Ollie's Bargain Outlet (OLLI) 7 Jun 232024 Q1 Earnings call transcript

Company Profile

Participants

John Swygert	executive
Eric van der Valk	executive
Robert Helm	executive
Peter Keith	analyst
Bradley Thomas	analyst
Jason Haas	analyst
Edward Kelly	analyst
Randal Konik	analyst
Eric Cohen	analyst
Jeremy Hamblin	analyst
Matthew Boss	analyst
Joshua Young	analyst
Mark Carden	analyst
Simeon Gutman	analyst
Paul Lejuez	analyst

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 fiscal 2023. [Operator Instructions] 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 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.

A press release covering the company's financial results was issued this morning, and a copy of the press release can be found in the Investor Relations section of the company's website.

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

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

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

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

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

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

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

John Swygert

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

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

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

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

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

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

and were Our flooring. top-performing health candy, categories beauty, food, garden and lawn and

great business. changes reinforce year, We side And our print customers deal of advertising began last to deals. we late testing to respond know to our our the strategy

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

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

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

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

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

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

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

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

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

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

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

now me to pass Let call over the Eric.

Eric van der Valk

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 want a our and

turn the call now will I to over Rob.

Robert Helm

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

nine our quarter. opened closed stores XX expectations and with states. During the new stores new in the stores, one, pleased in with We're which these XXX in quarter, ending results outperformed our we early

Gross margin costs, line to to by partially improved higher XXX favorable offset driven shrink supply margin XX.X%, and basis in lower expectations, with a related chain in our merchandise mix points the quarter. consumables primarily by of

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

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

Turning to the balance sheet.

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

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

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

Turning to our outlook for the full year.

positive sales fiscal Given both in our results our XXXX. outlook quarter for trends business, strong first raising and and are we earnings our

to rate Pennsylvania weighted income $XXX in expect of the shares sales of XX annual income opening store an and and capital adjusted $XXX $XXX comparable closure, compensation, to $XX expenditures gross $XXX net which billion effective center. includes new related we excludes million XX.X% of year, outstanding the for of which to our income $X.XXX to net diluted per to including For million fourth distribution diluted of of XXrd XX.X%, week, of total of of net the million, $X.XX expansion $X.XX, million, one approximately adjusted of to approximately operating the margin stock-based X.X%, $X.XXX X% of of now tax million the tax million range sales distribution average and to the $XXX the less our growth benefits $XX center XX.X%, million share stores construction billion, full

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

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

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

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

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

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

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

I call the John. to now back turn will over

John Swygert

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

As we Ollie's. we say, are

take We questions. will now Operator? your

Operator

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

Peter Keith

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

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

John Swygert

this for we've time, I XX in Sure. but long doing years. July been obviously, be will Peter, a

every exist each closeouts and So year.

are a X,XXX have that closeouts excess others. we years, overall, better Some list of vendors. -- of vendors are than different over But in

continue day. each and deals to So every come

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

we feel see good the that in a them. and us dealing pressure we year-to-year. to vendors, annualize But the these easier quarter-to-quarter, we little and say, as with, analyze become these we're are for seeing position more like it's year-over-year pretty bit So when compares. we right as it's we we're a does not become to feel -- always meaningful the we it customers feel can continue now robustness we scale to Obviously,

Peter Keith

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

Robert Helm

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

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

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

Peter Keith

investigations, Just shrink, is you're it's with it it shrink else still elevated or you like externally? -- is this seeing the elevated internal? everyone Or find

Robert Helm

I would both. say it's

Eric van der Valk

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

So on it. definitely we're

John Swygert

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

Operator

line comes And from KeyBanc. our next from of Brad Thomas question the

Bradley Thomas

you start color year and the the and nice other started. comparison much give the could trends of has hoping a backdrop slowed. just the little in more having on congrats how are on quarter difficult talking Obviously, here. XQ us many is was a about I And XQ more retailers

curious XQ your you're based raising outlook just what behind seeing? a you little more, So the all bit rationale on

Eric van der Valk

Sure.

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

Bradley Thomas

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

Eric van der Valk

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

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

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

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

Operator

of And our from America. Jason of next question line comes from the Haas Bank

Jason Haas

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

Eric van der Valk

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

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

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

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

Jason Haas

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

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

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

John Swygert

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

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

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

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

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

Operator

our line comes Kelly And Edward next of Fargo. the Wells from Instructions] [Operator question from

Edward Kelly

a lying then you're strength more comparisons consumers the little May that like look quarter you're And color ahead? from be would what bit color hoping some you the this here. raise sort additional comp comp seeing, that have Is give guidance? do more you Does was this tougher the year-over-year tougher color just how there Or seeing the in wondering, I on helpful. that just May, on Just to of is May? comparison I'm June, July. confidence compare. multiyear

Robert Helm

This quarter in is seeing Sure. date. to comps Rob. strong We're QX

business in linked forward. we seeing some QX weakness That's the saw in categories seasonal-related wildcard spilled the cooler temps. consumable strong that going is to are Our that but we're over, biggest

weather the deliver positioned businesses. if to hot, breaks and So inventory it well perspective gets those seasonal we're an from

ticks comparison probably little May July compare. From bit toughest say the would up June the was a is and easiest. I perspective, a

Edward Kelly

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

John Swygert

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

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

Edward Kelly

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

Robert Helm

Sure. This is Rob again.

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

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

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

Operator

from from Instructions] Randy of [Operator the comes Jefferies. line question next our Konik And

Randal Konik

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

Eric van der Valk

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

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

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

less turnover high than who remains have of for days. Our people are tenure -- XX

increase we that XX months, assumption say to a wages in It's to day-to-day next have to mid-single-digit hard built and It's year. we in remain the a of fight this in for but continue battle it. local what happen ensure will we competitive, an

to I like it be should really to okay. seems be speak in reasonable a so And far, assumption, and that we can't the may look what future.

and make offset pressure process continue do work hard some will we've on experience. to to very and of that experiencing been improvement investments this continue wage We to

Randal Konik

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

You've back been buying stock.

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

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

Eric van der Valk

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

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

Robert Helm

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

Randal Konik

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

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

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

Robert Helm

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

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

Operator

our Cohen Gordon next from line Eric comes And question Haskett. the from of Instructions] [Operator

Eric Cohen

You comp quarter. really this strong guys had a

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

Robert Helm

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

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

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

Eric van der Valk

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

Eric Cohen

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

Eric van der Valk

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

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

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

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

Operator

our question from Jeremy line Hamblin [Operator comes of Instructions] And the Craig-Hallum. next from

Jeremy Hamblin

strong wanted the bit. performance on I Congrats into results. get to the category a little

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

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

John Swygert

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

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

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

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

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

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

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

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

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

Jeremy Hamblin

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

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

Robert Helm

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

quarter first XX%. closer The was to

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

John Swygert

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

Jeremy Hamblin

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

John Swygert

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

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

Operator

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

Matthew Boss

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

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

John Swygert

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

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

growth One are stories of few the that out there.

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

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

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

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

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

Robert Helm

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

Matthew Boss

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

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

John Swygert

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

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

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

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

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

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

Eric van der Valk

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

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

Operator

And Instructions] question [Operator comes the next Ciccarelli Scot from our Truist. line of from

Joshua Young

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

Robert Helm

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

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

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

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

Operator

our line from Carden And Mark next of from UBS. comes Instructions] [Operator the question

Mark Carden

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

Robert Helm

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

conservatively. it -- were we So pretty pitched

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

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

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

Mark Carden

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

Eric van der Valk

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

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

Mark Carden

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

Eric van der Valk

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

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

So of the and they're kind same. one

Mark Carden

very That's That clarifies it. helpful.

Operator

from our from the Morgan of line Simeon Gutman question And Instructions] [Operator next Stanley. comes

Simeon Gutman

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

John Swygert

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

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

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

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

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

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

Simeon Gutman

quick then And it. follow-up. a Got

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

John Swygert

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

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

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

difficult. very it's So

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

Operator

line Lejuez [Operator Instructions] from Paul comes And next our Citi. from the of question

Paul Lejuez

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

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

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

John Swygert

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

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

Eric van der Valk

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

Paul Lejuez

And then interest income?

Eric van der Valk

change. No

Operator

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

John Swygert

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

Operator

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

Good disconnect. may day. now You

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