Ollie's Bargain Outlet (OLLI) 7 Jun 232023 Q1 Earnings call transcript

Company Profile

Participants

Lyn Walther	ICR
John Swygert	President and Chief Executive Officer
Eric van der Valk	Executive Vice President and Chief Operating Officer
Rob Helm	Senior Vice President and Chief Financial Officer
Peter Keith	Piper Sandler
Bradley Thomas	KeyBanc
Jason Haas	Bank of America
Edward Kelly	Wells Fargo
Randy Konik	Jefferies
Eric Cohen	Gordon Haskett
Jeremy Hamblin	Craig-Hallum
Matthew Boss	JPMorgan
Joshua Young	Truist
Mark Carden	UBS
Simeon Gutman	Morgan Stanley
Paul Lejuez	Citigroup

Call transcript

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Operator

Good morning, and welcome to Ollie's Bargain Outlet Conference Call to discuss Financial Results for the First Quarter of Fiscal 2023. 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 that this call is being recorded and the reproduction of this call in whole or in part is not permitted without the express written authorization of Ollie's.

Joining us on today's call from Ollie's management are John Swygert, President and Chief Executive Officer; Eric van der Valk, Executive Vice-President and Chief Operating Officer; and Rob Helm, Senior Vice-President and Chief Financial Officer. section the copy results can of in Investor covering morning, issued be release website. the a company's and that Relations press company's was financial this found A the of press release

I want remarks call the of contain Exchange may of Securities meaning of that Act statements the and XXA Act on the Section within XXE this forward-looking Section remind to everyone management's of of XXXX. XXXX Securities

estimates, limited Securities statements call. results items and also within include, such financial also All or meaning not plans, predictions, Forward-looking may the those Discussions today's XXXX. or forward-looking Reform strategy, assumptions, statements performance, actual the of be differ on to should Litigation of from may future materially outlook, Act be could trends, statements. forward-looking Private include intentions expectations but mentioned of considered

undue to forward-looking of required should on obligation no today, You revise except which as by-law, to and reliance place the extent our forward-looking update speak undertake only statements. not these or we statements,

uncertainties risks anticipated to projected, results materially statements differ involve actual cause those that implied. could from or Forward-looking and

factors. most reports Although for risk we and and more described annual read encourage to today a well release or not the to those Exchange filed periodic detailed as recent with our as all the uncertainties, earlier such Commission, investors in and possible it identify description earnings issued is risks factors predict Securities of our

earnings GAAP certain to non-GAAP of our be financial Reconciliation referring financial measures operating to may access comparable important in are that included non-GAAP most will We to believe closely measures these our measures today's investors release. be financial on call, for we performance.

ahead, turn Swygert. Please that, sir. the Mr. to call over I'll with And go

John Swygert

good of business. strong morning, We Thank momentum are we quarter first pleased you our with the a and had and everyone.

expenses. Our maintaining comparable expectations gross control All of sales, by results in while margin. exceeded and strong productivity store improvements quarter store our driven continued were new and first

store increased our comparable increased increased quarter quarter, accounted of Army net over EBITDA In sales and margin the increased to million over with basis-points we Ollie's the XX.X%. active XX.X% million, sales first XX% slightly Gross for Adjusted Total sales. members, which XXX $XX.X XX.X%. XX.X X.X%. to ended

sales continue store transactions, shoppers. fourth This see a driven wider benefits in was age that our by positive higher younger comparable increased the quarter and Our income quarter consecutive comps. to growth customer-base of includes more we and marks from

was of On strength positive. broad-based a departments basis, XX% our product category our comping sales almost with

we certain our was expected, and home-related As softness some in quarter, business categories. in Consumables the saw very strong

beauty, late were Our candy, and year, deal health of to print top-performing advertising great respond We categories our last deals. and business. our food, flooring. reinforce changes testing In to side our began lawn know strategy to we and the garden customers

better a we execute of higher assortment quarter, stores. to reduced concentrated During plan, consumables. us as more deliver the helped the to deals such featured of tell our inventory focused the allowed us and items This flow into story. more targeted powerful merchandise around number and categories some more our story in demand you The

Lastly, the in showcase easier made more items to streamlined it these advertising our stores.

reinforced quarter. this the business, in of motivated believe All customers spectacular of which deal nature we the our

been and success, for real bargains to first want and our mission our more been years formula store our brands and cheap. real need be to guiding continues principle. always our XX We has opening today. Since ago, good This than has sell sell that our stuff customers

trends ability to our The of all which have XXXX, several cost product. pandemic second the started of and to move Things fiscal during challenges, these created improve impacted half supply-chain continued. and

market. made have capacity, for patterns, retailers and buying brought strong supply-chain inventory, have front, due consumers have to disruptions, has merchandising closeout excess their On manufacturers shifted this new on a the very

in experience vendor capitalize us extensive on a environment. puts deep position strong the in relationships current to Our

seeing the and are are deals the this we good built we today. for very market feel about in We

productivity hear to a will and investments you from As Eric in levels. have also few we execution improve minutes, made

started also in import have declines to from rates. benefit container meaningful We

flow the trends, current are our Given sales our to earnings full-year long-term of our and and and back and margin double-digit strong way XX% growth, sales algo operating double-digit deal we guidance working raising margins. gross

the Eric. pass now me Let call to over

Eric van der Valk

everyone. are loves share. growth good with a potential well John, need very morning, Thanks, operate customers business Everyone and tremendous growing super a and continue to talented more time at positioned a and market our we believe when a a and we have unique bargain, We more team. bargain,

priorities have three around out business. We our strategic decision-making laid that our guide

customers. first the and deals to values compelling offer is our to of most The assortment

is to second growing third and is our customer-base. continue margin, expand and store to the our The operating

Starting with significantly levels. approaching now pre-pandemic container and import down come have several operating the past margin, rates are we over months,

We start selling expect market carrier year. inventory the in to start realizing as lower rates we additional new through new benefits contracts spot of later ocean and

to our our and improvement in continue stores. in resulted better have believe enhancements improve in We equipment, and is well wages as current centers make at execution levels enhancements business the handling and business. productivity we and distribution and investments to material Investments IT our execution, momentum supporting process of which as

in the closed base. store XXX during first nine quarter, and Our opened one states. with our and is We in third priority and stores stores XX quarter to grow customer the

While stores the challenging, and real we XXXX. tracking remains estate in to XX fiscal are construction open still environment

goal to than stores be more target to long-term annually. XX Our a X,XXX open XX to with stores continues

is last early the something addition to with we and are opening also pleased are In stores, started results. stores. we new year, existing remodeling we This

flow of As and stores queues. format we checkouts impulse product, with the purchase this adding to updating of are re-merchandising a program, part racetrack

to year this we've plans and Our remodels, XX for XX call to completed date. XX

enable XX stores to center this to in of to will expansion XX to distribution on expansion us location. fiscal our continue an Pennsylvania distribution of XXXX. in This We additional the support track growth. be store from invest network our our is service The completed second-quarter to

ground also in center our We Illinois. on broken distribution fourth have

Our XXXX, the fiscal expand. to us approximately newest In we When operating improve stores over efficiency, to XXX XXX feature have service automation, enable distribution more costs reduce which the our total, to distribution completed XXX will stores. investments with almost support center throughput ability will center in will will time. to and capacity

Before make dedication moment experience each all I day turn do teammates We all it for over appreciate their I hard to Rob, our a thank to of for customers. work. every you great to and to Ollie's take wanted a our and

call I will the over to now turn Rob.

Rob Helm

Thanks, Eric, morning, and everyone. good

increased quarter. a sales, a both was We store results, to than X.X% are stronger bottom Net top million the by and XX.X% increase $XXX and an in expected sales on count. comparable to X.X% and driven deliver in lines pleased this increase store

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

are the expectations expectations, with our consumables with quarter. offset quarter. XX.X%, to results We supply-chain related in and pleased driven margin merchandise by our new margin partially in a improved basis-points XXX in to early shrink outperformed the primarily in these by which lower Gross our stores, line of higher costs, favorable mix

compensation. increased partially expenses basis-points leverage increased $XX the income primarily the to sales in XX store to on X.X% incentive quarter. offset basis-points sales, higher fixed by a the XXX% of of decreased SG&A XXX and percentage to million Operating increase levels in net expenses by operating XX.X%, comparable driven as of margin

to share XXX% to $X.XX, first Adjusted earnings increased million income net in last to compared and was quarter. EBITDA XX% million $X.XX quarter. $XX and for increased to the per adjusted EBITDA XX.X% basis-points adjusted increased margin year's $XX Adjusted XXX

outstanding times remains strong in-transit position of represented $XX cash inventory our credit in X%. million to million. a sheet, decrease and balance quarter. under for end. borrowings hand items, decreased approximately remaining a facility on cash with quarter our the and combined the inventory total no with on to $XXX investments, freight costs, at Adjusting Turning Inventory million revolving between our $XXX these Lower increased normalization our X% short-term lead of

Capital distribution the expenditures for center our the of the of stores, million existing and and stores, distribution Illinois. $XX primarily new the center expansion construction in development of the in Pennsylvania remodeling of our new totaled quarter, were

end quarter, needs. repurchases, We're our current we to our working to investors committed capital for balancing authorization. million bought remaining total $XXX back opportunities the our strategic million. capital $XX had of XXX,XXX while the we common At share through share repurchase returning stock on of During and a the shares of quarter, growth

our we outlook the and results full our to for raising are and given earnings first-quarter business, sales strong year, fiscal our Turning trends XXXX. our in outlook for both positive

net XXrd of the income new of growth For X.X%. adjusted we the $X.XXX total per stores, of XX.X%. to of $X.XX. million to which the million, Adjusted margin week, $X.XX $XXX Operating store $XXX sales includes billion. $X.XXX $XXX expect net million. share XX closure. The income opening Comparable to of in XX.X% billion sales net to X% one of year, less million now Gross $XXX and range diluted income to to of full

An expenditures million capital fourth the million, the Diluted distribution tax-rate our the of benefits and approximately which $XXX of outstanding million, stock-based expansion and Pennsylvania average XX.X%, annual center. of for our effective compensation. tax weighted of to approximately related of excludes distribution $XX including $XX shares construction center

on commentary provide flow Lastly, balance the of expectations for of the me our let terms in some quarterly year.

compared third $X the number openings, half, open in expect largest the roughly by having second to previous our million. and back When the sales of the stores at balance to new-store second-quarter the Looking guidance, quarter new six we reduces this the openings. in now with quarter new

being continued our consumers comp-store and are are into spending. the we cautious under The but quarter, has with discretionary pressure strength recognize sales of second

challenging comparison have pressures put We quarter, in items and cooler also second seasonal far. the so more a on faced slight certain temperatures

pipeline store range are we deal X% to X% comfortable X%, up we be response the range raising of seeing of are to with customers, X%. from our the planned our for initial in from the on comparable Based the to quarter our sales second and

unchanged. Our of back-half the for the comp-store sales year remains expectation

the higher slightly calls Finally, pattern would quarter. gross our is really in expect gross second to gross outlook regarding unchanged. lower second margin, here the fourth. the in We most normal margin and margin quarters, follow margin more still year-over-year gross significant first a in seasonal for improvement year, be margin We in and expect this third the to and which gross slightly

call now I John. over the back to turn will

John Swygert

and a dedication another, incredible team really environment for it's strong that help you our work consumers our built Ollie's. our shareholders. working and like customers know of great Rob. We challenging save Thanks, than customers' care many for business to people are but type this This for I by and driven time is passionate for for, to we're thank their deals returns that to there, money. for the is unique our would always a is deliver XX,XXX hard to more one members out

As we are say, we Ollie's.

operator. questions, your We take will now

Operator

first of Our Instructions] question Piper Sandler. comes [Operator line from Keith Certainly. the from Peter

question Your please.

Peter Keith

Good thank everyone. morning, Hi, you.

John, and just described the in closeout best the think very is strong, as I even So, in of recent regarding memory. past you environment it today one the

best today this can year. this environment your then even on tough continue? year very a So, how next inherently a what's this, sense closeout environment elevated long compare there and is create for And just strong looking at closeout

John Swygert

Obviously, exist are and so closeouts vendors vendors, July, Peter. over each every have every Sure, of this come so we've a in years that be some day. different time. it X,XXX for In to of deals excess long we years, list others, are but year, doing each better will overall, than continue and closeouts -- been a XX

us? it does each Sure world So, always the best we when deals. just day, it merchants for down, country make it and are for the does, every what it do and but the scouring does the and tougher it's slow

are customers can the we with, that are robustness we feel dealing we annualize pressure seeing and right the So, them. now

is vendors. we're these as meaningful we little not we see quarter-to-quarter, more It for become Obviously, like in and the always pretty say, we it's annualize when to feel a position does these good continue it bit scale easier as comparison. year-to-year, become we but to us to year-over-year

Peter Keith

conduct actually you based margin, any, shrink could some Okay, to down? you context defensive maybe shrink give how on pressured guys your try did mention had merchandise if you good. just place measures, that because And your of sounds what checks inventory putting to bring and in are secondly, you us that

Rob Helm

Rob. a schedule based the is on stores rolling year. basis, this the on of we into our count throughout Hey, course Peter, a so the preset year count going We

quarter. hasn't we saw it and we any kind up, quarter, definitely fourth really any It spillover the take that worse, the For gotten first saw of gotten shrink better. hasn't in but

the stores We and operations are the teams really internally, focused working closely it's into impact. and on managers staff our conducting it loss and and to regional with getting investigations and really prevention field mitigate

Peter Keith

that's it the find shrink externally? is is this everyone you're that are And just elevated investigations, seeing elevated Or with shrinkage just like you it still else internal.

Rob Helm

say I both. it's would

Eric van der Valk

Yeah. partnerships -- terms tool we've on I and local social use our stronger The these a of would we're police local that enforcement of great in -- to external with shrink, add are so is this Peter it. combating now. markets also for much Eric law us definitely in is media

John Swygert

Peter, as what a would some is, big seen. just are last businesses to and other relative it it's The I've I up to not add, other thing number peers reporting, that wrap

Peter Keith

Okay, much so very Thanks good good. and luck.

John Swygert

Peter. Thanks,

Operator

moment next question KeyBanc. Thomas from next the our comes our for line And Thank of question. you. One from Brad

please. question Your

Bradley Thomas

XQ the backdrop all quarter the little talking us rationale based many slowed, to just the color taking year XQ Obviously raising and Hi, how more here. so the bit hoping started. has I trends much your seeing. my a much and for on difficult retailers about thanks so what could nice little a is the you're in Thanks. and on behind give comparison start outlook having was you curious XQ question, more are other just more you congrats on

John Swygert

Sure.

strength for tax we've a March bit had from February month the into refunds March. part into with I down, widely of and would some strongest February deal the we feel been strength of of back April it was flow bit content believe continue So flow have that and impact month was reported QX, saw like we a picked May. and seen I a stores, the strong as little say quarter. quarterly we beginning up in little decelerated of

Bradley Thomas

Okay. more performing? candidates able stores think wondering be of remodels? color those you of the do out and you've program, any that I to if maybe may give kind optimism about the more stores that are And What started those remodeling are on was are you that could with, how initially the us you lift get how there for

Eric van der Valk

we I'll Brad. is have only by excited Eric. of date. response we actually in handful take a Customer super the stores this we're mind, that it. results point. anniversaried like Sure, we've and we're positive, We're It's seeing. to at what seeing Keep very

of So the we've ago. we XX remodeled stores inception year a since program, but a over the little started

but seeing. the between mid-single-digit capital we're and $XXX,XXX we The So And It's -- We're we spend test it's still not it's lift. still The like learn expect -- still do and in heavy requirement. still early. average probably payback $XXX,XXX. a mode, what is sales years. is we're a on about two

to We to stores So the far to probably continue look at number commit with XX how and remodel we similar think we plan through the would XXXX. see we're to we We'll year. move this. for results committed a XX this

Bradley Thomas

you Thank much. great. That's very

Eric van der Valk

Thanks, Brad.

Operator

America. line for our next of Haas our Thank question. from of comes moment One from Bank you. next And the question Jason

please. question Your

Jason Haas

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

higher to are their for shopping income, have you what's down stores them you're is which maybe some great seeing more, So hear. called the shopping younger sense any one. Do at some on the know you which and first categories that I out tracking just shopping Ollie's? into customers

Eric van der Valk

it's cohort. Eric. Jason, category by income We Sure, track performance don't

So the that. have color income net tendency bit from just And strongest a But income customers probably would segment a customer, I seeing income don't for an of range. worth our that some as there's we're largest is $XXX,XXX from lower a is sense higher higher growth income the to well. with of standpoint growth $XXX,XXX towards on little I the add of

that dwindling So from savings group. more customer trade maybe of and that's indicative down

customer. lower seen discernible stabilization no customer. SNAP keep that QX, some of customers which with continue -- is to income dynamic QX don't of also benefits obviously, We've customer from economic there's impact for Remember, that under lower income mind but the seeing in encouraging. Snap, into Also, take we the we're impact there's us. index And of

Jason Haas

still the about talk to not guess, count, follow-up, a or you would terms then consider direct it, store any, you. happy mix could And map if if closeout I now. with potential point, the I'm Got of, you're as that's more what on adding thank pretty sure you road sourcing? in start at

some can would the get could you larger I augment once you've past, with some level, a -- I at basically in size, store basically guess just direct sourcing. think you you talked to consider, about you more

was I So a curious if plan. that's still

John Swygert

our do we bit. where certain closeouts, Jason, we goal, becomes get categories augment size, that little had some is better issues to continuity Yes, them some if druthers as a our of we may for a Ollie's. there we more realize But need the to to with the

XXX we've right almost need in to to always now. a to have stores, XXX stores. XXX augment So to little order our We're said having difficulty not our We're sourcing feed any bit. to closeouts we may at real stores

the time But So goal for. our make the to closeouts is in we're built that we and that's will have appropriate what store, adjustment our at is necessary.

a we XX%, if our are think private to remind Do very But that but sometimes the closeouts when down did difference. to And full so foresee closeouts label don't Probably, -- similar sees big We're even make at change -- to brand just close the to customer capacity? private XX% the we I enhancers today. don't we profile go label closeouts better a overall we change. brands margin, not margins. have to and everyone, XX%

drive So on what closeout really the focus that's here. and trying to we we're

Jason Haas

makes it. Thank sense. Got It you.

John Swygert

Thanks, Jason.

Operator

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

please. question Your

Edward Kelly

good little color May you're I hoping the on more bit strength guys, a Hi seeing. Yes. that was comp morning.

the color do you of have multi-year May? how lying quarter, and or that give July? comparisons helpful. I'm comparisons here, that Does tougher consumers from seeing additional you you're that ahead? raise Is this May, guidance June, confidence in Just what to look wondering, compare. would the comp be like around tougher is color there sort just more this Just some

Rob Helm

is Rob. seeing We're strong this Sure, QX comps quarter-to-date. in

those we're Our we cooler would forward. seasonal From saw consumable ticked an perspective, in little toughest was positioned a related QX linked business the and that and weakness are May wildcard probably to categories the from the say, easiest. we're June breaks over, the compare. has hot, seasonal temps. some deliver but strong in a up is perspective If bit weather biggest inventory gets I going seeing comparison to it spilled that the well July businesses. That's

Edward Kelly

of in anticipate that then to running X% Or terms compare is X% May, the And in Okay. a to you'll July? -- range? May harder and X% X% -- have in with deal that

John Swygert

we're it's Yes, Ed, but normal where not our not, above of time, not into two get increase mode our to really with it's comps obviously a you've for been operation we're long at going one guide. to quarter-to-date, us and to our

feel So to in we we're sitting we where deliver feel today good good really we those we are comfortable with a and numbers, are it. position

Edward Kelly

clear. right. color us about for the little follow-up year? All the That's remainder a thinking you the last margin gross more cadence Thanks, bit around gross give margin, you're how of on John. the One could of the

Rob Helm

Sure. Rob This again. is

So for expansion the QX's the margin be gross biggest clearly to going is year.

quarter, that a year, the in think last XX.X%. we I did second

the because didn't gross not an points definitely have the margin be QX there. we year we closer as more what So on to entered. be and algo QX expect do on exiting make hundred progress algo last to several will towards But margin an much than year. basis impact we significant much of gross to a and expansion

Edward Kelly

All you. right. Thank

John Swygert

Ed. Thanks,

Operator

the question question. moment our our Thank Konik Jefferies. of for from from next you. next line One comes Randy And

please. question Your

Randal Konik

guys. Thanks

Where in from ongoing. you think kind think go where cycle? and bit talked ahead. rates You do you we Just little that labor a are investment on of that's here do investment we been about in wages

Eric van der Valk

that. Sure, Randy, answer I'll It's, Eric.

couple We We We for today. for sitting have last individual competitive. well. made where investments we're wages investments local and as our We like in so of level, stores meaningful at we're make relatively the over that feel years. DCs the markets

has been strong, the the flow candidate months. Our over DCs in relatively several especially past

local tenure of remain battle high continue remains who competitive, It's to to that XX people fight and less for days. turnover ensure are than a Our we it. day-to-day we

hard a in digit have the wages assumption It's increase happen of built what this to an say XX will mid-single for in but next year. we months, in

a I future. to this We okay. it reasonable so that seems like work we pressure on the be assumption, and experience. And what hard offset far, speak to to been continue be continue can't will that look and make and do may of very we've should in investments to experiencing, process really improvement wage some to

Randal Konik

Q&A, us just Can then is the gave how obviously, sheet And much not to helpful. some good cash of the what remind earlier go the you CapEx? trying The I figure you margins improving. Super is much. flow breakdown -- kind on gave normalized you're like Because think cost on what and you perspective are the balance I'm back maybe on Yes. are is that remodels of kind CapEx the because out to free looks strong. super the

buying back stock. been You've

of feels So repurchase of cash kind of I terms being or share cycle kind it's accelerating think generation, going constant. continue to in like activity that

on give us some CapEx breaking it maybe down. what the Thanks. like looks Just perspective

Eric van der Valk

part remodels in second Yes, total. the CapEx of first I'll take Randy. will your part and Rob question about related the to take

bit store, than merchandise a The moving less condition, not is and the of relocating remodels, Depends XX%. spend ahead, fixtures. it's on new the remerchandising average. but remerchandising the existing store little or in replacement the XX% and its the than majority investing CapEx and and is on relocating Rob. on portion fixtures For Go store around the necessarily fixtures less --

Rob Helm

can From a your just you bit? question CapEx little clarify perspective, a

Randal Konik

Yes. million Look, at is your CapEx $XXX guided.

for it's lower. CapEx the a know historically, that's of obviously look You DC. is I lot

some back stock. on you're rate look -- the want which, CapEx get what to to probably down, in again, because CapEx years using being perspective so generation, get just continue can on to perspective that should how run that to breaks some buy I we ahead some you're perspective cash So get free like normalized flow

Rob Helm

flow CapEx slightly forward way. answer free is a I that our forward. or I going say would different cash about X% -- would line probably Yes. top in of going it

in say, million. general from $XX remodels range say of range The bucket would to may of So but swing X%. corporate, in I the the from year-to-year

Randal Konik

Understood. Thanks, guys.

John Swygert

Thanks, Randy.

Operator

One next from Eric our for And Cohen Haskett. our Gordon the question moment you. next line Thank comes from question.

Your question please.

Eric Cohen

Hi, thanks, good morning.

strong a guys You this comp quarter. really had

flow-through been the prior guidance the a year, not why be above bit might the have which And X.X%, to the flow-through curious little stronger. to seems in-line margin the typically of with leverage the guidance X% increase, come you at Just X% with the comps guidance. the for the would looking X.X%, is rest now expenses at. How EBIT

So a how not higher flow-through better come is the there with topline?

John Swygert

coming would I we is called this And a we're there year the algo that two year but Well, necessarily dynamics the towards happening not yet. be say going long-term to that in going back there's here. be work to out

to first supply That and we half have coming gross half, gross for margin continues abate off I margin. capitalized second headwind higher first the starts dynamic The a for is, balance mentioned like do earlier. into sheet chain to cost be the the or the the cost in

put back on that last incentive performance. reduced is was second The compensation piece of year our based a

Rob Helm

past. are a the excited period increase we've And double-digit from with swing the to still obviously -- op in and then consumable XX our And little the a able And that our perspective. of income pretty the to it about makes is, is on pretty is time be the going what from XX still our Eric, op consumables I maintain sitting big to a addition perspective, challenging guide we're in. from digit, more double bit margin the be we're to selling pretty more one to seen to in thing, think, which margins impressive from lives

doing really, really controlling think a good job I we're it.

Eric Cohen

Makes of sense. some do take improve maybe improving your bunch of Or advantage you opportunity that a real the accelerate store guys and closing estate? of whole to growth maybe does it negotiations is Bed, Like you? cost and see rent for Bath landlord stores. And

Eric van der Valk

sit us, of estate any our estate good Eric. for makes I need is mean, deal a that a I'll This little Typically, for for for distant us. Sure, take real real while type to that. in Eric, Typically, thing landlords sense. is on

it's it do but this we bit little right and disruption. like like more immediate make an struggling to because does impact, willing are So were other -- that do Bath anxious, and Bed, our not retailers now landlords we're several a deals. We

not, say, estate we a let’s cycle to often in more real XX way. inventory XX month more of to see before enough -- than accelerate any But

I question think would it stores were consider to more opportunities? And see than XX your we the XX time. in to of XX additional -- we stores moment stores part We're if to be I your remains at XX exceeding estate real is, guess, future the or to seen. in this committed

Eric Cohen

lot. a Thanks

Eric van der Valk

Thanks, Eric.

Operator

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

question please. Your

Jeremy Hamblin

a performance the to into category little bit. get wanted strong the on results. and congrats I Thanks,

the and strong you health beauty, food, lawn candy, first garden performers. cited as think and and I quarter in

but what that on on estimate contribution quarter, the of -- range cited negative a wanted as think or is estimate which for I and your that comps? in cite here to of negative kind the a lot contrast on You seasonal here there's to to noted seeing sense some and of QX get in course, of impact want a you out didn't peers, your sense actually the a be a dragging overall garden that from -- first been get in think weather call for goods. lawn you're potential I second might impact quarter, a in negative an

John Swygert

I'll what from the Jeremy, obviously, others. you've performance. talk And off and about heard lawn first QX garden different from Yes, category was is --

West had far differences impacted we point have that don't others that as there big that lot the that of time. others that one in west have think We'll on the this I we front. based think of I Coast we're weather at garden go some and -- was was, companies Coast Texas. lawn on And of the a other West these as unfavorable not

that -- you, the tell our some were with great some honestly, It's brand garden the model for they deals way some names the in and will is we had it. built. to responded just So category And I customers. motivators lawn great big and

you there tell customers had think similar for wasn't pretty the would our we as lined deals early some we in good we really weather because and result lawn So even have stores garden. with sort that do season have we -- bought we last we up these year very late in brands that of

to With with our QX, cooler a regards to category the pressures the seasonal see it's the business, than little weather focused call. we regards being we from the a on we perspective, call in is we pretty for our bit to to good air, don't as With on -- move. said normal, for hot. continue momentum really that pressure have it's heat we always to to That know what get a going little in hot. more order We it's always -- when going AC tell need get business. I just room everyone which that

So one -- right pressure has that's quarter. category put little a of the sales been little a the that for now overall bit on

consideration, we're But today. sitting we're even comfortable taking into where pretty

even we're at our So really world, that's think better to for we an perform a today. bit opportunity -- in there's us where than

what when to and right but to how -- -- we're quarter. does the we're reserve So turns it obviously for see and the the weather how the going weather

Jeremy Hamblin

just impacts. Thanks a it. then questions follow-up And color. for margin on of Got that couple here

magnitude Want You kind say, But you characterize cited gross improve in impact the then here then in Illinois, from let's also, provide margin. of impact you open on your of of would QX year remainder progress think could if in and that to see from as impact freight QX benefit. of be. the if here should to you a and just could freight terms to on margin in get see or you the the I little you color DC done think then continue in -- that the of what here XXXX wanted and and

Rob Helm

XX%. our Sure. -- This in Rob. that it, for is we chain of, call were implies we called range XX%. year year-end year, guide costs This the out around The call, supply last

The closer first XX%. to quarter was

range. X.X% of closer year So course to the to say, expect math, sequential throughout the the year if we the be the be to, you do X%, exiting sub-XX% improvement

John Swygert

to call, pretty we -- we see said that's close cost. margin our think much just earlier our And to that, in back that's long-term on get really some that's more back half I it algo. supply the and start clarify the chain the where loaded. where think back-half to Rob normalization but is Jeremy, to -- And we The

Jeremy Hamblin

And the then the kind of magnitude centers? of the impact and timing and distribution

John Swygert

to up the I for shouldn't of Yes. York is on discuss. error. not the of up have which to we going number online ramp material XXXX, ever DC that more XXXX. midyear DC. on it into something won't more that of impact we're that of but expect in will four, really to create we The the It and it XXXX as be of start we expect impact impact XXXX margin That's don't any don't firing QX bring a rounding anything probably a -- expansion

be our but to a basis, on the that perception with I annual maybe it XX heavy XXXX DC. get our real change bps won't of year there think would a guide full new not through that, lift overall and XX,

Jeremy Hamblin

for luck color rest good the Thanks year. the on that of and

John Swygert

Thanks, Jeremy.

Operator

our next Matthew comes of line the question [Operator Instructions] And from Thank from Boss you. JPMorgan.

question please. Your

Matthew Boss

Great. Thanks.

touch new new could recent cohorts, seeing more productivity you're acceleration that John, on your from So really the on this new elaborate out just And what quarter? you material in stood drove performance, unit maybe store economics? store what

unit could picture, space the elaborate just opportunity? just And you maybe you John, white multiyear? on larger as growth changes think about Any long-term new

John Swygert

about space, Sure. XXX new XXX, we're around XX obviously, then performance. space, the stores, we're in With of the said always productivity regards talk Matt, shy states. and say, store I'll the Rob white still and let white to take I'll we've

long have. This and white we key us available know not with story. been So it is you've comp Matt, this been a growth has of for space of this you ton And that a is -- a a model our there's time, one is this always still focuses, story. and

stories One out of the growth are few that there.

and years continue by our grow many, many returns great We have to base to continuing continue the deliver ability drive to store the business. to for our shareholders to

say the we cake don't always is comp that off but always the registers icing So we turn I on either. say the

for know do to comps comp there try drive perspective. to the as flow we the the best through So our we

to real and are a successfully. stores being very strong part new grow component of key us integral able our But a

we white is about go, there opportunities out see the in there a the we're still excited So space and out the lot market. to

Rob Helm

I park, sometimes some we out would couple has a hit years, we're The during I productivity last the during you to that of saw anything the with did mean first And from just the differently. great productivity stores pandemic. of it happened of that and perspective, COVID. We doing these not stores. quarter the opened say over recovered productivity we with locations. new be store dip

Matthew Boss

across Great. And John, we historically trend the as comps would I bucking clearly and top middle-income during follow-up, then for line? consumer your could a consumer. you're macro you especially now, about versus lateral I macro of low right times maybe trend, look general, the And to back speak think disruption. guess maybe say, the micro the your just

trade-out relative you rational inventory more what from moving as to to are a position? seem seeing trade like retail So does maybe customer customer broader down it's across

John Swygert

Matt, we're obviously this I'll what model, seeing time, had set Yes. play great we this and we everyone we bucking is saying. and value, a us should kind we're trend. our built to of it We QX, We're happen. for actually we're QX, said -- year should Consumers to of now, XXXX year And last flocking this, call for. this I what in into really right under of and really kind be pressure say are to they're countercyclical like and -- a what up to is and talked this seeing definitely are is year, about in the is the late ton -- right

Ollie's guidance year. guidance their raising really we're out stick scratching are the people It's the taking customers heads back seeing stores us we're before us to frequently the shop resonating. more what come than deals getting -- and they are and come in our -- and think on full I were down else and they're and how we're they're where coming QX because model to seeing

I to for going think, this So Ollie's. nice stand-up be a year is,

drive it's the I into in to But going we a don't set nice X% comp. saw where like to comp we almost year. good XXXX we're anything think pretty had be

uncertainty half. back So of the there's lot in a still

of we we'll where We'll adjust kind the accordingly. half back see we're and at maintaining point. it So go this with

Eric van der Valk

on a that. encouraging. older, more age mature I think, category, customers, We is up. add trip is too, age Matt, tend just to of in the comment and I'd our have Plus customers consolidation XX the has more seeing age in cohort XX the old. seeing new of we're We're helping on impact those to potentially in acquisition years category. then cola customers, drive strength sales of that And XX some customer

age an standpoint, it from we're appear also So would winning.

Matthew Boss

It's great color. Best of luck.

Operator

our comes And One question you. line from from Thank next question. of next Truist. Scot Ciccarelli our for the moment

please. Your question

Joshua Young

good XX% just for see This Could the guys level? Young path gross morning. on Hi, to is through you to get you Scott. margin Josh talk back that

Rob Helm

impact I'll first Rob, and that. earlier is overhang capitalization I on half. supply The and the call, the gross the costs margin we of into It's took Hi. take it costs. the year Like big part kind a those of chain said that of

closer the sequentially on be impact be in expect for year, margin to We an gross the much to result. will algo that and throughout line

to It don't seeing wage we We about From is think earlier. I we an it algo are impact. range. perspective, an on back talked pressure. an that SG&A, get SG&A SG&A

a So line process leverage, the I next that back bottom beyond. to that sales additional helps mentioned in it's us get year on combination of and that of the improvements for store some algo Eric think the net

Joshua Young

Okay. it. That’s helpful. Got Thanks.

Operator

next our Thank Mark Carden our from next UBS. line comes of from you. for moment the question. And question One

Your please. question

Mark Carden

Good for a the morning. Thanks lot taking questions.

Within you think quarter, another you by to last allowed start any front the do were more to to really a this point your this of perhaps guidance, offset of you And your avoid than become what has headwinds then on degree one are tailwinds? to same on of headwind shrink shrink. gross expecting you relative at some the So margin being competitors?

Rob Helm

accounts. Rob perspective, sober year our a This pretty shrink again. From our guidance, the is QX coming into we after were

So we were -- conservatively. pitched it pretty

don't any relative we from anticipate our additional So to guidance. trade impact

of of absolute the From we gross overall our lower is -- a set some perspective, number. just of our relative other competitor margin shrink a terms the in to peers quotient

it about the of think you it when smaller the others and getting it's worse are impact because as a get as So starting some just can't number. worse, seeing as

Mark Carden

longer to Army? sense. term? And to has higher for you and income shoppers, expect what then Ollie's holding the then on And Makes how for younger most impactful them these conversion customers be been do on steps to

Eric van der Valk

in our mentioned up was acquisition Acquisition I Mark. last XX- -- cohort that, younger particular. in XX-year-old acquisition are customer XX% we're very that that numbers strong in seeing year. acquisition customer, over that to segment some actually The strong in And total. take very, I'll Yes, healthy definitely

And acquisition in is very also customers then healthy. higher-income

following of that strength So numbers it's leading. following customer kind of cohorts acquisition those where are is The I the mentioned.

Mark Carden

seeing the just in Okay. Great. conversion Army, to that's you've Ollie's line been of in with store? then been less And terms the across what or more

Eric van der Valk

-- customers Army the into of acquisition so The the Army, conversion XX%. into up is Army meaning new Ollie's

question about converting you're So don't sale, is Army if a sale. a know asking I into to but converting the

same. kind of the one So and they're

Mark Carden

much. That so Thanks it. helpful. clarifies very That's

Eric van der Valk

Thank you. Yes.

Operator

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

please. question Your

Simeon Gutman

the new it are And how frame? the we on Thanks. see morning, cohort. that relative productivity, cohorts of sales still entirely that relative newer that the given per of space older don't guys. is some also down? explained cohorts look down to of Good the ones store Related down? Curious Or to XXXX some by performance the weighing over is time

John Swygert

the cohorts as don't Yes. than details. Simeon, tell productive cohorts the those more are too say. into you, older newer we I get we always would much But

they new opening the and base. impacts in with month grand they XX. productive Our X the as a new stores very typically they after to on stores have comp year comp overall start enter to the are the And drag

take thing But different to XXXX in world. is the away the tell -- is this I for would very biggest everybody you XXXX than

excited are seeing well, seeing well stores. metrics very customer responses the very, and performing are working in that we're we're stores very Our and for we're about And the us. overall very the what

a and our almost some we're to performance even as supply lot lives back even year, is to disruptions. back get So in new XXXX chain We've our store the -- -- XXXX of going got have to productivity noise in and signaled the new with normal. last we XXXX store

what see normal we're more stores producing. in stores So are the and our a starting to productivity

Simeon Gutman

a follow-up. Got it. And quick then

basis Your best over gauge same But were since selling to the basket, a not how you're year-over-year, of in you price over an that's guess it's price? or or impacting of hard either again. the comp? business what item if and the inflation items on I know terms in guesstimate

John Swygert

very Simeon, year because over over point, Very we same the hard very, year. to hard your year -- don't carry things

So had sales bit than obviously, a expected. little in year as we been last said, we and and slower has -- ACs

much and -- a is our unit average than on AC unit sale. So higher sell

difficult. very it's So

in the there others not I is, obviously definitely we're rate would say of sitting inflation do driver. category pulled comp. was definitely and not is stores as some inflation It's food We've is impacting everyone quantified the overall to as a dealing that hard out it on how the seeing much year-over-year. in for us but but we're comparable that else that that's with real items our same

Simeon Gutman

it. Got

Okay. it. Appreciate Thanks.

Operator

line our Citi. question. of comes Paul from One Lejuez our question And Thank next moment for next the you. from

please. Your question

Paul Lejuez

Can about what ex-freight, guys. ex-strength? just out-the-door deal your getting of Just the XQ pure for year? directionally price, outlook your in the came that and you the merchandise to curious in like rest talk how versus is is the margin Thanks, your relative expectation

better. if And think then income, a bit in it little I came interest change your also you curious

many if XQ Sorry it, how missed get I the half? just pushed then that your from out guidance, how And in stores second changed? into

John Swygert

are, merch obviously, take margin regards supply sitting XX the to the is obviously, elevated which of to But to chain We the, IMU, from Yes, the due the strength market those years offset of I'll and points, prior our the also closeout is cost the Paul, typically don't and components the shrink. out. margin. the markdowns current merch With the break in. close sitting we're

a that's are have. strong So proud we number to very that very

Eric van der Valk

perspective, And a stores to say I pushout want to seven quarter. the was second six for store from it

Paul Lejuez

interest income? then And

Eric van der Valk

change. No

Operator

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

John Swygert

We support your of forward look for next you our Have results Ollie's. quarter. on you day. Thank a great to updating

Operator

This in conclude Thank the today's you, gentlemen, and participation conference. for ladies your program. does

disconnect. now You Good may day.

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