Ollie's Bargain Outlet (OLLI)2025-06-03 13:32Financial Data and Key Metrics Changes - Net sales increased by 13% to 46.1 million, with adjusted earnings per share at 72.2 million, with an adjusted EBITDA margin of 12.5% for the quarter [22] - Gross margin remained flat at 41.1%, slightly ahead of expectations [21][22] - SG&A expenses as a percentage of sales increased by 60 basis points to 28.6% due to higher medical and casualty claims and new store growth [21] Business Line Data and Key Metrics Changes - Comparable store sales increased by 2.6%, driven by an increase in transactions [20] - The best-performing categories included food, hardware, electronics, domestics, and housewares [20] - Ollie's Army membership grew by over 9% to 15.5 million members, with sales to members representing over 80% of total sales [20] Market Data and Key Metrics Changes - The company opened 25 new stores in the first quarter, a record for any period in its history, ending with a total of 584 stores, a 13% year-over-year increase [19][20] - The closeout market remains fluid, with significant retail store closures creating excess inventory opportunities [9][11] Company Strategy and Development Direction - The company is focused on aggressive market share acquisition through accelerated store growth, enhanced digital marketing, and the Ollie's Army loyalty program [11][12] - The company aims to maintain its value proposition and price gaps, especially on brand-name items, while reducing reliance on Chinese imports [43][125] - The company is investing in its people and enhancing customer acquisition and retention strategies [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic environment and reaffirmed the financial outlook for the fiscal year [15][25] - The company anticipates continued strong deal flow due to retail store closures and supply chain disruptions [9][11] - Management expects second quarter comparable store sales to be at the lower end of the 1% to 2% range, with strong core comp trends in non-seasonal categories [26][99] Other Important Information - The company completed the initial rollout of a co-branded credit card, seeing strong spending and shopping frequency [13] - A new private shopping event for Ollie's Army members is planned, enhancing the loyalty program [14][68] Q&A Session Summary Question: State of closeout availability and impact of tariffs - Management noted strong deal flow and a 16% increase in inventory, with expectations for more product availability due to supply chain disruptions and retail bankruptcies [32][33] Question: Traffic trends and confidence in second quarter comps - Traffic has been strong, with a core comp running in the low to mid single-digit range, despite some seasonal impacts [35][36] Question: Impact of tariffs on supplier negotiations and pricing - Management emphasized maintaining value propositions and price gaps while working closely with vendors to mitigate tariff impacts [41][42] Question: Real estate opportunities and store openings - The pipeline for new store openings is strong, with expectations for above-average growth in 2026 [50][51] Question: Impact of Big Lots closures on comps - The liquidation of Big Lots stores had a 50 basis point impact on comps, but stores that closed prior to Christmas are seeing low to mid single-digit lifts [55][56] Question: Cadence of comps and Ollie's Army Night - Comps improved significantly in March, and the new Ollie's Army Night is expected to enhance customer loyalty and drive sales [65][68] Question: Gross margin expectations and tariff impacts - Management expects gross margins to follow a seasonal flow, targeting 40% for the year, with some tariff impacts already included [70][71] Question: Pricing strategy amidst competition - The company is committed to maintaining price gaps and is actively sourcing products to ensure value for customers [75][76] Question: Ollie's Army membership growth and performance - Newer stores are seeing higher conversion rates to Ollie's Army membership, benefiting from customer familiarity with loyalty programs [87][88]