you. Thank

Operator

next from Citi. [Operator Paul question comes Instructions] Lejuez with Our

open. Your line is

Paul Lejuez

guys. thanks Hey,

You you'll I be playing gross you kind you in gross where margin in of how mentioned playing look in environment of year gets from just you're sales about I'm promotional? might versus if is how you you sort happens? drive a think the or some promotional preserve perspective, Do more How got guess, Curious for the what curious to is? think just you do that today that implicit about environment the ‘XX out. what next react have assumption. comp margins that high-level margin and think to But shake sales? trade-off XX% you gross XX% what you And margin, the think you've Thanks.

John Swygert

stores obviously all we're the is fancy and market -- way price Paul, we go we below a we way. big pretty the Yes. the to price way in

margin, year is shifting strong, we're be us this prepared does So I promotional doesn't we're for market. clearing to as but earlier activity going promotional the XXXX of make we if earlier priced we'll with We're I be of the than to inventory explained as and toys. markdown don't change impact think has it just rate of regards it increase the happen, shifting and think more off we're price later. timing as I to markdowns. don't our the even already because overall been

the to price we're very on active and market going our that, below focused are with go is is going merchants there promotional, still to to being be going if So and we're market to that. knowing that

don't upfront everyday price So the obviously, with give high-low customer. that loyalty the and value. game, them we're always and the best We the builds play in we

So in that run I the business. value think the our wins we way

Paul Lejuez

just Then it. on Got me. one follow-up

fancy you talked that You guys buy, which marketed about. store

if it anticipated? that quarter, as benefit had how event quarter on performed, much well short third as has quarter the but the second part you a that reason the was side And in of I margin the the gross event? buy the of fell think margins versus bit fourth I'm was curious

John Swygert

the Yes. The it's deals There's and performed. said the pleased has with it we have pipeline categories. opportunities And of we're the obviously, it deal performed overall of very deal was strong, a our performed excited lot I well. to impacted not And in the lot But We're as in all. the earlier, very how of well outside impact QX. these and margin in departments a that QX. very, margin definitely deal MLB

minutes fixed I a as sitting the So not in It's supply QX few is chain ago, costs. the deleveraging merch the margins. to in in all related shortfall is margin said and

here. I we margin, good the in in think, we're is and So shape, position good feel a

Paul Lejuez

Good Thank it. you. luck. Got

John Swygert

Paul. Thanks,

Operator

the showing turn John over any this like back questions closing to for not I'm further And any call I'd at remarks. time. to

John Swygert

ever. are I over to and season places the on them We grown XX,XXX the holiday who XX-years, our Over than all thank members harder demands past associates, team we've working know extra sincerely passion, support Thank at year, what of that the not Ollie's. for team do, of they It's but time combined every only successful. of this the your makes experience, day. you commitment for Ollie

are we we say, Ollie's. As

Operator

Ladies and today's does gentlemen, presentation. this conclude

wonderful and have You day. disconnect, may a now

Ollie's Bargain Outlet (OLLI) 7 Dec 222022 Q3 Earnings call transcript