Q1 2023 Ollie's Bargain Outlet Holdings Inc Earnings Call

Speaker 2: Good morning and welcome to OLLI's Bargain Outlet Conference call to discuss financial results for the first quarter 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.

Speaker 2: 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 allies. Joining us on today's call from Allie Management are John Swaggart-President and Chief Executive Officer.

Speaker 2: Eric Vander Vlach, 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 that press release can be found in the investor relations section.

Speaker 2: of the company's website. I want to remind everyone that management remarks on this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Speaker 2: forward-looking statements may include

Speaker 2: But not be limited to predictions, expectations, or estimates, and actual results could differ materially from those mentioned on today's call. Discussions of future performance, financial outlook, trends, strategy, plans, assumptions, or intentions may also...

Speaker 2: for looking statements which speak only as of today and accept to the extents required by law we undertake no obligation to update or revise our for looking statements. For looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected anticipated or implied.

Speaker 2: Although it is not possible to predict or identify all such risks and uncertainties, we encourage investors to read the risk vectors described in our most recent annual and periodic reports filed with the Security and Exchange Commission, as well as our earnings release issued earlier today for a...

Speaker 2: most closely comparable GAAP financial measures to non- GAAP financial measures are included in our earnings release. And with that, I'll turn the call over to Mr. Swagger. Please go ahead, sir.

Speaker 3: Thank you and good morning everyone.

Speaker 3: We had a strong first quarter and we were pleased with the momentum of our business. Our first quarter results exceeded our expectations and were driven by continued improvements in comparable store sales, new store productivity, and gross margin, all while maintaining strong control of expenses.

Speaker 2: centers and stores. Investments in wages and material handling equipment, as well as process improvement and IT enhancements, have resulted in better execution, which we believe is supporting the current momentum of our business. Our third priority is to grow our store and customer base. We opened nine stores and closed one during the quarter, ending the first quarter with 476 stores in 29 states. While the real estate and construction environment remains challenging, we are still tracking to open 45 stores in fiscal 2023. Our long-term target continues to be more than 1,050 stores with a goal to open 50 to 55 stores annually. In addition to opening new stores, we are also remodeling existing stores. This is something we started last year and we are pleased with the early results.

Speaker 3: It's not as big a number relative to what some other peers are reporting and other businesses that I've seen. Okay, very good. Thanks so much and good luck.

Speaker 2: Thanks, Peter. Thanks, Bill. Thank you. One moment for our next question.

Speaker 2: And our next question comes from the line of Brad Thomas from KeyBank. Your question, please.

Speaker 4: Hi, thanks so much for taking my question and congrats on the nice start of the year here. I was hoping you could just give us a little more color on trends in the quarter and how 2Q has started. I'm just curious a little bit more about the rationale behind you all.

Speaker 4: raising your 2Q outlook based on what you're seeing. Thanks.

Speaker 5: Sure. So, um, from a quarterly flow for Q1, I would say that February is the strongest month of the quarter. Um, February strength.

Speaker 5: decelerate a little bit into March as, you know, I believe it was widely reported tax refunds have been down and we feel like, you know, we saw a little bit of impact at the beginning part of March. April picked back up with some strong deal flow and content we had in stores, and we've seen strength continue into the month of May.

Speaker 4: Okay, thanks. On the remodeling program, I was wondering if you could give us any more color about how the stores that you've initially started with, how those are performing, what kind of lifts you think you may be able to get out of those.

Speaker 4: and the optimism that maybe there are more source that are candidates for models.

Speaker 2: Sure, Brad, I'll take it. It's Eric. Yeah, we're super excited by what we're seeing. Customer response is very, very positive and we like the results we're seeing to date. Keep in mind, we only have a handful of stores that we've actually anniversary at this point. So we've remodeled 32 stores since the inception of the program, but we started a little over a year ago, so it's still...

Speaker 2: like what we're seeing so far. We plan with the 30 to 40 stores that we're committed to remodel this year.

Speaker 2: continue to look at the results and see how we move through this, we would think we commit to probably a similar number for 2024.

Speaker 6: That's great. Thank you very much.

Speaker 6: That's great. Thank you very much. Thanks, Brad.

Speaker 2: Thank you one moment for our next question. And our next question comes to the line of Jason Haas from Bank of America. Your question please.

Speaker 5: Hey, good morning and thanks for taking my questions. So maybe for the first one, I know you called out that you're seeing some higher income, some younger customers shopping in stores more, which is great to hear. Do you have any sense for which categories they're shopping in most? What's tracking them down into shopping at Ollie's?

Speaker 2: Sure, Jason, it's Eric. We don't track category performance by income cohort, so I don't have a sense.

Speaker 2: Jason, it's Eric. We don't track category performance by income cohort, so I don't have a sense for that.