Q4 2023 Ollie's Bargain Outlet Holdings Inc Earnings Call

Yeah.

Unknown Executive: Good morning and welcome to the Dutch Financial Results for the 4th Quarter and Fiscal Year 2012. Currently, all participants are in a listen-only mode.

Good morning, and welcome to the Ollie's bargain.

Speaker Change: Oh gosh financial results for the fourth quarter and fiscal year 2023. Currently all participants are in a listen only mode. Later, we will conduct a question and answer session and an interactive instructions will follow at that time. Please be advised that this call is being recorded.

Unknown Executive: 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 express written authorization from Ollie's. Joining us on today's call from Ollie's management are John Swygert, President and Chief Executive Officer, Eric Vander Vlaak, Executive Vice President and Chief Operating Officer, and Robert Helm, Senior Vice President and Chief Financial Officer. Certain comments made today may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. As amended, such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed.

The reproduction of this call in whole or in part is not permitted without expressed written authorization of valleys joining us on today's call from Ollie's management, or John Swygert, President and Chief Executive Officer.

Speaker Change: Eric Bader of luck Executive Vice President and Chief operating Officer, and Robert <unk>, Senior Vice President and Chief Financial Officer certain comments made today may constitute forward looking statements and are made pursuant to and within the meaning of the safe Harbor provisions of the private Securities litigation.

Speaker Change: And Reform Act of 1995 as amended such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements.

Unknown Executive: Risks and uncertainties are described in our annual report on Form 10-K and quarterly reports on Form 10-Q on file with the SEC and earnings press release. Forelooking statements made today are as of the date of this call, and we do not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non-GAAP financial measures. Reconciliation of those most closely comparable GAAP financial measures to non-GAAP financial measures is included in our earnings press release. With that said, I'll turn the program over to Mr. Swygert. Please go ahead, sir.

Speaker Change: Yes.

Speaker Change: Risks and uncertainties are described in our annual report on Form 10-K, and quarterly reports on Form 10-Q on file with the SEC and earnings press release forward looking statements made today are as of the date of this call and we do not undertake any obligation to update these statements.

Speaker Change: Today's call. The company will also be referring to certain non-GAAP financial measures reconciliation of those most closely comparable GAAP financial measures to non-GAAP financial measures are included in our earnings press release.

Speaker Change: With that said I'll turn the program over to Mr. Swagger. Please go ahead Sir.

John W. Swygert: Thank you and good morning everyone. We appreciate you joining our call today. For the fourth quarter, we delivered better than expected top and bottom line results. Comparable store sales increased 3.9%, our seventh consecutive quarter of positive cost.

Swagger: Thank you and good morning, everyone.

Swagger: Joining our call today.

Swagger: We had a strong fourth quarter and fiscal year.

Swagger: The fourth quarter, we delivered better than expected top and bottom line results comparable store sales increased three 9% our seventh consecutive quarter of positive comps.

John W. Swygert: Our CompServe sales growth was broad-based, with over 60% of our product categories comping positive in the quarter. In addition to the solid coffee store sales growth, we also delivered very strong margins; gross margin increased 290 basis points to 40.5%, which in turn helped us deliver a 46% increase in adjusted earnings per share. The fourth quarter capped off a great year for Ollie's. Fiscal 2023 marked a return to the strong financial performance and consistent execution that are a hallmark at Ollie's. We are proud of our team's achievements this past year, which included a number of records and milestones. In fiscal 2023, we generated record net sales and crossed the $2 billion mark for the first time in our 41-year history.

Swagger: Our comp store sales growth was broad based with over 60% of our product categories coffee costs in the quarter.

Swagger: In addition to the solid comp store sales growth. We also delivered very strong margin growth.

Swagger: Gross margin increased 290 basis points to 45%, which in turn helped us deliver a 46% increase in adjusted earnings per share.

Swagger: The fourth quarter capped off a great year for our fiscal.

Swagger: Fiscal 2023 market return to the strong financial performance.

Execution of a hallmark of ours.

Speaker Change: We are proud of our team's achievement this past year, which included a number of records and milestones.

Speaker Change: In fiscal 2023, we generated record net sales and crossed the $2 billion Mark for the first time in our 41 year history we.

John W. Swygert: We opened our 500th store and entered our 30th state. We returned to our long-term algo gross margin target of 40% in the second half of the year. We added a record 3.6 million new Ollie's Army members and grew to almost 14 million active members strong.

Speaker Change: We opened our 500th store in natured, our 38 states.

Speaker Change: We returned to our long term algo gross margin target of 40% in the second half of the year.

Speaker Change: We added a record $3 6 million, New Ollie's Army members and grew to almost 14 million members strong.

John W. Swygert: We beat and raised our full year of sales and earnings estimates in all four quarters. And, most importantly, we returned to a pattern of consistent execution and strong financial results. We feel very good about the underlying trends in our business and our focus on the long term. We recently completed our latest third-party real estate feasibility study, which utilizes demographic data and density across a changing U.S. The migration trend out of larger metropolitan markets into rural and suburban areas over the past few years is a positive trend for Ollie's, and our analysis supports a new long-term target of $1,300, up from a previous $1,000. Everyone loves to bargain.

Speaker Change: We beat and raised our full year sales and earnings estimates in all four quarters.

Speaker Change: And most importantly, we've returned to a pattern of consistent execution and strong financial results.

Speaker Change: We feel very good about the underlying trends in our business and our focus on long term growth.

Speaker Change: We recently completed our latest third party real estate feasibility study, which utilizes demographic data intensity across the changing U S landscape.

Speaker Change: The migration trend out of larger metropolitan markets into rural and suburban areas over the past few years as a positive trend for ollie's and our analysis supports a new long term target of 1300 stores up from our previous thousand 50.

John W. Swygert: And as consumers seek value, we are positioned to sell good stuff cheap, high quality name brand products at prices typically 20% to 70% below the fan. Since our founding over 41 years ago, we have built our model around close-outs and bargains. In doing so, we have developed deep relationships throughout the vendor community, built an experienced team of talented buyers, and set up our distribution network to handle deals of all shapes and sizes in a cost-effective and agile manner, and developed a trusted and loyal customer following. Today, consumers are looking for bargains, and manufacturers are looking for trusted partners who can help them manage their inventory and supply. Larger retailers are being supplied by larger manufacturers, and this leads to larger orders and products At the same time, manufacturers are constantly developing and introducing new products, new packaging, and working around endless changes and disruptions to the marketplace and supply chain. This is driving strong growth in the retail industry. We are the king of closeouts, and we are built for this. Nobody has our experience, size, scale, and credibility to close out.

Speaker Change: Everyone lots of bargain and as consumers seek value we are positioned to win.

Speaker Change: We saw good stuff cheap high quality name brand products that prices typically 20% to 70% below the P&C doors.

Speaker Change: Our founding over 41 years ago, we have built our model around Closeouts and margins.

Speaker Change: So we have developed deep relationships throughout the vendor community built an experienced team of talented buyers and.

Speaker Change: We set up our distribution network to handle yields of all shapes and sizes in a cost effective and agile manner and developed a trusted and loyal customer following.

Speaker Change: Today consumers are looking for bargains and manufacturers are looking for trusted partners, who can help them manage their inventory and supply chain.

Speaker Change: Larger retailers are being supplied by larger manufacturers and this lead to larger orders and product flow.

Speaker Change: At the same time manufacturers are constantly developing and introducing new products, new packaging and working on enlist changes and disruptions in the marketplace and supply chain. This is driving strong growth in the closeout market.

We are the key of Closeouts and we are built for this environment nobody has our experience.

Speaker Change: <unk> scale and credibility in the closeout market.

John W. Swygert: With over 41 years of history and extensive relationships, manufacturers know we are a trusted and reliable partner for access and closeout products. As a result, our purchasing power is growing, and we're becoming more and more meaningful to the vendor community. We have made significant investments to enhance execution and drive productivity. We have investment wages across the entire company, our distribution centers, our stores, Field Management Teams, and SOAR support.

Speaker Change: We're 41 year history of innovation and extensive relationships manufacturers no. We are a trusted and reliable partner for excess of closeout products. As a result, our purchasing power is growing and we're becoming more and more meaningful to the vendor community.

We have made significant investments to enhance execution to drive productivity.

Speaker Change: We have invested in wages across the entire company our distribution centers our stores our field management teams and store support center, we have enhanced major operational teams such as the supply chain loss prevention real estate and marketing.

Eric van der Valk: We have enhanced major operational teams, such as the supply chain, loss prevention, real estate, and marketing, expanded our distribution capability, implemented new technology and systems, initiated a story model program, retooled our marketing campaigns, and expanded our digital capability. Clearly, these investments are paying off. Our customer base is expanding, our productivity levels are increasing, and our costs are well under control. In short, we're executing well and delivering strong and consistent financial results. Now, let me turn the call over to Eric. Thanks, John, and good morning, everyone.

Speaker Change: We expanded our distribution capabilities.

Speaker Change: <unk>, new technology and system initiated a store remodel program.

Speaker Change: And retooled, our marketing campaigns and expanded our digital capabilities.

Speaker Change: Clearly these investments are paying off.

Speaker Change: Our customer base is expanding our productivity productivity levels are increasing and our costs are well under control in short, we are executing well and delivering strong and consistent financial results now, let me turn the call over to Eric.

Eric Bader: Thanks, John and good morning, everyone.

Eric van der Valk: Our fourth-quarter fiscal year results reflect the strength of our deals, the hard work and commitment of our team, and our execution across the organization. Process improvements and investments we have made in our people, supply chain, stores, and marketing continue to drive better productivity and strong results. Our growth is focused on a number of core issues, offering amazing deals, expanding our reach through new store openings, digital marketing, and Ollie's Army, and leveraging investments to drive operating efficiencies and execution. In the fourth quarter, we opened seven new stores and hit our target of 45 new store openings for the fiscal year. The 30 store openings in the back half of the year were a new record.

Eric Bader: Our fourth quarter and fiscal year results reflect the strength of our deals the hard work and commitment of our team and our execution across the organization process improvements and investments we have made in our people supply chain stores and marketing continue to drive better productivity and strong results.

Eric Bader: Our growth is focused on a number of core initiatives offering amazing deals.

Eric Bader: Spanning our reach through new store openings digital marketing and always army.

Eric Bader: Leveraging investments to drive operating efficiencies and execution.

Eric Bader: In the fourth quarter, we opened seven new stores and hit our target of 45, new store openings for the fiscal year.

Eric Bader: The 30 store openings in the back half of the year was a new record we continue to pursue a contiguous growth real estate strategy that Leverages brand awareness marketing reach and our supply chain.

Unknown Executive: We continue to pursue a continuous growth real estate strategy that leverages brand awareness, marketing reach, and our supply chain. With the opening of our 500th store in Iowa City, we now operate in 30 states. In fiscal 2024, we are targeting to open approximately 50 new stores with a good portion of and The Midway. In addition to opening new stores, we continue to upgrade our existing stores through our remodel program. Over 10% of our store base has now been remodeled, and we are applying our learnings to both existing stores and new store design. Ladies and gentlemen, please stand by. Your program will resume momentarily. Once again, please stand by. Your program will resume momentarily. Once again, please stand by; your program will resume momentarily. Again, sorry, ladies and gentlemen, for the inconvenience, but please stand by; your program will resume momentarily.

Eric Bader: With the opening of our 500th store in Iowa City, we now operate in 30 states.

Eric Bader: In fiscal 2024, we are targeting to open approximately 50, new stores with a good portion of the existing markets and the Midwest.

Eric Bader: In addition to opening new stores, we continue to upgrade our existing stores through our remodel program.

Eric Bader: 10% of our store base has now been remodeled and we're applying our learnings to both existing stores and new store designs.

Eric Bader: Yes.

Ladies and gentlemen, please standby your program will resume momentarily once again, please standby your program will resume momentarily.

Unknown Executive: Once again, please stand by; your program will begin will resume momentarily. Thank you. Ladies and gentlemen, please stand by. Your program will resume momentarily. Once again, please stand by. Your program will resume momentarily.

Eric Bader: Yes.

Speaker Change: Once again, ladies and gentlemen.

Speaker Change: Please standby your program will resume momentarily once again, please standby your program will resume momentarily.

Unknown Executive: Thank you for your patience, and please continue to hold. And, ladies and gentlemen, our program will resume now. Thank you for your time. Ladies and gentlemen, please stand by. Your program will resume momentarily. Ladies and gentlemen, please stand by. Once again, please stand by. Your program will resume momentarily. Ladies and gentlemen, please stand by. Your program will resume momentarily. Once again, please stand by. Your program will resume momentarily. We're all in, so...Michelle, are you able to hear us? Yeah, hi, I can hear you now.

Speaker Change: Again, sorry, ladies and gentlemen for the inconvenience, but please standby your program will resume momentarily once again.

Speaker Change: Please standby your program will begin will resume momentarily. Thank you.

Unknown Executive: All right, great. Yes, you may proceed. Okay, again, everybody, we apologize for the technical difficulties.

Speaker Change: Ladies and gentlemen, please standby your program will resume momentarily once again. Please standby your program will resume momentarily. Thank you for your patience. It please continue to hold.

Eric van der Valk: We're going to resume, you know, the Ollie's conference call, you know, with Eric starting back in on his portion. Thank you, everybody. Thank you, John Rouleau. Thank you, John Swygert. Good morning, everyone.

Eric van der Valk: Our fourth quarter and fiscal year results reflect the strength of our deals, the hard work and commitment of our team, and the execution across the organization. Process improvements and investments we have made in our people, supply chain, stores, and marketing continue to drive better productivity and strong results. Our growth is focused on a number of core initiatives, offering amazing deals, expanding our reach through new store openings, digital marketing, and Ollie's Army, and leveraging investments to drive operating efficiencies and execution. In the fourth quarter, we opened seven new stores and hit our target of 45 new store openings for the fiscal year. The 30 store openings in the back half of the year were a new record.

Speaker Change: And Lee.

Speaker Change: Ladies and gentlemen for our program will resume now.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen, please standby your program will resume momentarily.

Speaker Change: Ladies and gentlemen, please standby once again, please standby your program will resume momentarily.

Eric van der Valk: We continue to pursue a contiguous growth real estate strategy that leverages brand awareness, marketing reach, and our supply chain. With the opening of our 500th store in Iowa City, we now operate in 30 states. In fiscal 2024, we are targeting to open approximately 50 new stores, with a good portion of these in existing markets and the Midwest. In addition to opening new stores, we continue to upgrade our existing stores through our remodel program. Over 10% of our store base has now been remodeled, and we are applying our learnings to both existing stores and new store designs. Our new distribution center in Illinois will support our continued growth in the Midwest and is on track to start full operations in the second half of this year. Our fourth distribution center will expand our capacity to service an additional 150 to 175 stores.

Speaker Change: Ladies.

Speaker Change: And gentlemen, please standby your program will resume momentarily once again, please standby your program will resume momentarily.

Speaker Change: Okay.

Speaker Change: With all that.

Speaker Change: Michelle are you able to hear us.

Michelle: Yeah, Hi, I can hear you now alright, great and yes, you May proceed.

Speaker Change: Okay again, everybody, we apologize for the technical difficulties.

Speaker Change: We're going to resume the Ollie's conference call with Eric starting back in on his portion. Thank you everybody.

Alright. Thank you John Rouleau May think he dropped swagger.

Speaker Change: Yeah.

Eric Bader: Good morning, everyone, our fourth quarter and fiscal year results reflect the strength of our deals the hard work and commitment of our team and the execution across the organization.

Eric van der Valk: When combined with investments we've made over the past year, we will have the ability to service up to 750 stores. On the marketing front, we continue to shift advertising dollars into various digital and social media platforms, including influencers across TikTok, Instagram, and Facebook. For Black Friday and Christmas, we tested a series of video ad formats that generated millions of views and over a billion impressions on Google channels, including YouTube.

Eric Bader: Office improvements and investments we have made in our people supply chain stores and marketing continue to drive better productivity and strong results. Our growth is focused on a number of core initiatives offering amazing deals expanding our reach through new store openings digital marketing and Ollie's army and leveraging investments to drive operating efficiencies.

Eric van der Valk: Our digital flyer registered over 300 million impressions on Facebook and Instagram. Our expanded digital marketing program is helping us to reach new and younger customers and keep Ollie's, the birthplace of bargains, top of mind with existing customers. Our growing customer base is reflected in our Ollie's Army numbers. As John mentioned, we had a record year in customer additions with over 3.6 million customers added to Ollie's Army this year alone. In line with the growth in the younger customer demographic we are attracting, we are also seeing growth in younger customers joining Ollie's Army.

And execution in.

Eric Bader: In the fourth quarter, we opened seven new stores and hit our target of 45, new store openings for the fiscal year. The 30 store openings in the back half of the year was a new record we continue to pursue a contiguous growth real estate strategy that Leverages brand awareness marketing reach and our supply chain with the opening of our.

Eric Bader: 500 store in Iowa City, we now operate in 30 states in fiscal 2024, we are targeting to open approximately 50, new stores with a good portion of these in existing markets and the Midwest in.

Eric Bader: In addition to opening new stores, we continue to upgrade our existing stores through our remodel program over 10% of our store base has now been remodeled and we are applying our learnings to both existing stores and new store design.

Eric van der Valk: Lastly, we continue to benefit from the trade-down effect we have experienced over the last several quarters and are seeing strong retention from this customer core cohort. Touching on supply chain for a moment, our annual international carrier contracts are renegotiated every May.

Eric Bader: Our new distribution center in Illinois will support our continued growth in the Midwest and is on track to start up full operations in the second half of this year.

Eric van der Valk: This is an area where we have made significant improvements over the past few years. We have overhauled our team, brought in new systems to improve visibility and execution, and increased the number of direct carrier relationships. Most importantly, we have leveraged our volume to negotiate favorable annual contracts. Now, almost 90% of our foreign shipping requirements are covered under contract. As a result, we have very little exposure to the spot market.

Eric Bader: Our fourth distribution center expands our capacity to service an additional 150 to 175 stores when combining this with investments we've made over the past year, we will have the ability to service up to 750 stores.

Eric Bader: On the marketing front, we continue to shift advertising dollars into various various digital and social media platforms, including Influencers across Tictoc, Instagram and Facebook for Black Friday, and Christmas we tested a series of video AD formats that generate millions of views and over a billion impressions.

Eric van der Valk: As a reminder, around 20% of our overall purchases are in. In addition, we have not seen any meaningful impact from the shipping disruptions through the Suez Canal, and our import costs remain well controlled. Like other retailers, we don't know what could happen to import tariffs as a result of the upcoming presidential election. But I do want to remind everyone that we negotiate pricing fluidly based on prices in the marketplace on a relatively short-term basis. If prices were to increase from the implementation of new tariffs, we would adjust our buying accordingly and offer the same compelling value to our customers while delivering margin within our targeted parameters. We continue to watch the real estate market closely.

Eric Bader: Google channels, including Youtube.

Eric Bader: Our digital Flyer registered over 300 million impressions with Facebook and Instagram users our expanded digital marketing program is helping us to reach new and younger customers and keeping ollie's the birth place of bargains top of mind with existing customers.

Eric Bader: Our growing customer base as reflected in our Ollie's Army numbers as John mentioned, we had a record year in customer additions with over $3 6 million customers added to Ollie's Army this year alone.

Eric Bader: In line with the growth in the younger customer demographic. We are attracting we are also seeing growth in younger customers joining ollie's army.

Lastly, we continue to benefit from the trade down effect, we have experienced over the last several quarters.

Eric van der Valk: While the market is a bit tight at the moment, we think this could start to loosen up with some of the recent and potentially forthcoming foreclosures and bankruptcies. The strength of our business model, and particularly our balance sheet, provides us with the positioning to seize this opportunity as it arises. Before I turn the call over to Rob, I would like to take a moment to thank our incredible team of associates who are value-obsessed and committed to executing the different areas across our business day in, day out. John alluded to the consistent results we delivered this quarter, and this is only possible when our entire team is working together to execute. Rob.

Eric Bader: And are seeing strong retention from this customer core cohort.

Eric Bader: Touching on supply chain for a moment our annual international carrier contracts are renegotiated every may this is an area, where we have made significant improvements over the past few years, we have overhauled our team brought in new systems to improve visibility and execution at.

Eric Bader: And increase the number of direct carrier relationships.

Eric Bader: Most importantly, we have leveraged our volume to negotiate favorable annual contracts in terms now.

Eric Bader: Now almost 90% of our foreign shipping requirements are covered under contract.

Eric Bader: As a result, we have very little exposure to the spot market.

Robert Helm: Thanks, Eric, and good morning, everyone. We're extremely pleased with our fourth quarter and full year results, which came in ahead of our expectations, driven by strong sales growth and healthy margin expansion. In fact, our fourth quarter adjusted earnings per share was a new record number for Ollie.

Eric Bader: As a reminder, around 20% of our overall purchases are imports.

Eric Bader: In addition, we have not seen any meaningful impact from the shipping disruptions through the Suez Canal.

Eric Bader: And our input costs remain well controlled.

Eric Bader: Like other retailers, we don't know what could happen to import tariffs as a result of the upcoming presidential election.

Robert Helm: For the year, we achieved a record $2.1 billion in net sales, expanded gross margin by 370 basis points, and increased adjusted earnings per share by 80%. In the fourth quarter, net sales increased 18% to $649 million, driven by new store growth, comparable store sales growth, and the 53rd selling week. Comparable store sales increased 3.9% and were driven primarily by transactions.

Eric Bader: But do want to remind everyone that we negotiate pricing fluidly based on prices in the marketplace on a relatively short term basis.

Eric Bader: If prices were to increase from the implementation of new tariffs, we would adjust our buying accordingly and offer the same compelling value to our customers, while delivering margin within our targeted parameters.

Eric Bader: We continue to watch the real estate market closely.

Eric Bader: While the market is a bit tight at the moment. We think this could start to loosen up with some of them are more recent and potentially forthcoming store closures and bankruptcies.

Eric Bader: Strength of our business model and particularly our balance sheet provides that provides us with the positioning to seize this opportunity as it arises.

Robert Helm: Our category strength was broad-based, with over 60% of our product categories copying positively. Our best performing categories were food, seasonal, candy, housewares, and sporting goods. Finally, the 53rd selling week added approximately $34 million to net sales in the quarter. Ollie's Army increased 5.9% to 14 million members, and sales to our members represented over 80% of total sales. As both John and Eric mentioned, we added a record 3.6 million members in 2023, and the number of non-active members purging from Ollie's Army has been moderated.

Speaker Change: Before I turn the call over to Rob I would like to take a moment to thank our incredible team of associates or value of SaaS. They committed to executing the different areas across our business day in day out John alluded to the consistent results we delivered this quarter.

Rob: This is only possible when our entire team is working together to execute.

Rob: The business.

Rob: Rob.

Rob: Thanks, Eric and good morning, everyone.

Rob: We're extremely pleased with our fourth quarter and full year results, which came in ahead of our expectations driven by strong sales growth at healthy margin expansion.

Robert Helm: This should bode well for net member growth going forward. During the quarter, we opened seven new stores, ending with 512 stores in 30, an increase of 9.4% year over year. The timing of our new store openings did slightly impact new store productivity in the quarter, but our new stores continue to ramp and perform in line with our expectations and pro forma models. Gross margin improved 290 basis points to 40.5% compared to last year, primarily driven by favorable supply chain costs and a higher merchandise margin driven by lower strength. SG&A expenses as a percentage of net sales increased 30 basis points to 24.1 percent due to higher incentive compensation, partially offset by leverage of fixed expenses on the increase in net sales.

Rob: Our fourth quarter adjusted earnings per share was a new record number for ollie's.

Rob: For the year, we achieved a record $2 1 billion in net sales.

Rob: Expanded gross margin by 370 basis points and increased adjusted earnings per share by 80%.

Rob: In the fourth quarter net sales increased 18% to $649 million driven by new store growth comparable store sales growth and the 50 <unk> selling wheat.

Rob: Our comparable store sales increased three 9% and was driven primarily by transactions.

Rob: Our category strength was broad based with over 60% of our product categories Comping positive.

Rob: Our best performing categories were spoon seasonal candy housewares and sporting goods.

Rob: The 50, <unk> selling week added approximately 34 million for net sales in the quarter.

Robert Helm: Operating income increased 44.3% to $98 million, and operating margin increased 270 basis points to 15% in the quarter. Adjusted net income increased 45.5% to $76 million, and adjusted earnings per share was $1.23 compared to $0.84 last year. Adjusted EBITDA increased 43.2% to $111 million, and adjusted EBITDA margin increased 300 basis points to 17% for the quarter. Turning to the balance sheet, our cash position remains strong, with $353 million between cash on hand and short-term investments and no outstanding borrowings under our revolving credit facility, which we extended for another five years as favorable economics to the current market conditions. For the full year, we generated $254 million in cash from operations.

Rob: Ollie's Army increased five 9% to 14 million members and sales to our members represented over 80% of total sales.

Rob: As both John and Eric mentioned, we added a record $3 6 million members in 2023, and the number of non active members purging from Ollie's Army is moderating.

Rob: This should bode well for net member growth going forward.

During the quarter, we opened seven new stores, ending with 512 stores in 30 states an increase of nine 4% year over year.

Rob: The timing of our new store openings did slightly impact new store productivity in the quarter, but our new stores continue to ramp and perform in line with our expectations and pro forma models.

Rob: Gross margin improved 290 basis points to 45% compared to last year, primarily driven by favorable supply chain costs at a higher merchandise margin driven by lower shrink.

Rob: SG&A expenses as a percentage of net sales increased 30 basis points to 24, 1% due to higher incentive compensation, partially offset by leverage of fixed expenses and an increase in net sales.

Robert Helm: Inventory increased 7.5% to $506 million, primarily driven by new store growth, partially offset by the impact of lower capitalized freight costs. Capital expenditures totaled $43 million for the quarter, and were primarily for the development of new stores, the remodeling of existing stores, and the construction of our new distribution center in Illinois. During the quarter, we invested $13 million to repurchase shares of our common stock. We repurchased $53 million during the year and have $86 million remaining on our current share repurchase program authorization. We remain committed to returning capital to our investors through share repurchases while balancing our strategic growth opportunities and working capital needs. Turning to our outlook for 2024, as John mentioned, we continue to benefit from a strong closeout market as well as improved execution across many facets of our business.

Rob: Operating income increased 44, 3% to $98 million and operating margin increased 270 basis points.

Rob: 15% in the quarter.

Rob: Adjusted net income increased 45, 5% to $76 million and adjusted earnings per share was $1 23, compared to 84 cents last year.

Rob: Adjusted EBITDA increased 43, 2% to $111 million and adjusted EBITDA margin increased 300 basis points to 17% for the quarter.

Rob: Turning to the balance sheet, our cash position remains strong.

Rob: With $353 million between cash on hand, and short term investments and no outstanding borrowings under our revolving credit facility, which we extended for another five years at favorable economics to the current market conditions.

Rob: For the full year, we generated $254 million in cash from operations.

Rob: Inventory increased seven 5% to $506 million, primarily driven by new store growth, partially offset by the impact of lower capitalized freight costs.

Robert Helm: While we enter the year with nice momentum, we always initially plan the year around our long-term algo of one to two percent positive comp growth for purposes of setting our cost structure and leverage. With that framework in place, for the full year, which is a 52-week year compared to 53 weeks in 2023. We expect total net sales of $2.248 to $2.273 billion, comparable store sales growth of one to 2%, and the opening of 50 new stores left two closures where we chose not to renew, and gross margin of approximately 40%. Operating income of $243 to $251 million, adjusted net income of $192 to $198 million, and adjusted net income per diluted share of $3.10 to $3.20.

Rob: Capital expenditures totaled $43 million for the quarter and were primarily for the development of new stores, the remodeling of existing stores and the construction of our new distribution center in Illinois.

Rob: During the quarter, we invested $13 million to repurchase shares of our common stock, we repurchased $53 million during the year and have $86 million remaining on our current share repurchase program authorization.

Rob: We remain committed to returning capital to our investors through share repurchases, while balancing our strategic growth opportunities and working capital needs.

Rob: Turning to our outlook for 2024 as John mentioned, we continue to benefit from a strong closeout market as well as improved execution across many facets of our business.

Robert Helm: An annual affected tax rate of 25%, which excludes the tax benefits related to stock-based compensation, diluted weighted average shares outstanding of approximately 62 million. And lastly, capital expenditures of approximately $85 million, including approximately $30 million for the completion of our distribution center in Princeton, Illinois. Now, let me provide some color on how we're thinking about quarterly comps and store opening cadence, as well as a few other numbers to help with your models. With our continued momentum, we expect to deliver Q1 comps slightly above the high end of our annual guidance. For Q2, we are planning comps at the midpoint of our annual guidance range. For Q3, we anticipate comp sales to be flat due to a change related to the calendar shift from the 53rd.

Rob: While we entered the year with nice momentum, we always initially planned the year around our long term algo of 1% to 2% positive comp growth for purposes, setting our cost structure and leverage points.

Rob: With that framework in place.

Rob: For the full year, which is a 52 week year compared to 53 weeks in 2023, we expect total net sales of two point to four eight the 2.2 dollars 73 billion.

Rob: Comparable store sales growth of one 2%.

Rob: The opening of 15, new stores left to closures, where we chose not to renew.

Rob: Gross margin of approximately 40%.

Operating income of $243 million to $251 million.

Rob: Adjusted net income of $192 million to $198 million and adjusted net income per diluted share of $3 10 to $3 20.

Rob: And annual effective tax rate of 25%, which excludes the tax benefits related to stock based compensation.

Robert Helm: And as a result of this shift, we would expect Q4 comps to be slightly above the high end of our annual guidance range. For new stores, we're modeling approximately 30% of our openings in the first half and 70% of our openings in the second half. Related to store openings, we expect pre-opening expenses, including expenses associated with our remodel program, to be approximately $17 million for the year.

Diluted weighted average shares outstanding of approximately 62 million.

Rob: And lastly capital expenditures of approximately 85 million, including approximately $30 million for the completion of our distribution center in Princeton, Illinois.

Speaker Change: Now let me provide some color on how we're thinking about quarterly comps and store opening tables as well as a few other numbers to help with your models.

Speaker Change: With our continued momentum we expect to deliver Q1 comps slightly above the high end of our annual guidance range.

Robert Helm: In terms of gross margin, we anticipate most of our improvements occurring in the first half of the year as we lauch our stronger results in the second half of the year. We're planning for depreciation and amortization expense of approximately 42 million, which includes $11 million that runs through cost of goods sold. And lastly, we expect net interest income of approximately $13 million, which considers a higher average cash balance for the year, partially offset by the impact of the potential for lower interest rates in the back half of the year.

Speaker Change: For Q2, we are planning comps to the midpoint of our annual guidance range for.

Speaker Change: For Q3, we anticipate comp sales to be flat due to a change related to the calendar shift from the 50 <unk> week.

Speaker Change: And as a result of the shift we would expect Q4 comps to be slightly above the high end of our annual guidance range.

Speaker Change: For new stores, we are modeling approximately 30% of our openings in the first half and 70% of our openings in the second half related to store openings, we expect preopening expenses, including expenses associated with our remodel program to be approximately $17 million for the year.

Speaker Change: In terms of the gross margin, we anticipate most of our improvements occur in the first half of the year as we lap our stronger results in the second half of the year.

Speaker Change: We're planning for depreciation and amortization expense of approximately $42 million, which includes $11 million that runs through cost of goods sold.

John W. Swygert: Now, let me turn the call back over to John. Thanks, Rob. Operating a closed retail business is not for the faint of heart.

Speaker Change: And lastly, we expect net interest income of approximately $13 million, which considers a higher average cash balance for the year, partially offset by the impact of the potential for lower interest rates in the back half of the year now.

John W. Swygert: It takes a lot of dedicated team members who are passionate about selling good stuff cheap to execute our model. We know the holiday season was a very busy time for our associates this year, and I want to congratulate our team for the way they managed the business and delivered results. I am very proud of their performance this past quarter and year. As we say, We are Ollie. That concludes our prepared remarks, and we are now happy to take your questions. Operator?

Speaker Change: Now, let me turn the call back over to jobs.

Jobs: Thanks, Rob.

Jobs: Operator close out retail business is not for the faint heart. It takes a lot of dedicated team members, who are passionate about selling good stuff cheap to execute our model.

Unknown Executive: Certainly. And as a reminder, ladies and gentlemen, if you have a question at this time, please press star 11 on your telephone. One moment for our first question. And our first question comes from the line of Brad Thomas from KeyBank Capital Markets. Your question, please. Hi, good morning.

Jobs: We know the holiday season was a very busy time for our associates this year and I want to congratulate our team for the way they manage the business and delivered results I am very proud of their performance this past quarter and year.

Jobs: As we say.

Jobs: We are.

Jobs: Please.

Speaker Change: That concludes our prepared remarks, and we are now happy to take your questions operator.

John W. Swygert: Thanks for taking my question and congrats on a strong 2023. John, I just wanted to circle back on a question that we've been asking. And investors have been asking really, really for the past year, as you've started to see this, strong momentum in your business, can you talk a little bit more about the line of sight on sourcing and your confidence that you can keep up with the comp as we move here through 2024? Yeah, Brad, this is a question we've gotten for a long period of time.

Speaker Change: Certainly M. As a reminder, ladies and gentlemen, if you have a question at this time. Please press star one one on your telephone one moment for our first question.

Speaker Change: And our first question comes from the line of Brad Thomas from Keybanc Capital markets. Your question. Please.

Bradley Bingham Thomas: Hi, Good morning, Thanks for taking my question and congrats on a strong 2023.

Bradley Bingham Thomas: Hey, John I, just wanted to circle back on a question that we've been asking.

Bradley Bingham Thomas: And investors have been asking really really for the past year as you've started to see this strong momentum in your business can.

Bradley Bingham Thomas: Can you talk a little bit more about the line of sight on sourcing and your confidence that you can comp the comp as we move here through 2024.

John W. Swygert: With regards, you know, we've been doing this for 41 years, and the relationships we've built over that time period are very, very strong. Closeout, the closeout market is a very large market. As we said before, when I first started talking about it, it was about 80 and $80 billion; now it's probably closer to $115 billion. So, and we just surpassed the $2 billion sales number for this year. So there's plenty of excess inventory out in the marketplace. So that that does not bother us or the company to be able to comp the comp or find their source deals. The deal flows are very, very strong, and have been strong, and they'll continue to be strong. So that doesn't bother us from that perspective.

Speaker Change: Yeah. Brad. This is a question we've done for a long period of time with regards to and we've been doing this for 41 years.

Speaker Change: The the relationships we've built over that time period are very very strong closeout. The closeout market is a very large market as we said before it's a when I first started talking about with the 80% $80 billion market now, it's probably closer to $115 billion market. So and we just we just surpassed the $2 billion sales number for this year, so theres plenty of excess.

Speaker Change: Inventory out in the marketplace, so that debt that does not bother us or the company to be able to comp the comp or find their source deals. The deal flows are very very strong and have been strong and they'll continue to be strong so that doesn't bother us from that perspective, a line of sight is always been the major question because we're buying closeouts, we're not manufacturing goods. So we don't see too far out.

John W. Swygert: Line of sight has always been the major question because we're buying closeouts. We're not manufacturing goods, so we don't see too far ahead. I can't tell you what we're going to buy in June and July.

Speaker Change: I can't tell you what we're going to buy in June July, but when you do.

John W. Swygert: But when you do, when you're living this every day, you do feel the momentum that's out there and the surplus is sitting in the marketplace. So, you know, with our continued size and scale, we have become much, much more meaningful and built these relationships with the manufacturers, and we believe we're positioned to continue to deliver results. And we're not afraid of that. That's very helpful, John.

Speaker Change: When you're living this every day you do not you do have and feel the momentum that's out there in the surplus is fitting into the marketplace. So with our continued size and scale, we become much much more meaningful and built these relationships with the manufacturers and we believe we are positioned to continue to to deliver the results and we're not afraid that.

John W. Swygert: And as a related follow-up, you know, it's encouraging to see the increased long-term store target. Can you talk a little bit more about the work on the sourcing side and the merchandising side that goes into your confidence in supporting that increased store base? Yeah, as we talked about for a long time, Brad, we got this question at 100 stores, we got this question at 200 stores, the deals keep getting bigger and bigger, and our relationships with the direct manufacturers keep getting bigger and bigger. And as we scale, and we get more coverage of the United States, the facilities that they operate in continue to be a natural fit for us. So the store count, and I think people always get worried about other folks who have been in the closeout industry for many years, and they haven't succeeded. This is all we've done. We've never gone away from our knitting.

Speaker Change: That's very helpful, John and as it related follow up.

Speaker Change: It's encouraging to see the increased long term store target.

Speaker Change: Can you talk a little bit more about the work on the sourcing side and the merchandising side. It goes into your confidence in supporting that inquiry store base.

Speaker Change: Yes, it's a blip as we've talked about for a long time, Brad the way. We got this question of the 100 stores. We had this question in 200 stores, the DLC keep getting bigger and bigger and our relationships with the direct manufacturers keep getting bigger and bigger and as we scale and we get more coverage of the United States.

Speaker Change: The facilities that they operate in continues to be a natural fit for us or the historic count in the I think people are worried about other other folks have been in the closeout industry and they have not succeeded over many years.

Speaker Change: This is all we've done we've never gone away from our knitting. This is what we've done for 41 years. This is all our buyers focus on each and every day. So we're committed to closeouts, it's definitely inconvenience business.

John W. Swygert: This is what we've done for 41 years. This is all our buyers' focus on each and every day. So we're committed to closeouts. It's definitely an inconvenience business.

John W. Swygert: But like we said, this is something that we live and breathe every day. And this doesn't bother us from the scale perspective. As we scale up our store base, do closeouts become a slightly smaller percentage of the overall purchases? Sure, it does. But I don't think the customer ever notices that.

Speaker Change: Like we said this is something that we live and breathe every day and this doesn't bother us from a scale perspective, we've talked about in the past as we scale up our store base to close us become a slightly smaller percentage of the overall purchase is sure. It does I don't think the customer ever noticed is that and I do think our merchants will continue to push and deliver closeouts I never see us getting below 50%.

John W. Swygert: And I do think our merchants will continue to push and deliver closeouts. I never see us getting below a 50% closeout in our total business. I just think there's enough abundance out there for us to be continuing to drive that and drive that shopping experience for our customers, a piece that makes us stand apart from others that are in this business.

Closeout in our total business.

Speaker Change: I think theres enough abundance out there for us to be continue to drive that and drive that shopping experience for our customers. Brad. This is Eric just I'll just add on a comment that this is a fragmented marketplace. The closeout business and our size is a differentiator a very important differentiator as we continue to grow. It also highlight that we have a very strong balance sheet with which is another.

Bradley Bingham Thomas: Thanks, guys. Thanks, Brad. Thank you. One moment for our next question. And our next question comes from the line of Kate McShane from Goldman Sachs. Your question, please. Hi, good morning.

Eric Bader: Piece that makes us stand apart from others that are in this business.

Speaker Change: I appreciate it thanks guys.

Speaker Change: Thanks, Brad.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Kate Mcshane from Goldman Sachs. Your question. Please.

Katharine Amanda McShane: Thanks for taking our question. We wondered what impact you might be seeing; it sounds like the guide for Q1 Finster sales is pretty solid, but just what impact you might be seeing as the tax refunds here seem to be a little bit slower coming in versus last year. And if it's having any kind of impact on you? Hey, Kate. This is Rob.

Katharine Amanda McShane: Hi, good morning, Thanks for taking our question.

We predict what impact you might be seeing it sounds like the guide on Q1 same store sales is pretty solid, but just what impact you might be seeing as the.

Katharine Amanda McShane: Tax refund peers seem to be a little bit slower coming coming in versus last year, and if it's having any kind of impact on you.

Katharine Amanda McShane: Hey, Kate this is Rob.

Rob: The tax refund piece has been widely reported, and it's something certainly that we're tracking. Obviously, more liquidity for our customers and their wallets is good for business, good for all retailers. But today, we haven't really seen it have a significant impact coming off of last year. You know, I think the IRS has reported that they're about a week behind, but average refunds on it that are going into customers' hands are bigger.

Rob: The tax refund piece has been widely reported and if something certainly that we're tracking.

Rob: Obviously, what more liquidity for our customers and their wallets as good a good for business good for all retailers.

Speaker Change: To date, we haven't really seen it have a significant impact coming off of last year.

Speaker Change: I think the Irs's reported there about a week behind.

Speaker Change: What average refunds on it that are going into customers' hands are bigger so.

Rob: So, you know, net-net, I would say not much of an impact so far. Okay, thank you. And then our second question was just on remodels. Can you remind us again the list that you get from the remodels and what the cadence in 2024 will look like? Hey, it's Eric.

Speaker Change: Net net I would say not much of an impact so far.

Speaker Change: Okay. Thank you and then our second question was just on.

Speaker Change: Remodel can you remind us again, the lift that you get from the Remodels and what the cadence in 2020, Portland look like.

Eric van der Valk: We expected this single-digit list from for remodels. We're repositioning the program a bit going forward. So we'll talk about full remodels, where we're reorganizing the store, potentially installing racetracks, reflowing the stores, changing adjacencies, etc. We expect that we will remodel around 20 stores.

Speaker Change: David Eric.

David: We expect a mid single digit lift from for Remodels were repositioning the program a big going forward. So we'll talk about.

Full remodels.

We're reorganizing the store potentially selling racetracks free flowing the stores changing adjacencies et cetera.

David: We expect that we expect to remodel round 20 stores.

Eric van der Valk: We're also touching at least 30 stores with some degree of updating, which includes installing front-end queues, wayfinding, and some other adjustments. So it's really, going forward, we're learning from our experience in the remodel program what gets us the biggest return, and what improves the customer experience, you know, the most, and we're investing in those elements in more stores as we move forward. Thank you.

David: We're also touching at least 30 stores with some degree of updating which includes installing front in Qs way finding and some other adjustments.

David: So it's really going forward, we're learning from our experience in in the remodel program what gets us the biggest return.

David: And what improves the customer experience.

David: The most and we're investing in those elements in more sources, we move forward.

Speaker Change: Thank you.

Speaker Change: Yeah.

Unknown Executive: Thank you. One moment for our next question. And our next question comes from the line of Peter Keith from Piper Sandler. Your question, please. Oh, hey, good morning, everyone.

Speaker Change: Thanks Kate.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Peter Keith from Piper Sandler Your question. Please.

Peter Jacob Keith: Oh, Hey, good morning, everyone. Congrats from me as well as the great year.

Peter Jacob Keith: Congratulations for me as well. It's been a great year. Looking at the new store target of 1300, I was curious how you're thinking about annual store growth going forward. I believe the target's been 50 to 55 per year. Is that how we should still kind of model out longer-term unit growth on an annual basis? Hi Tudors, it's Eric.

Peter Jacob Keith: Looking at the new store target of 1300, I was curious how youre thinking about annual store growth going forward I believe the target has been 50 to 55 per year.

Peter Jacob Keith: Is that how we should still kind of model out longer term unit growth on an annual basis.

Eric Bader: Hi, Peter its Eric.

Eric van der Valk: Yeah, we have to build our infrastructure to open 50 to 55 stores a year, as well as executing on the remodel program. Just to remind everyone, in 2022, we opened 40 stores. In 23, we committed to 45, opened 45, and we're committing to 50 in 24.

Peter Jacob Keith: Yeah, we have we've built our infrastructure to open 50 to 55 stores a year.

Eric Bader: As well as executing on the remodel program.

Eric Bader: To remind everyone. In 2022, we opened 40 stores in 23, we committed to 45 opened 45, and we're committing to 50 and 24. They can see a cadence stayed to growing the number of stores that we're opening.

Eric van der Valk: So you can see a cadence for growing the number of stores that we're opening. That being said, we have a disciplined approach to growth. We will not risk execution.

Eric Bader: That being said, we have a disciplined approach to growth we will not risk execution. There is a lot of disruption in the market, which is trading opportunities on the real estate side and we feel very good about the pipeline looking out into future years, 'twenty five and in 'twenty six.

Eric van der Valk: There is a lot of disruption in the market, which is creating opportunities on the real estate side. And we feel very good about the pipeline looking out into future years, 25 and 26. With this new real estate study in hand, we're evaluating what would be required to accelerate growth.

Eric Bader: With this new real estate study in hand, we're evaluating what would be required to accelerate growth or supply chain opening the Illinois warehouse D. C is a big leap forward in.

Eric van der Valk: Our supply chain, opening the Illinois warehouse, VC, is a big leap forward in our ability to scale. The pipeline, of course, of real estate, store leadership, store support teams, and we'll get back to you in a few quarters with what that looks like for the out. Okay, very helpful and interesting. Secondly, I did want to ask about tariffs, you mentioned it, about 20% of products, or maybe 20% of sales are imported. And I guess, what's the philosophy, just thinking ahead, if tariffs do get implemented, do you think about diversifying away from China?

Eric Bader: Our ability to scale the pipeline of course of real estate store leadership store support teams.

Eric Bader: And we will get back to you on in a few quarters with what that looks like for for the out years.

Speaker Change: Okay very helpful and interesting.

Speaker Change: Secondly, I did want to ask about tariffs you mentioned it about 20% of products that.

Speaker Change: But maybe 20% of sales are imported.

Speaker Change: And I guess, what's the philosophy just thinking ahead, if if tariffs do get implemented do you think about diversifying away from China or on the other hand I was thinking about maybe other companies are diversifying away and that therefore creates more closeout opportunities with Chinese factories and supplier.

Eric van der Valk: Or, on the other hand, I was thinking about maybe other companies are diversifying away, and that therefore creates more close opportunities with Chinese factories and suppliers. So just curious how you're thinking about maybe the approach to China sourcing on a multi-year basis here. Sure, Peter, it's Eric again.

Speaker Change: So just curious how you're thinking about maybe the approach to China sourcing on a on a multiyear basis here.

Derek: Sure Peter Derek again.

Eric van der Valk: We do think about both elements of your question. We think about diversifying and de-risking around China with that 20% that is direct. We also think about the opportunities it creates, you know, as we move into a period that may be somewhat disruptive. All that being said, our business is primarily closeout oriented, and tariffs will have an impact on everything that, you know, not everything, but the percentage that comes out of China potentially across multiple categories of business.

Derek: We do think about both elements of your question, we think about diversifying and derisking around China with that 20% that is direct.

Derek: We also think about the opportunities it creates.

Derek: As we move into a period that may be somewhat disruptive all that being said our business is primarily closeout oriented in tariffs will have an impact on everything that you know not everything but you know a percentage that comes out of China potentially.

Derek: Across multiple categories of business.

Eric van der Valk: And we're not concerned about it because of what I said in my opening remarks. From a pricing standpoint, we're very fluid. As we're buying clothes that may, over time, be impacted by increasing tariffs, we're pricing in the marketplace, and typically, what's happened is we've been through this a couple of times in the past. The prices are increased across various competitors, and we price up accordingly and ensure that we can deliver margin. I'm, So we feel we feel good about it. We're not losing sleep over tariffs. Yeah, Peter said a little bit about that in a different, different way.

Derek: And we're not concerned about it because of what I said in our in my opening remarks from a pricing standpoint, we're very fluid.

As we're buying closeouts that may over time be impacted by increasing tariffs were pricing in the marketplace and typically what's happened is we've been through this a couple of times in the past is.

Derek: Is it prices or increased across across our various competitors and we price up accordingly, and ensure that we can deliver margins. So.

Derek:

Derek: So we feel we feel good about we're not losing sleep about tariffs.

Speaker Change: Pete I'll, just add a little bit to that in a different different way, but we would say that we're a price.

Pete: Follow or not a price setter so as the market moves we move accordingly, we keep that same value proposition, so whether whether the tariffs come in or out or whether people move business from China to another country, where just following what the market's doing so that we're in a we're in a very good position.

Eric van der Valk: But we would say that we're a price and bring in the country. So we believe we're well positioned for this. And as we always say, when it comes to disruption, we do normally win at that. So this is something that could also play into our hands. Okay, very helpful guys. Thanks so much and good luck.

Pete: And also to your point.

Pete: We comstock lots, but you'll closeouts that could be in China.

Pete: Things don't move out of there are opportunities for us to be able to byproduct and bring into the country. So we're we believe we're well positioned for this and as we always say when anytime there's a disruption we do normally win at that so that gives us something that could also play our hand.

Speaker Change: Okay very helpful guys. Thanks, so much and good luck.

Edward Joseph Kelly: Thank you. Thank you. One moment for our next question. And our next question comes from the line of Edward Kelly from Wells Fargo. Your question, please. Hi, good morning, everyone.

Speaker Change: Thank you Sir.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Okay.

And our next question comes from the line of Edward Kelly from Wells Fargo. Your question. Please.

Edward Joseph Kelly: Hi, good morning, everyone.

Edward Joseph Kelly: I wanted to maybe ask, you know, the promotional cadence for the year and, you know, how you're thinking about any changes there. Like, I noticed there was an earlier March flyer that I think shifted back. Obviously, you have a harder, you know, pretty hard, like Q2, Q3.

Edward Joseph Kelly: Wanted to maybe.

Yes.

Edward Joseph Kelly: Promotional cadence for the year end.

Edward Joseph Kelly: How youre thinking about.

Edward Joseph Kelly: Any change there like I noticed there was an earlier March flyer that I think shifted back.

Edward Joseph Kelly: See you have a harder pretty hard like Q2, Q3 compare I'm not sure if you're thinking about anything differently, there or in Holly just how should we think about promotional cadence you did mention some movement around the comp by quarter. So just maybe a little bit more color there.

Edward Joseph Kelly: I'm not sure if you're thinking about anything differently there, or in Holly, just how should we think about promotional cadence? You did mention, you know, some movement around the comp by quarter. So just maybe a little bit more color there.

John W. Swygert: Yeah, and I'll answer it, and then maybe Eric or Rob will add to it. But with regard to the promotional calendar, it's pretty much the same as last year; we are experiencing a shift from Q3 to Q4, just naturally because of the 53rd week occurring and how the weeks fall. And then obviously, the compressed holiday selling period from Thanksgiving to Christmas this year. But the cadence is right now planned to be pretty comparable to last year. And we feel very comfortable where we're sitting today. And it's just maybe a follow-up to this question around, you know, around the comparison. John, how are you thinking about the mix of the product that you think you'll be buying? So you think about last year, right?

Speaker Change: Yeah, Ed I'll answer it and then maybe Rob.

Speaker Change: Erika Rob will add into it but with regards to promotional calendar, it's pretty much. The same as last year. We are experiencing a shift from Q3 to Q4, just naturally because of the 50 <unk> week occurring in how the weeks fall and then obviously the compressed holiday selling period from from Thanksgiving to Christmas this year, but the.

Erika Rob: Cadence is right now planned to be pretty comparable to last year, and we feel very comfortable we're sitting today.

Erika Rob: And that it just maybe a follow up to this question around in around the comparison.

Erika Rob: How are you thinking about the mix of the product that you do you think you'll be buying so you think about last year are you going to lap this call may blow out, which I'm sure was there.

John W. Swygert: You're going to have this Coleman blowout, which, you know, I'm sure was very good. I don't know if you're anticipating, you know, like consumable versus GenMerge, right? Like how you're looking at that. Maybe that would be helpful.

Erika Rob: I don't know if youre anticipating consumable verses Gen merch rate all year, how youre looking at that.

John W. Swygert: And then, Eric, I just want to ask you one quick question on the store opening cadence. It looks like Q1 might be pretty light based on what's on the website. So any color on Q1 openings? Are you with regard to the overall and I won't say too much about deals and how we're going to compare to comp from the prior year from a competition perspective, but we are, and we feel like we're well positioned, and we'll be able to annualize those special deals we had last year that are out there. So we feel well positioned. I just can't say much more about that.

Speaker Change: Maybe that would be helpful. And then Eric I just want to ask you. One quick question on the store opening cadence is it looks like Q1 might be pretty light based upon what's on the website. So any color on on Q1 openings.

Speaker Change: Are you with regards to the overall.

Speaker Change: Not say too much about deals.

Eric Bader: And how we are going to comp the comp from prior year.

From a competition perspective, but we are and we feel like we're well positioned and were we able to annualize those.

Eric Bader: Special deals we had last year are there out there. So we were we feel well positioned I can't say much more about it but the deal flow is strong enough that we feel good we're not obviously consumables is a leading category for I think a lot of retailers out there were not much different I think food and candy is working very very well for us.

Eric van der Valk: But the deal flow is strong enough that we feel good. We're not, you know, obviously, consumables is a leading category for I think a lot of retailers out there. We're not much different.

Eric van der Valk: I think food and candy is working very, very well for us, and obviously the consumable categories that we have in HBA and housewares are obviously a very strong performer. We're well positioned there. The deals, you know, the outsized deals are what really put us over the top, and I think we're positioned here for this first and second quarter without a doubt. And Ed, from a store cadence perspective, we're opening five in the first quarter. We are planning, out of the two closures, one of the closures is planned to occur in the first quarter, but that could push out as we work through the turnover requirements with the landlord.

Eric Bader: And obviously the consumable categories that we have an H b, a and housewares is obviously, a very strong performer, we're well positioned there.

Eric Bader: The deal for the outsized deals, which really put us over the top but I think we're positioned here.

Eric Bader: For this first second quarter without a doubt an AD from a store from a store cadence perspective, we're opening five in the first quarter.

Eric Bader: We are planning to add the two closures one of the closures that is planned to occur in the first close in the first quarter, but that could push out as we worked through the turnover requirements with the landlord.

Eric van der Valk: Yeah, and Ed, just to comment, you know, generally about the cadence, it is back half loaded, very similar to last year. And that really reflects momentum in the pipeline. We moved through last year, and we want to get to a point where we're not as back half loaded, and we know we can execute the back half loaded plan based on what happened in 23. So we have the confidence that we'll execute it as we look out in 20 Five. We're going to work hard to get a better balance. Thank you. Thanks, guys. Thank you.

Speaker Change: Yes, I'd add just a comment.

Speaker Change: Generally about the cadence it is back half loaded very similar to last year.

Speaker Change: And.

Speaker Change: That really reflects the momentum in the pipeline as we move through.

Speaker Change: Last year we.

Speaker Change: We want to get to a point, where we're not as back half loaded we know we can execute the backup loaded plan based on.

Speaker Change: What happened in in 'twenty three so we have the confidence that we'll execute and as we look out in 'twenty.

Speaker Change: Five we're going to work hard to us to get a better balance.

Speaker Change: Thank you.

Speaker Change: Okay.

Jeremy Scott Hamblin: One moment for our next question. And our next question comes from the line of Jeremy Hamblin from Craig Hallam Capital Group. Your question, please. Thanks, and congratulations on the strong results.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question.

Speaker Change: Comes from the line of Jeremy Hamblin from Craig Hallum Capital Group. Your question. Please.

Jeremy Scott Hamblin: Thanks, and congrats on the strong results I wanted to get into your Q4 Q4 gross margins I think may have been a record for Q4, certainly and you noted in the commentary that are part of that was related to.

Jeremy Scott Hamblin: I wanted to get into your Q4 gross margins, which I think may have been a record for Q4, certainly. And you noted in the commentary that part of that was related to lower shrink year over year, some of it was improved product margins, of course, lower freight. But I wanted to dive in a little bit in terms of, you know, thinking about that impact, you know, on a go forward basis.

Jeremy Scott Hamblin: Lower shrink year over year. Some of it was improved product margin is of course lower freight.

Jeremy Scott Hamblin: <unk> freight.

Jeremy Scott Hamblin: But I wanted to dive in a little bit in terms of thinking about that impact.

Jeremy Scott Hamblin: You know on a go forward basis, one do you feel like you're shrink.

Jeremy Scott Hamblin: One, do you feel like your shrink is now under control? I know that you've noted in the past that it's a, you know, a real subset of your stores, maybe 20%, or less. So, Eric, do you feel like that is in a much better spot? And any other commentary on just kind of loss prevention?

Jeremy Scott Hamblin: You now have under control I know that you've noted in the past that it's a you know a real subset of your stores, maybe 20% or less that are causing 80% of the issues.

Jeremy Scott Hamblin: So Eric do you feel like that is in them in a much better spot.

Eric Bader: And any other commentary on just kind of loss prevention.

Jeremy Scott Hamblin: And then we should be thinking about Q4 gross margins being potentially a little bit higher than what, Thank you. This is Rob. From a Q4 gross margin perspective, we were very pleased with our performance. It was primarily supply chain driven.

Eric Bader: That would help.

Eric Bader: Then it should we be thinking about Q4 gross margins is potentially a little bit higher.

Eric Bader: And what they've been in the past.

Eric Bader: Thank you. This is Rob from a Q4 gross margin perspective, we were very pleased with our performance.

Rob: It was primarily supply chain fueled.

Rob: We feel that the supply chain came in at, I think it was in the range of 9% for the fourth quarter. That's pretty consistent with where we thought it was going to be maybe slightly better, and we'll be able to improve upon that for next year, planning supply chain costs for the full year in the range of, say, 9%. From a shrink perspective, shrink was a nice contributor to our Q4 gross margin. We started to see some improvement in shrink in the second half of the year. As we've discussed in the past, shrinkage is a trailing indicator.

Rob: We feel that the supply chain.

Rob: Came in it.

Rob: I think it was in the range of 9% for the fourth quarter.

Rob: It's pretty consistent where we thought it was going to be maybe slightly better and we will be able to improve upon that for next year.

Rob: Planning supply chain costs for the full year the range of 9% from a shrink perspective shrink was a nice contributor to our Q4 gross margin.

Rob: We.

Rob: Starting to see some improvement in shrink in the second half of the year as we've discussed in the past shrink is a trailing indicator we count each one of our stores annually. So we only get a snapshot of how shrink is performing after those counts and it's nice to see that some of the additional efforts in <unk>.

Eric van der Valk: We count each one of our stores annually, so we only get a snapshot of how shrink is performing after those counts, and it's nice to see that some of the additional efforts and resources we put against it have started to make some progress. That being said, we still are not back to where we were in the past from a shrink perspective, and we still have more work to do, but given where we landed in Q4 in terms of gross margin, we're very confident with our 40% gross margin guide for next. Jeremy, just add a little bit more on shrink, as Rob indicated, our heightened focus on shrink over the past year. We did upgrade the teams and equipment in various ways. We're much more focused on internal theft in addition to external theft.

Rob: As we put against it have started too.

Rob: <unk> made some progress that being said, we still are not back to where we were in the past from a shrink perspective, and we still have more work to do but given our where we landed Q4 in terms of gross margin, we're very confident with our 40% gross margin guide for next year.

Rob: Jeremy just add a little bit more on shrink as Rob indicated our heightened focus.

Jeremy Scott Hamblin: On shrink over the past year, we did upgrade.

Jeremy Scott Hamblin: The teams in the team in various ways, we're much more focused on internal theft. In addition to external theft.

Eric van der Valk: And we've deployed a disproportionate amount of our resources on the 20% you refer to that's creating kind of most of our issue. And we would never, we would never say with 100% confidence that it's totally under control as it pertains to shrink, but we feel pretty good about heading into 24. Hey, Jeremy, this is Sean.

Jeremy Scott Hamblin: And we've deployed a disproportionate amount of our resource on the 20% you referred to that security kind of most of our issue.

Jeremy Scott Hamblin: We would never we would never say with 100% confidence that it's totally under control as it pertains to shrink, but we feel pretty good about heading into 2004.

John W. Swygert: Just one last addition on margin just so no one gets ahead of us because we did have a very strong Q4. We're working to get back to a 40% gross margin from a long-term algo for 2024. So I just want to make sure no one runs away from that number. It's not that easy to always hit exactly where we're trying to hit for the quarter. With the changing costs we have had and the overall buying environment we've been in, I still would ask everyone to stick with us on the 40% gross margin for 2024 at a minimum, understood. And then just one more.

Jeremy Scott Hamblin: Hey, Jeremy It's John just one last addition on margin just just so no. One gets ahead of us because we did have a very strong Q4.

John: We're working to get back to a 40% gross margin from a long term algo for 2024, So I just want make sure knoll runs away from from that number.

Not that easy to always hit exactly what we're trying to hit for the quarter with the changing cost we had in the overall buying environment. We've been in I still would ask everyone to stick with us on the 40% gross margin for 2024 at a minimum.

Speaker Change: Understood and then just one other.

Jeremy Scott Hamblin: The new one to get an update on the new DC and Illinois and progress on the York expansion and just understand the potential financial impact of that this year, you know, timing on when you may have any drag related to that opening. Jeremy, it's Eric. I'll take the first part of the question. We are on track on time to begin full operations in Q3 of this year. We actually begin receiving in that building in Q2.

Speaker Change: The new wanted to get an update on the new D C in Illinois.

Speaker Change: And progress on the the York.

Speaker Change: Expansion and just understand that the potential financial impact of that this year.

Speaker Change: Timing on when you may have any drag related to that that opening of the new D. C in Illinois.

Speaker Change: Jeremy It's Eric I'll take the first part of the question. We are on track on time to begin full operations in.

Eric Bader: Q3 of this year, we actually been begin receiving in that building in Q2.

Eric van der Valk: All is going well. We have confidence that the startup will be successful. So, I'm feeling very good about this at this moment. From a financial impact perspective, we used to call the opening of the new D.C. state a 20 basis points drag on gross margin.

Eric Bader: All is going well, we have confidence that the startup will be.

Eric Bader: Successful.

Eric Bader: So.

Eric Bader: Feeling very good about this and this moment.

Eric Bader: From a financial impact perspective, we used to call the opening of a new DC say 20 basis points drag on gross margin.

Eric van der Valk: I would say given our bigger size, I would call that closer to 10 basis points now, but that's contemplated in our guidance in arriving at the 40% gross margin target. The other piece of it is there is elevated depreciation that is alongside the York expansion and the Princeton Distribution Center, which is also contemplated in our guidance. Oh, I didn't comment, Jeremy. You asked me about York. It's so far behind me now.

Eric Bader: I would say given our bigger size I wouldn't call that closer to 10 basis points now, but that's contemplated in our guidance in arriving at the 40% gross margin target.

Eric Bader: The other piece of it is there is an elevated depreciation that it is a long side the York expansion and the.

Eric Bader: Princeton distribution center, which has also been contemplated in our guidance call I didn't comment Jeremy you're asking about York, a so far behind me now I'm not really thinking about it we completed that expansion in the middle of.

Eric van der Valk: I'm not really thinking about it. We completed that expansion in the middle of... 2023. And everything is going well, successful throughputs where we needed to be. We have the expanded space, the ability to service additional stores. Great. Thanks for the call.

2023, and all is going well successful throughput so we needed to be we have the expanded space the ability to service additional stores.

Jeremy Scott Hamblin: Our best wishes. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone.

Speaker Change: Great. Thanks for the color best wishes.

Speaker Change: Thanks, Jeremy.

Speaker Change: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone.

Unknown Executive: One moment for our next question. And our next question comes from the line of Eric Cohen from Gordon Hasek. Your question, please. Good morning, thanks for taking the question. Congratulations on a nice quarter.

Speaker Change: For our next question.

Speaker Change: And our next question comes from the line of Eric Cohen from Gordon Haskett. Your question. Please.

Eric Michael Cohen: Good morning, Thanks for taking my question and congrats on a nice quarter one effort the raised store target the incremental 250 stores. So where are you finding the additional opportunity is it in new markets that you didn't think you could previously enter or great opportunity filling in existing markets and do you anticipate that these stores will have a similar.

Eric Michael Cohen: I want to ask about the raised store target, the incremental 250 stores. So where are you finding the additional opportunity? Is it in new markets that you didn't think you could previously enter or great opportunities filling in existing markets? And do you anticipate that these stores will have a similar store productivity and profitability as the existing base? Hey, I'll take that part. It's part of the question, Rob.

Eric Michael Cohen: Store productivity and profitability of the existing base.

Speaker Change: Hey, I'll take that part is part of the questions Rob.

Rob: From a new target perspective, I would say that there were certainly some new markets in terms of the markets that came into our study in terms of demographics and population density. The way that we think about where we sit today in our 512-store base versus our 1,300-store target in the future, about a third of it is a backfill opportunity in existing markets. Two-thirds of the remaining stores that we're going to open are in new markets. From the other aspect of your questions, in terms of the model, we've found over 41 years that this model is exceptionally profitable and predictable in every market that we open and is portable. So we have no doubts that we'll be as profitable in some of these other markets as we open as we are in our existing markets. Yeah, Eric, just add a little more color.

Rob: From a new target perspective, I would say that there was certainly a bit of new markets.

Rob: In terms of the markets that came into our study in terms of demographics and population density.

Rob: The way that we think about where.

Where we sit today in a 512 store base versus our 1300 target in the future about a third of it is a backfill opportunity into existing markets.

Rob: Two thirds of the remaining stores that we're going to open or are in new markets.

Rob: From a from the other aspect of your questions in terms of the model.

Rob: We found over 41 years that this model is.

Rob: Exceptionally profitable and predictable and every market that we open and portable.

Rob: So we have no doubts that we will be as profitable as some of these other markets.

Rob: As we open as we are in our existing markets.

Speaker Change: Yeah, Eric just add Sarah just allo more color.

Rob: As we said in our opening remarks, the urban sprawl that it has been accelerated through COVID is certainly helping. Simeon Gutman, Randal Konik, Matthew Boss, Peter Keith, Lyn Walther, John Swygert, Jeremy Hamblin, Edward Kelly, Paul Lejuez, Bradley Thomas, Mark Carden, Jason Haas, Katharine McShane, Eric Cohen, Robert Helm, Brandon Cheatham, Eric Cohen, Paul Lejuez, Bradley Thomas, Mark Carden, Jason Haas, Scott Ciccarelli, Great And then you've talked about benefiting from trade down in recent quarters. Can you discuss what the customer demographic mix looks like today versus a couple years ago? And whether or not this incremental trade on customers you've got is sustainable? And then, does adding higher-income consumers help you offer products at higher prices that maybe you couldn't offer previously? Sure, Eric. Eric again.

Eric: As we said in our opening remarks that.

Eric: Urban sprawl that it was accelerated through Covid is certainly helping.

Eric: Fall into suburban and rural communities.

Speaker Change: But also in looking at our customer base, it's become more affluent and younger and that's also affecting the markets that we believe will be successful as you move forward in.

Speaker Change: And the growth the 250 store growth towards.

Speaker Change: Long term target.

Speaker Change: Hello.

Speaker Change: Great.

Speaker Change: Talk about banking from trade down in recent quarters. He is discussing with the customer demographic nickelic slip demographic mix looks like today versus a couple years ago, and whether or not this the incremental trade on customers. You've got is sustainable and then does adding higher income consumers help you offer price products at high.

Speaker Change: Your prices that maybe previously couldn't.

Speaker Change: Sure Eric Eric again.

Eric van der Valk: We're seeing strength trade down strength in above $100,000 incomes, and we're seeing especially some strength above 150,000. And from what we've seen to date now over several quarters, retention does look good. Lower income customers are relatively stable. We have under indexed low income consistently over the years.

Eric: We're seeing strength through strength in above 100000, our fleet comes in we're seeing especially some strength above a 150000 and from what we've seen to date now over several quarters of retention does look good.

Eric: Lower income customers are relatively stable.

Eric: We under indexed Laurie from consistently over the years you remember, we're we don't take snap and where more discretionary assortment.

Rob: If you remember, we don't take staff, and we're a more discretionary assortment. The other dynamic, this is Rob, I would add, is that as we've deepened our mix into consumables, it's a high-frequency, high-visit business for us, and typically, a repeat shopper. We feel that once we have you as an ongoing consumable shopper, those consumable shoppers are much more loyal, visit more often, and are retained for a much longer period of time.

Eric: Versus some others out there the other dynamic this is Rob I would add is that.

As we have.

Rob: Deepened our mixing to consumables, it's a high frequency high visit.

Rob: Business for us and typically our repeat shopper. So we feel that once we have U S and ongoing consumable shopper.

Rob: Those consumable shoppers are much more loyal visit more often and are retained for a much longer period of time. So we're pretty confident that the customer growth. We've seen for last year will be will.

Rob: We're pretty confident that the customer growth we've seen for last year will be betting. Thanks and good luck. Thank you. One moment for our next question. And our next question comes from the line of Matthew Boss from J.P. Morgan. Your question, please. Great, thanks.

Rob: We will be benefiting from it for the next couple of years.

Speaker Change: Thanks, and good luck.

Speaker Change: Thanks, Eric.

Speaker Change: Thank you one moment for our next questions.

Speaker Change: And our next question.

Speaker Change: Comes from the line of Matthew Boss from Jpmorgan. Your question. Please.

Speaker Change: Okay.

Matthew Robert Boss: John, could you just elaborate on the trends you've seen post holiday, going back and to the momentum that you cited? And then, on the expanded vendor relationships and scale, where do you see the most opportunity across categories in the box moving forward? Yeah, Matt, with regard to the trends post holiday, as we've said a couple times today, we have been very consistent. Q4 was a very consistent quarter for us.

Matthew Robert Boss: Great. Thanks, John.

John could you just elaborate on trends you've seen post holiday going back in and to the momentum that you cited and then on the expanded vendor relationships and scale, where do you see the most opportunity across categories and the box moving forward.

John: Yes, Matt with regards to trends post holiday. It we've been in we've list. We've said a couple of times today, we have been very consistent.

John W. Swygert: And we continue to come out of the gate, and everything we've just been executing and delivering, you know, consistent results. So we're not seeing a big change in our overall momentum in the business. So we're excited about what we're doing here. So with regard to vendor relationships and expansion, it's not an expansion fully on new vendors. There's an increased expansion on existing vendors as well. So with regard to categories, we're seeing a pretty broad base right now. Obviously, with whatever's presented to us in the categories we sell, which is a very wide variety of basically hard goods, we're seeing a lot of mix coming through, and a lot of building on existing relationships that are getting more categories to come in as well. So it's not something that I specifically call out.

John: Q4 was a very consistent quarter for us and we continue to come out of the gate and everything just we've been executing and delivering consistent results. So we're not seeing a big change our overall momentum.

John: Momentum in the business. So we're excited what we're doing here so with regards to vendor relationships and expansion. It's it's it's not an expansion, but fully on new vendors, there's big increased expansion on existing vendors as well so with regard to the categories. We're seeing a pretty broad based right now obviously with what whatever whatever's.

John: To us in the categories, we sell which is a very wide variety of basically hard goods and we're seeing a lot of a lot of mix coming through and a lot of building on existing relationships that are getting more categories to come in as well. So it's not something that I specifically call out.

John W. Swygert: We're adding new vendors every day, but the big vendors are the ones who do a lot for us. So we're very excited about what we're seeing. That's great. And then Rob, larger picture, help us to think about bottom line flow through opportunity, maybe relative to the roughly 11% operating margin guide for this year. If comps were to come in above the 1-2% plan, just thinking about gross margin relative to the SGMA opportunity. Sure. So I think over time, there's certainly opportunity for us to continue to improve on our operating margin. I think gross margin, you know, John hit the nail on the head. You know, we're planning a 40 for next year. We haven't been at a 40 for several years now.

John: We're adding new vendors every day, but the big vendors are the ones, who drive a lot for us. So we're very excited what we're seeing out there.

John: That's great and then Rob larger picture, how best to think about bottom line flow through opportunity maybe relative to the roughly 11% operating margin guide for this year, if comps were to come in above the 1% to 2% plan just thinking about gross margin relative to SG&A opportunity.

John: Yes.

Sure.

Rob: I think over time, there's certainly opportunity for us to continue to improve on our operating margin I think gross margin.

Rob: John John hit the nail on the head we're planning a 40 for next year, we haven't been out of 40 for several years now we're going to see how that stabilizes from a pricing.

Rob: We're going to see how that stabilizes from a pricing and customer perspective and then, you know, evaluate any movement from there in our years, potentially. From a leverage point perspective, you know, you'd expect 10 basis points of leverage on SG&A as we comp above 2%. So, you know, given the strong closeout environment and where we're at, we're planning one to two, which has benefited us over time because we get leverage as we do outsize comps. We're not going to shut the registers off.

Rob: Customer perspective, and then evaluate.

Rob: Any movement from there in out years potentially.

Rob: From a leverage point perspective, you would expect the 10 basis points of leverage.

Rob: On SG&A.

Rob: We comp above 2%.

Rob: So given the strong closeout environment and where we're at we're planning one to two which has benefited us over time that you could get leverage as we do outsized comps were not going to shut the registers off so should.

Rob: So should we deliver a higher comp, we'll certainly be able to leverage faster and get back to our longer-term operating margin highs. Great. Best of luck. Thank you very much.

Rob: Should we deliver a higher comp will certainly be able to leverage faster and get back to our.

Rob: Longer term operating margin highs.

Rob: Yeah.

Speaker Change: Great Best of luck.

Scot Ciccarelli: Thank you. Thank you. One moment for our next question, and our next question comes from the line of Scot Ciccarelli from Truist. Your question, please. Good morning, guys.

Thank you thanks, Matt.

Speaker Change: Q1 moment for our next question.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: And our next question.

Speaker Change: Comes from the line of Scot Ciccarelli from tourists to your question. Please.

Unknown Executive: If you look at SG&A per store, you guys, hi guys. If you look at SG&A per store, you're essentially at 2020 levels and really only up modestly from 2019, even with this year's increases. That's a pretty stark contrast to your expense inflation versus what we've seen from most other retailers. And look, you guys have always run a tight ship, but what would you attribute that minimal SG&A growth to, and how should we think about that on a go-forward basis? Thanks. We don't necessarily look at it on an average store basis because we are opening boxes that are different sizes, so the expense leverage kind of moves with that, or expense dollars, for that matter.

Scot Ciccarelli: Good morning, guys. If you look at ethylene per store you guys Hi, guys.

Scot Ciccarelli: Looking at G&A per store, you essentially at 2020 levels and really only up modestly from 2019, even with this year's increases and that's a pretty Stark contrast on your expense inflation first what we've seen from most other retailers and look you guys have always run a tight ship, but what would you attribute that minimal SG&A growth too and how should we think about that on a.

Scot Ciccarelli: On a go forward basis. Thanks.

Scot Ciccarelli: We don't necessarily look at it on an average store basis, because we are opening boxes that are different sized though the expense leverage kind of moves with that our expense dollars for that matter moves with that.

Unknown Executive: We are hard at work on expense leverage. We are making the necessary investments we have to make in terms of payroll across all aspects of our business, the distribution center, and the stores. And the goal of that investment is to get improved efficiency and productivity, and that's what we're seeing come to bear in our results for this year and coming to bear in our guidance for next year. And is there anything we should be aware of in terms of wage changes for 24, potentially even 25, given what you know now?

Scot Ciccarelli: We are hard at work on expense leverage we are making the necessary investments we have to make in terms of payroll across all aspects of our business the distribution center and the stores.

Scot Ciccarelli: And the goal of that investment is to get improved efficiency and productivity.

Scot Ciccarelli: That's what we're seeing come to bear and our results for this year and coming to bear and our guidance for next year.

Scot Ciccarelli: And is there anything we should be aware of in terms of weight wage changes for 'twenty four potentially even 25, given what you know now.

Unknown Executive: No changes at this time. Okay, thanks, guys. Thanks, Scott.

Speaker Change: No changes at this time.

Speaker Change: Okay. Thanks, guys.

Simeon Ari Gutman: Thank you. One moment for our next question. And our next question comes from the line of Simeon Gutman from Morgan Stanley. Your question, please? Hey, guys, sorry for the background noise. I know it's practice to not guide any different than the way you did for the comps one to two. I just ask because the last year or so has usually been good for closeouts. Is there any scenario?

Speaker Change: Thanks, Scott Thanks, Scott.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Simeon Gutman from Morgan Stanley. Your question. Please.

Simeon Ari Gutman: Hey, guys, sorry for the background noise I know its practice to not guide any different than the way you did for the comp wanted to I, just I'm asking because the last year or so has been unusually good for Closeouts is there is there any scenario.

John W. Swygert: And was there anything you saw out there? Why couldn't this business come stronger? You know, is there an is it lapping a tough closeout environment, but I know John talked about it being pretty strong.

Simeon Ari Gutman: There anything you see out there why this business couldn't comp stronger is there and it is lapping a tough a closeout environment, but I know John talked about it being pretty strong.

John W. Swygert: Yes, I mean, this is John. I would tell you there's no structural reason we couldn't comp stronger. We feel very good that we're in position right now. We build our model on the one to two. We always have that funny saying where we don't turn the registers off, and we get a number.

Simeon Ari Gutman: Yes, I mean this is John I would I would tell you. There is there is no.

John: Structural reason, we couldnt comp stronger we feel very good will position right now we build our model on the one to two we always have that funny, saying, where we don't turn the registers often we hit a number so we're going to continue to try to drive.

John W. Swygert: So we're gonna continue to try to drive. Deal flow remains strong. Our merchants are confident. So there's really nothing holding us back. We're going up against some pretty good numbers. So I don't think you'll see outsized comps like you did this year.

John: Deal flow remains strong our merchants our confidence so there's really no nothing holding us back were going up against some pretty good numbers. So I don't think youll see outsized comps like you did this year, but I think we have we have opportunity and when we can get it we'll get it and we'll give the flow through to the investors.

John W. Swygert: But I think we have an opportunity, and we can get it. We'll get it, and we'll give the flow through to the investor. And then a quick follow-up and thinking about the buying.

Speaker Change: And then a quick follow up and thinking about the buying.

John W. Swygert: One of the closeout grocers we follow, they've been seeing much higher margins, and we're not clear if that's on the buying or their markup. Have you seen any big step changes in categories over time? Is that usual?

Speaker Change: One of the closeout grocers.

Speaker Change: We follow that they've been seeing much higher margins and we're not clear if that's on the buying or their mark up have you seen any big step changes in categories over time as unusual and could that happen for you going forward given the scale keeps getting better.

John W. Swygert: And could that happen for you going forward, given the scale keeps getting better? We haven't seen any step changes in the grocery categories or what we call the food category or candy category. There's not been a large expansion in that area that we've seen at all.

Speaker Change: So we haven't seen any step changes in the grocery categories are we call. The food category are our candy category there has not been it.

Speaker Change: A large expansion in that area that we've seen at all and that could be S pushing value to our consumers for loyalty and repeat business, but nothing real big there, but we do see Simeon and we have seen over the last couple of years. There are honest is on certain deals are specific categories. We can have an outsized margin on the buy and still get the customer great value.

John W. Swygert: And that could just be us pushing value to our consumers for loyalty and repeat business, but nothing really big there. But we do see, Simeon, and we have seen over the last couple of years, on certain deals or specific categories, we can have an outsized margin on the sale and still give the customer great value. And when we can, we do. Okay, great, thanks, and good luck.

Speaker Change: And when we can we do.

John W. Swygert: Thank you. Thank you. One moment for our next question, and the next question comes from the line of Mark Carden from UBS. Your question, please. Morning, thanks so much for taking the time to answer my question. So this is building upon a few of the earlier questions and even the last question, but more broadly, across the consumer landscape, we've seen a slowdown in food inflation. Does this impact how you think about desired consumables penetration in the year ahead? Just think about the balance between the importance of this category with the potential for more freedom spending dollars for discretionary. Mark, a lot of the disinflation has been really around the, I'll call it, the grocery consumable category or the perishable or the, you know, cold food. We don't have any of that. We're really talking packaged goods and canned goods in our stores.

Speaker Change: Okay, great. Thanks, and good luck.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yes.

Speaker Change: And our next question.

Speaker Change: Comes from the line of Mark Carden from UBS. Your question. Please.

Mark David Carden: Good morning. Thanks, so much for taking the question. So this is building upon a few of the earlier questions and even the last question, but more broadly across the consumer landscape. We've seen a slowdown in food inflation does this impact how you think about desire consumables penetration in the year ahead, just thinking about the balance between the important to this category.

Mark David Carden: Lori with the potential for more freed up spending dollars for discretionary.

Mark David Carden: Mark a lot of a lot of.

Mark David Carden: The disinflation has been really around the I'll call. It the grocery consumable category of the perishable or the cold food. We don't have any of that we're really we're talkin package can be packaged goods and goods in our stores. So they haven't seen a ton of disinflation there yet.

John W. Swygert: So we haven't seen a ton of disinflation there yet. But if it does come, there'll be opportunities for us from that perspective too. So that doesn't bother us. The loyalty that we've built with the consumers has been very strong in the food and candy category, and we expect that to continue in 2024. Yeah, Mark, this inflation is disruption.

Mark David Carden: But if it does come.

Mark David Carden: There'll be opportunities for us from that perspective, Tuesday that doesn't bother us.

The loyalty that we built with the consumer has been very strong on the food and candy category and we expect that to continue in 2024.

John W. Swygert: And that's good for us. Okay, fantastic. And then, for a follow-up on the real estate environment, are opportunities from shuttered retailers like Bed Bath progressing in line with what you're anticipating? Just your latest thoughts there. It takes a little while, Mark, for that to work its way through.

Mark David Carden: Yeah, Mark Disinflation is disruption.

Mark David Carden: And that's good for us.

Speaker Change: Okay fantastic.

And then for a follow up just on the real estate environment, our opportunities from shuttered retailers like bed Bath progressing in line with what Youre anticipating just your latest thoughts there.

Speaker Change: It takes a little while mark for that to work its way.

Eric van der Valk: So the short answer to your question is yes. It does create opportunities. It is creating opportunities. With our model and our focus on second-generation sites that meet certain criteria, typically, the spaces are vacant for a period of time before the economics make sense to us and to the landlord to do a deal.

Speaker Change: Through so the short answer your question is yes, it does create opportunities it is creating opportunities.

Speaker Change: With our model and our focus on second generation sites that meet certain criteria typically the spaces are vacant for a period of time.

Speaker Change: Before the economics makes sense to us until landlord to to do a deal so.

Eric van der Valk: So we do like what we're seeing out there. We like our chances. We like some of the vacancies that are being created by this disruption and, And you know, some of the retailers that are out there that are shedding sites are potentially on the brink of decay.

Speaker Change: We do like what we're seeing out there we like our chances we like.

Speaker Change: Some of the vacancies that are being created by this disruption and.

Speaker Change: And so you know some of the retailers that are out there that are shedding sites or potentially on the on the break of BK. So that is good for us.

Eric van der Valk: So that is good for us. Great. Thanks so much. Good luck.

Speaker Change: Great. Thanks, so much goodbye.

John W. Swygert: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to John Swygert for any further remarks. I would like to thank everyone for their time and interest in Ollie's. We look forward to updating you on our continued progress on our next earnings call.

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

I would like to thank everyone for their time and interest in all of these we look forward to updating you on our continued progress on our next earnings call. Thank you have a great day.

John W. Swygert: Thank you. Have a great day! Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Thanks for watching!

John W. Swygert: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

John W. Swygert: Yeah.

Okay.

John W. Swygert: Okay.

John W. Swygert: [music].