Q4 2025 Ollie's Bargain Outlet Holdings Inc Earnings Call

March 12, 2026

Operator: Good morning, and welcome to Ollie's Bargain Outlet Conference Call to discuss financial results for Q4 and fiscal year 2025. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without the express written authorization of Ollie's. I would now like to introduce our host for today's call, John Swygert, Managing Director of Corporate Communications and Business Development for Ollie's. John, please go ahead.

Speaker #1: I would now like to introduce our host for today's call, John Ruleau, Managing Director of Corporate Communications and Business Development for Ollie's. John, please go ahead.

Speaker #2: Good morning. Thank you. Everybody, we appreciate your time and participation. Joining me on today's call from Ollie's are Eric Van der Valk, President and Chief Executive Officer; and Robert Helm, Executive Vice President and Chief Financial Officer.

John Swygert: Good morning. Thank you, everybody. We appreciate your time and participation. Joining me on today's call from Ollie's are Eric van der Valk, President and Chief Executive Officer, and Robert Helm, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for questions. To ensure that everyone has the opportunity to participate, we ask that you limit yourself to one question. For additional questions, please reenter the queue. Finally, let me remind you that certain comments made on today's call may constitute forward-looking statements, and these 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 such statements.

Speaker #2: Following their prepared remarks, we will open the call for questions. To ensure that everyone has the opportunity to participate, we ask that you limit yourself to one question.

Speaker #2: For additional questions, please re-enter the queue. Finally, let me remind you that certain comments made on today's call may constitute forward-looking statements, and these are made pursuant to and within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 as amended.

Speaker #2: 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. Those risks and uncertainties are described in the company's earnings release and filings with the SEC.

John Swygert: Those risks and uncertainties are described in the company's earnings release and filings with the SEC, including the annual report on Form 10-K and the quarterly reports on Form 10-Q. Forward-looking statements made today are as of the date of this call, and the company does 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 the most closely comparable GAAP financial measures to the non-GAAP financial measures are included in the company's earnings press release. With all of that said, it's now my pleasure to turn the call over to Eric.

Speaker #2: Including the annual report on Form 10-K and the quarterly reports on Form 10-Q. Forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update these statements.

Speaker #2: On today's call, the company will also be referring to certain non-GAAP financial measures. Reconciliation of the most closely comparable GAAP financial measures to the non-GAAP financial measures is included in the company's earnings press release.

Speaker #2: With all of that said, it's now my pleasure to turn the call over to Eric.

Speaker #3: Good morning. And thank you for joining us today. We had a strong fourth quarter to cap off an exceptional year. Both comparable store sales and earnings were ahead of our expectations, and we delivered on all of our strategic objectives in 2025.

Eric van der Valk: Good morning, and thank you for joining us today. We had a strong Q4 to cap off an exceptional year. Both comparable store sales and earnings were ahead of our expectations, and we delivered on all of our strategic objectives in 2025. We entered last year with a number of ambitious goals. Most notable of these was to accelerate our growth and capitalize on opportunities in the market, including real estate, merchandise, customers, and talent. All of this required considerable planning and execution, and our team delivered. We opened a record 86 stores last year, which was significantly higher than our previous record of 50 stores. All stores were open in Q1, Q2, and Q3, another first for us. We moved to a soft opening strategy, which simplified the process and improved our execution. Our next goal was to enhance and drive growth in the Ollie's Army loyalty program.

Speaker #3: We entered last year with a number of ambitious goals, most notable of these was to accelerate our growth and capitalize on opportunities in the market, including real estate, merchandise, customers, and talent.

Speaker #3: All of this required considerable planning and execution and our team delivered. We opened a record 86 stores last year, which was significantly higher than our previous record of 50 stores.

Speaker #3: All stores were open in the first three quarters, another first for us. We moved to a soft opening strategy which simplified the process and improved our execution.

Speaker #3: Our next goal was to enhance and drive growth in the Ollie's Army loyalty program. We added an Ollie's Army night in June. We made our Ollie's Days event exclusive to members only.

Eric van der Valk: We added an Ollie's Army Night in June. We made our Ollie Days event exclusive to members only. We gave members advanced notice on special events, and we rolled out the Ollie's Credit Card. Our stores did an amazing job communicating the benefits and enrolling customers in the loyalty program. Great job, team. Your efforts paid off. The result was stronger customer acquisition growth the entire year. New memberships in our Ollie's Army loyalty program increased 23%, and our total customer file increased by more than 12%. On top of the accelerated membership growth, we are welcoming a wider breadth of customers. America loves a bargain, and as we grow from east to west, we are expanding our customer demographics. Our unprecedented deals simply cannot be beat, and we are clearly benefiting from consumer seeking value and trading down. It's not just trade down, however.

Speaker #3: We gave members advance notice on special events. And we rolled out the Ollie's credit card. Our stores did an amazing job communicating the benefits and enrolling customers in the loyalty program.

Speaker #3: Great job, team. Your efforts paid off. The result was stronger customer acquisition growth the entire year. New memberships in our Ollie's Army loyalty program increased 23%.

Speaker #3: And our total customer file increased by more than 12%. On top of the accelerated membership growth, we are welcoming a wider breadth of customers.

Speaker #3: America loves a bargain, and as we grow from east to west, we are expanding our customer demographics. Our unprecedented deal simply cannot be beat.

Speaker #3: And we are clearly benefiting from consumers seeking value and trading down. It's not just trade down, however; we are also reaching a younger customer through digital marketing tactics.

Eric van der Valk: We are also reaching a younger customer through digital marketing tactics. Finally, we are re-investing in our stores and improving the customer shopping experience. All of this is driving an expanded customer base. Our next objective was to go after merchandise-related opportunities. Our mission is to sell good stuff cheap. We do this through a flexible off-price buying model that leverages our growing buying power across suppliers and manufacturers around the world. Our growing size and scale, and continued consolidation of the retail industry has resulted in better access to merchandise, and our deal flow is off the charts. This gives us more control and flexibility in how we build our merchandise assortment. A good example of this were changes we made to the seasonal category. Seasonal decor is an area that continues to grow in the marketplace, and there is a white space opportunity here.

Speaker #3: Finally, we are reinvesting in our stores and improving the customer shopping experience. All of this is driving an expanded customer base. Our next objective was to go after merchandise-related opportunities.

Speaker #3: Our mission is to sell good stuff cheap. We do this through a flexible, off-price buying model that leverages our growing buying power across suppliers and manufacturers around the world.

Speaker #3: Our growing size and scale and continued consolidation of the retail industry has resulted in better access to merchandise, and our deal flow is off the charts.

Speaker #3: This gives us more control and flexibility in how we build our merchandise assortment. A good example of this were changes we made to the seasonal category.

Speaker #3: Seasonal decor is an area that continues to grow in the marketplace, and there is a white space opportunity here. At the same time, toys is an area that continues to evolve away from traditional to more interactive products.

Eric van der Valk: At the same time, toys is an area that continues to evolve away from traditional to more interactive products. With this in mind, we increased our investments in seasonal decor and changed our approach to toys. These changes resonated with our customers and were big wins in Q4. Our last initiative was to continue reinvesting in our business to support future growth. We have strengthened our bench in many critical areas, including planning and allocation, marketing, and new store development. We also increased our distribution center throughput through expansion and automation. We continued to improve our store and customer experience. Looking ahead, we will build on our momentum and progress in pursuing these initiatives in 2026. Our flywheel for growth starts with the opening of new stores, and the availability of real estate continues to be strong.

Speaker #3: With this in mind, we increased our investments in seasonal decor and changed our approach to toys. These changes resonated with our customers and were big wins in the fourth quarter.

Speaker #3: Our last initiative was to continue reinvesting in our business to support future growth. We have strengthened our bench in many critical areas, including planning and allocation, marketing, and new store development.

Speaker #3: We also increased our distribution center throughput through expansion and automation. And we continue to improve our store and consumer and customer experience. Looking ahead, we will build on our momentum and progress in pursuing these initiatives in 2026.

Speaker #3: Our flywheel for growth starts with the opening of new stores and the availability of real estate continues to be strong. We are planning to open 75 stores this year, and these will be a mix of new and existing markets as we continue to expand contiguously.

Eric van der Valk: We are planning to open 75 stores this year, and these will be a mix of new and existing markets as we continue to expand contiguously. We recently celebrated entering our 35th state with the opening of our store in Austin, Minnesota. We celebrated the grand opening last week with a long line of enthusiastic customers that stretched down the side of the building. It was great to meet and talk to so many good people. Austin loves deals, and we are proud to be part of your community. Thank you, Austin, and Minnesota. The birthplace of bargains has arrived with more stores coming soon. In addition to Minnesota, we will also be entering New Mexico later this year. With a total of 658 stores in 35 states, we are only at the halfway mark of our long-term goal of more than 1,300 stores.

Speaker #3: We recently celebrated entering our 35th state with the opening of our store in Austin, Minnesota. We celebrated the grand opening last week with a long line of enthusiastic customers that stretched down the side of the building.

Speaker #3: It was great to meet and talk to so many good people. Austin loves deals, and we are proud to be part of your community.

Speaker #3: Thank you, Austin, and Minnesota. The birthplace of bargains has arrived, with more stores coming soon. In addition to Minnesota, we will also be entering New Mexico later this year.

Speaker #3: With a total of 658 stores in 35 states, we are only at the halfway mark of our long-term goal of more than 1,300 stores.

Speaker #3: It's such an invigorating time to be with Ollie's, with so much growth ahead of us. While new stores remain the cornerstone of our growth, we are also focused on driving comparable store sales through better execution, leveraging our growing size and scale, and improving sales productivity.

Eric van der Valk: It's such an invigorating time to be with Ollie's with so much growth ahead of us. While new stores remain the cornerstone of our growth, we are also focused on driving comparable store sales through better execution, leveraging our growing size and scale, and improving sales productivity. We touched on strengthening our product assortment. We are also seeing opportunities arise in areas such as real estate and talent. When you combine this with the fact that we reinvest in the business every year because of our strong sales, profitability, cash generation, and balance sheet, it feels like we have reached an inflection point. With these dynamics, we are confident in our ability to continue executing the business and driving consistent results. Our growth and the continued consolidation of the retail sector is leading to more buying power and expanding our access to products.

Speaker #3: We touched on strengthening our product assortment. We are also seeing opportunities arise in areas such as real estate and talent. When you combine this with the fact that we reinvest in the business every year—because of our strong sales, profitability, cash generation, and balance sheet—it feels like we have reached an inflection point.

Speaker #3: With these dynamics, we are confident in our ability to continue executing the business and driving consistent results. Our growth and the continued consolidation of the retail sector is leading to more buying power and expanding our access to products.

Speaker #3: This gives us the ability to balance our value proposition with our margin profile and strengthen both over time. Based on the structural changes to our business, we feel a comp target of 2% and a gross margin target of 40.5% is sustainable and strikes the right balance between price and margin.

Eric van der Valk: This gives us the ability to balance our value proposition with our margin profile and strengthen both over time. Based on the structural changes to our business, we feel a comp target of 2% and a gross margin target of 40.5% is sustainable and strikes the right balance between price and margin. We also believe that this stability and strong free cash flow now allows us to commit to returning higher levels of excess cash to shareholders through share repurchases. Combining 10% unit growth, 2% comp growth, and a commitment to stepping up share repurchases, we are confident in delivering consistent mid-teens EPS growth while reinvesting back into the business to support profitable long-term growth and reach our target of 1,300 stores.

Speaker #3: We also believe that this stability and strong free cash flow now allows us to commit to returning higher levels of excess cash to shareholders through share repurchases.

Speaker #3: Combining 10% unit growth, 2% comp growth, and a commitment to stepping up share repurchases we are confident in delivering consistent mid-teens EPS growth while reinvesting back into the business to support profitable long-term growth and reach our target of 1,300 stores.

Speaker #3: In 2026, our focus will be on improving the in-store customer shopping experience, sharpening our dynamic marketing media mix model, expanding our IT application development capabilities, and further integrating technology and data analysis across the enterprise, including leveraging proven AI with appropriate solutions for our business model.

Eric van der Valk: In 2026, our focus will be on improving the in-store customer shopping experience. Sharpening our dynamic marketing media mix model, expanding our IT application development capabilities, and further integrating technology and data analysis across the enterprise, including leveraging proven AI with appropriate solutions for our business model. Growing our planning and allocation bench and capabilities, and increasing our distribution capacity by expanding our Texas and Illinois facilities and laying out plans for our fifth DC. There is so much potential to continue to develop and grow our business, but we are doing this in a calculated fashion, staying true to our business model, strong culture, and our new long-term growth algorithm. We are super proud of our achievements in fiscal 2025. We delivered against virtually every single metric and goal we set out for ourselves at the beginning of the year. Now that's behind us.

Speaker #3: Growing our planning and allocation bench and capabilities, and increasing our distribution capacity by expanding our Texas and Illinois facilities, and laying out plans for our fifth DC.

Speaker #3: There is so much potential to continue to develop and grow our business, but we are doing this in a calculated fashion staying true to our business model: strong culture, and our new long-term growth algorithm.

Speaker #3: We are super proud of our achievements in fiscal 2025. We delivered against virtually every single metric and goal we set out for ourselves at the beginning of the year.

Speaker #3: But now that's behind us. We are focused on building on our success, seizing new opportunities, delivering another year of good stuff cheap to our customers, and strong results for our shareholders.

Eric van der Valk: We are focused on building on our success, seizing new opportunities, delivering another year of good stuff cheap to our customers and strong results for our shareholders. Let me wrap up by recognizing and thanking all of our dedicated associates and team members. Every one of you plays an important role in serving our loyal discount customers and fulfilling our mission. Serving our communities by selling good stuff cheap is not just a tagline, it's our purpose, our passion, and our reason for being. Thank you for everything you do. Now, let me turn the call over to Rob.

Speaker #3: Let me wrap up by recognizing and thanking all of our dedicated associates and team members, every one of you plays an important role in serving our loyal discount customers and fulfilling our mission.

Speaker #3: Serving our communities by selling good stuff cheap is not just a tagline. It's our purpose, our passion, and our reason for being. Thank you for everything you do.

Speaker #3: Now let me turn the call over to Rob.

Speaker #4: Thanks, Eric. And good morning, everyone. We were very pleased with our fourth quarter results, and the underlying trends in the business. Earnings were slightly ahead of our expectations driven by solid comp growth, healthy margins, and disciplined expense control.

Robert Helm: Thanks, Eric, and good morning, everyone. We were very pleased with our Q4 results and the underlying trends in the business. Earnings were slightly ahead of our expectations, driven by solid comp growth, healthy margins, and disciplined expense control. New stores and customer acquisition remain our two top priorities, and we continue to deliver on both of these. We opened a record 86 stores last year, an increase of more than 15%. Membership growth in Ollie's Army remains strong, up more than 12% for the year to 17 million members. Now let me walk you through the P&L. Net sales increased 17% to $779 million, driven by new store openings and comparable store sales growth. Comparable store sales increased 3.6%, driven by an increase in both basket and transactions.

Speaker #4: New stores and customer acquisition remain our two top priorities, and we continue to deliver on both of these. We opened a record 86 stores last year, an increase of more than 15%.

Speaker #4: And membership growth in Ollie's Army remains strong, up more than 12% for the year, to 17 million members. Now let me walk you through the P&L.

Speaker #4: Net sales increased 17% to $779 million driven by new store openings and comparable store sales growth. Comparable store sales increased 3.6% driven by an increase in both basket and transactions.

Robert Helm: Seasonal consumables, hardware, stationery, and sporting goods were our top-performing categories. Our comp sales increase was above our expectations in the quarter, even more so when factoring in the impact of severe winter weather. Major storms around Black Friday weekend, the weekend of Ollie's Army Night, and the end of January caused a significant number of store closures and disruptions to the business. Given our store geography, we were particularly hard hit by the weather. While comp store sales were ahead of expectation, new store sales were slightly below our plan. This was a different trend than the rest of the year, as our new stores outperformed expectations in the first three quarters. In hindsight, we underestimated the flattening of the reverse waterfall for the new stores in year one from the soft opening strategy.

Speaker #4: Seasonal consumables, hardware, stationery, and sporting goods were our top-performing categories. Our comp sales increase was above our expectations in the quarter, even more so when factoring in the impact of severe winter weather.

Speaker #4: Major storms around Black Friday weekend, the weekend of Ollie's Army night, and the end of January caused a significant number of store closures and disruptions to the business.

Speaker #4: Given our store geography, we were particularly hard hit by the weather. While comp store sales were ahead of expectations, new store sales were slightly below our plan.

Speaker #4: This was a different trend than the rest of the year, as our new stores outperformed expectations in the first three quarters. In hindsight, we underestimated the flattening of the reverse waterfall for the new stores in year one from the soft opening strategy.

Speaker #4: This proved to be more impactful in the fourth quarter than what we observed earlier in the year because of the higher engagement levels with our Ollie's Army members during the holiday season.

Robert Helm: This proved to be more impactful in the Q4 than what we observed earlier in the year because of the higher engagement levels with our Ollie's Army members during the holiday season. The majority of our new stores de-planned for this full year, and the flattening of the reverse waterfall is something we continue to study. Gross margin of 39.9 was above plan for the quarter, but approximately 80 basis points lower than last year, which was largely due to planned investments in price. SG&A expenses were well managed in the quarter, excluding the $5 million of one-time expense related to the modification of equity awards for our executive chairman in last year's Q4. SG&A expenses, a percentage of net sales, decreased 40 basis points to 24.2%.

Speaker #4: The majority of our new stores B planned for this full year, and the flattening of the reverse waterfall is something we continue to study.

Speaker #4: Gross margin of 39.9% was above plan for the quarter, but approximately 80 basis points lower than last year, which was largely due to planned investments in price.

Speaker #4: SG&A expenses were well managed in the quarter, excluding the 5 million of one-time expense related to the modification of equity awards for our executive chairman in last year's fourth quarter, SG&A expenses a percentage of net sales decreased 40 basis points to 24.2%.

Speaker #4: The decrease was primarily driven by the leverage of our fixed costs from the increase in comparable store sales and benefits from our optimization efforts in marketing.

Robert Helm: The decrease was primarily driven by the leverage of our fixed costs from the increase in comparable store sales and benefits from our optimization efforts in marketing. Pre-opening expenses decreased 53% to $2.3 million, driven by the earlier timing of new store openings this year versus last year. Moving down to the bottom line, adjusted net income increased 16% to $85 million and adjusted earnings per share increased 17% to $1.39. Lastly, adjusted EBITDA increased 16% to $127 million, and adjusted EBITDA margin decreased ten basis points to 16.3% for the quarter.

Speaker #4: Pre-opening expenses decreased 53% to 2.3 million dollars driven by the earlier timing of new store openings this year versus last year. Moving down to the bottom line, adjusted net income increased 16% to 85 million dollars, and adjusted earnings per share increased 17% to $1.39.

Speaker #4: Lastly, adjusted EBITDA increased 16% to $127 million, and adjusted EBITDA margin decreased 10 basis points to 16.3% for the quarter. Turning to the balance sheet, our total cash and investments increased by more than 31%, or $134 million, to $563 million, and we had no meaningful long-term debt at the end of the quarter.

Robert Helm: Turning to the balance sheet, our total cash and investments increased by more than 31% or $134 million to $563 million, and we had no meaningful long-term debt at the end of the quarter. We remain committed to maintaining a very strong balance sheet because of the credibility this gives us with our various partners across the industry. Inventories increased 18% year-over-year, primarily driven by our new store growth and strong deal flow. Capital expenditures were $18 million for the quarter, with the majority of the spending going towards the opening of new stores, the improvement of existing stores, and to a lesser degree, investments in our supply chain. We did pull some new stores forward in early 2026, which drove CapEx and pre-opening a little higher than our expectations.

Speaker #4: We remain committed to maintaining a very strong balance sheet because of the credibility this gives us with our various partners across the industry. Inventories increased 18% year over year, primarily driven by our new store growth and strong deal flow.

Speaker #4: Capital expenditures were $18 million for the quarter, with the majority of the spending going towards the opening of new stores, the improvement of existing stores, and, to a lesser degree, investments in our supply chain.

Speaker #4: We did pull some new stores forward in early 2026, which drove CapEx and pre-opening a little higher than our expectations. We bought back $34 million worth of our common stock in the quarter and $74 million for the full fiscal year.

Robert Helm: We bought back $34 million worth of our common stock in the quarter and $74 million for the full fiscal year. At year-end, we had $259 million remaining under our current share repurchase authorization. We are stepping up the buyback in 2026, and I will speak to this more in a moment. Lastly, let me run through the way we are thinking about the business and our initial outlook for fiscal year 2026. Let me start with tariffs. The tariff situation obviously remains very fluid, and the current lower levels could be temporary. Bigger picture, tariffs are just another form of disruption, and we benefit from disruption. Whatever happens, we would expect to mitigate any margin pressure from tariffs.

Speaker #4: At year-end, we had $259 million remaining under our current share repurchase authorization. We are stepping up the buyback in 2026, and I will speak to this more in a moment.

Speaker #4: Lastly, let me run through the way we are thinking about the business and our initial outlook for fiscal year 2026. Let me start with tariffs.

Speaker #4: The tariff situation obviously remains very fluid, and the current lower levels could be temporary. Bigger picture, tariffs are just another form of disruption, and we benefit from disruption.

Speaker #4: Whatever happens, we would expect to mitigate any margin pressure from tariffs. Before running through our guidance for 2026, let me comment on how we are thinking about our new long-term growth algorithm that Eric quickly touched on.

Robert Helm: Before running through our guidance for 2026, let me comment on how we are thinking about our new long-term growth algorithm that Eric quickly touched on. We operate a flexible and fluid business that generates stable returns and very strong cash flows. Our strong growth, along with the consolidation of retail, gives us greater ability to scale and drive the business. With all of this, we feel confident in targeting annual comparable store sales growth of 2% and annual gross margin of 40.5 moving forward, acknowledging that there will be some variability to comps and margin between the quarters based on deal flow, seasonality, and a few other factors. The 40.5% annual gross margin target is our current baseline target, and our thought process is to reinvest anything over and above this back into our value proposition to our customers.

Speaker #4: We operate a flexible and fluid business that generates stable returns and very strong cash flows. Our strong growth, along with the consolidation of retail, gives us greater ability to scale and drive the business.

Speaker #4: With all of this, we feel confident in targeting annual comparable store sales growth of 2% and annual gross margin of 40.5% moving forward. Acknowledging that there will be some variability to comps and margin, between the quarters based on deal flow, seasonality, and a few other factors.

Speaker #4: The 40.5% annual gross margin target is our current baseline target, and our thought process is to reinvest anything over and above this back into our value proposition to our customers.

Speaker #4: Lastly, we are targeting to return approximately 50% of our free cash flow back to investors through share repurchases going forward. Our first and best use of cash is and will always be reinvesting into the business to support long-term growth.

Robert Helm: Lastly, we are targeting to return approximately 50% of our free cash flow back to investors through share repurchases going forward. Our first and best use of cash is and will always be reinvesting into the business to support long-term growth. However, between our very strong balance sheet and stable cash generation, we are confident in committing to a higher level of share repurchases that benefits long-term EPS growth.

Speaker #4: However, between our very strong balance sheet and stable cash generation, we are confident in committing to higher level of share repurchases that benefits long-term EPS growth.

Speaker #4: Our initial guidance figures reflect these changes, and are contained in the table in our earnings release posted this morning. And they include $75 new store openings, net sales of $2.985 to $3.013 billion, comparable store sales growth in the range of 2%, gross margin in the range of 40.5%, operating income of $339 to $348 million, and adjusted net income and adjusted net income per share of $270 to $277 million, and $4.40 to $4.50 respectively.

Robert Helm: Our initial guidance figures reflect these changes and are contained in the table in our earnings release posted this morning, and they include 75 new store openings, net sales of $2.985 to $3.013 billion, comparable store sales growth in the range of 2%, gross margin in the range of 40.5%, operating income of $339 to $348 million, and adjusted net income and adjusted net income per share of $270 to $277 million and $4.40 to $4.50 respectively. These estimates assume depreciation and amortization expenses of $63 million, inclusive of $15 million within cost of goods sold. Pre-opening expenses of $22 million, with a majority of this in the first half of the year.

Speaker #4: These estimates assume depreciation and amortization expenses of $63 million, inclusive of $15 million within cost of goods sold, pre-opening expenses of $22 million—with a majority of this in the first half of the year—and an annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation.

Robert Helm: An annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation. The tax rate is slightly higher than 20.25% due to higher levels of nondeductible compensation. Diluted weighted average shares outstanding of approximately 61.4 million, which includes a stepped up share repurchase level of approximately $100 million. Finally, capital expenditures are expected to be in the range of $103 million to $113 million, which includes almost $20 million for the expansion of our Texas and Illinois distribution centers. Similar to last year, we expect our new store openings to again be front-end weighted, with the majority of openings planned for the first half. In closing, let me also acknowledge and congratulate my fellow team members.

Speaker #4: The tax rate is slightly higher than 2025 due to higher levels of non-deductible compensation. Diluted weighted average share is outstanding of approximately 61.4 million, which includes a stepped-up share repurchase level of approximately $100 million.

Speaker #4: And finally, capital expenditures are expected to be in the range of $103 million to $113 million, which includes almost $20 million for the expansion of our Texas and Illinois distribution centers.

Speaker #4: Similar to last year, we expect our new store openings to again be front-end weighted, with a majority of openings planned for the first half.

Speaker #4: In closing, let me also acknowledge and congratulate my fellow team members. While we continue to integrate technology into how we do things, we will always be a people-led business that relies on each and every team member to play their part.

Robert Helm: While we continue to integrate technology into how we do things, we will always be a people-led business that relies on each and every team member to play their part. 2025 was a terrific year on all accounts, and I am excited about the opportunities that lie ahead for our team. Now let me turn the call back over to Eric.

Speaker #4: 2025 was a terrific year on all accounts. And I am excited about the opportunities that lie ahead for our team. Now, let me turn the call back over to Eric.

Speaker #5: Thanks, Rob. In closing, I'd like to share that we are well positioned in laser-focused on continuing to deliver profitable growth. We are committed to driving strong and consistent execution every hour of every day.

Eric van der Valk: Thanks, Rob. In closing, I'd like to share that we are well positioned and laser-focused on continuing to deliver profitable growth. We are committed to driving strong and consistent execution every hour of every day. We are proud of what we do in service of our customers. We are excited about the opportunities ahead. Last, but certainly not least, we are always. Operator, we are now ready for questions.

Speaker #5: We are proud of what we do in service of our customers. We are excited about the opportunities ahead. And last but certainly not least, we are always operator.

Speaker #5: We are. Now, ready for questions.

Speaker #1: Thank you so much. And as a reminder, if you do have a question, press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you so much. As a reminder, if you do have a question, press star one one on your telephone and wait for your name to be announced. To remove yourself, press star one one again. As a reminder, limit yourself to one question, and if you have additional questions, please reenter the queue. One moment for our first question. Comes from the line of Peter Keith with Piper Sandler. Please proceed.

Speaker #1: To remove yourself, press star 11 again. And as a reminder, limit yourself to one question and if you have additional questions, please re-enter the queue.

Speaker #1: One moment for our first question. It comes from the line of Peter Keith with Piper Sandler. Please proceed.

Peter Keith: Thank you. Good morning, everyone. Interesting on the algo change, certainly exciting from you moving from the historic 1% to 2% comp annual target up to now 2%. Kind of subtle, but I would still say meaningful. Could you give us the thought process and why you're doing that now? Maybe, I guess, even what gives you the confidence you can sustain that going forward?

Speaker #6: Thank you. Good morning, everyone. Interesting on the algo change—certainly exciting moving from the historic 1 to 2 percent comp annual target up to now 2%.

Speaker #6: So kind of subtle, but I would still say meaningful. Could you give us a thought process and why you're doing that now and maybe, I guess, even what gives you the confidence you can sustain that going forward?

Speaker #7: Sure. Hi, Peter. Thanks for your question. We do believe we're at an inflection point. We with the accelerated growth last year and looking at $3 billion in sales for next year, our growing size and scale is leading to better access to merchandise.

Eric van der Valk: Sure. Hi, Peter. Thanks for your question. We do believe we're at an inflection point. We, with the accelerated growth last year and looking at $3 billion in sales for next year, our growing size and scale is leading to better access to merchandise and deals. It's allowing us to steer our merchandise selection and our category mix much more deliberately than we were able to do in the past. Our flexible buying model allows us to get in and out of products and categories fluidly. With more consistent access to incredible deals and the improvements we've made throughout the business and the organization, we feel like a 2% comp algo is sustainable.

Speaker #7: And deals, it's allowing us to steer our merchandise selection and our category mix much more deliberately. Then we're able to do in the past.

Speaker #7: Our flexible buying model allows us to get in and out of products and categories fluidly. So, with more consistent access to credible deals and the improvements we've made throughout the business and the organization, we feel like a 2% comp algo is sustainable.

Robert Helm: Okay, thank you.

Speaker #6: Okay. Thank you.

Eric van der Valk: Thanks, Peter.

Speaker #7: Thanks, Peter.

Operator: Our next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed.

Speaker #1: Our next question comes from the line of Chuck Grumm with Gordon Haskett, please proceed.

Chuck Grom: Good morning, guys. I'd rate that chance.

Speaker #8: Good morning, guys. I'd rate that chant a 9.5. I think this morning—nice effort. My question is on sales productivity. You've noted changes being made to the size of certain assortments, such as shrinking carpeting, books, and toys just now.

Eric van der Valk: Go ahead.

Chuck Grom: The 9.5, I think, this morning. Nice effort. My question's on sales productivity. You've noted changes being made to the size of certain assortments, such as shrinking carpeting, books, and toys just now. Where are you guys in that journey? At $130 in sales per square foot, I'm curious for your best stores where that productivity sits. Last question would be, in our field work, we've observed furniture in stores. Is that just a seasonal drop, or are you guys leaning into that category more deeply? Thanks.

Speaker #8: Where are you guys in that journey, and at $130 in sales per square foot, where does that productivity sit? And then, last question would be—in our fieldwork, we've observed furniture in stores. Is that just a seasonal drop, or are you guys leaning into that category more deeply?

Speaker #8: Thanks.

Eric van der Valk: Thanks, Chuck. Appreciate it. I think I was a 10.0. It's all right. You could be a 9.5.

Speaker #6: Thanks, Chuck. Appreciate it. I think I was at 10.0 on the chant. Okay, that's all right. You could be at 9.5—room for improvement.

Robert Helm: Room for-

Eric van der Valk: Room for improvement. We like that. Yes.

Chuck Grom: That's right.

Speaker #6: We like that. Yes.

Speaker #8: That's right. That's right.

Eric van der Valk: In terms of space productivity, we are thinking about space productivity differently now than we have in the past. We first consider where we provide the best values in the most relevant merchandise categories, where we can chase a closeout pipeline. I would stress the fluidity, the flexibility of our business, and that the category mix is sometimes a following of the closeout pipeline. Our growing size and scale gives us better access to deals, which I said earlier results in. It's resulting in more long-term partnerships with the vendor community and more partnerships with the vendor community. The more expansive access to the merchandise is putting us in the driver's seat in steering categories and assortments.

Speaker #6: In terms of space productivity, we are thinking about space productivity differently now than we have in the past. We first consider where we provide the best values in the most relevant merchandise categories where we can chase a closed-out pipeline.

Speaker #6: So I would stress the fluidity, the flexibility of our business and that the category mix is sometimes a following of the closed-out pipeline. But our growing size and scale gives us better access to deals, which I said earlier, results in it's resulting in more long-term partnerships with the vendor community and more partnerships with the vendor community.

Speaker #6: The more expansive access to the merchandise is putting us in the driver's seat and assortments. We've also been on a journey thinking about this—how we value store space, how we drive higher space productivity within the box—for multiple years.

Eric van der Valk: We've also been on a journey thinking about this, how we value store space, how we drive higher space productivity within the box for multiple years at this point, beginning with some of the learnings that we took away from our remodel program several years ago. It's resulted in our confidence to accelerate some investments in the business and to steer categories in a more deliberate way. We're also making investments, as I mentioned on the call, in planning, allocation, and stores to further seize these opportunities. Furniture is a great example, I'm glad you brought it up, of a category that we've looked at, where there's tremendous white space in the market as a result of retail consolidation.

Speaker #6: At this point, beginning with some of the learnings that we took away from our remodel program several years ago, it's resulted in our confidence to accelerate some investments in the business and to steer categories in a more deliberate way.

Speaker #6: We're also making investments, as I mentioned on the call, in planning and allocation in stores to further seize these opportunities. Furniture is a great example.

Speaker #6: I'm glad you brought it up of a category that we've looked at where there's tremendous white space in the market as a result of retail consolidation so I throw out there big lots value city, American Freight, are good examples.

Eric van der Valk: I throw out there Big Lots, Value City, American Freight are good examples of retail consolidation that's happened somewhat recently, and it's opened up white space in what I would characterize as the deep discount furniture business with kind of opening price point. Living room furniture is kind of what we're going after. With our opportunistic buying model, we're well positioned to chase the business and move in and out of categories. We began testing expanded furniture last year, actually late last year in some stores, and we liked the results of the test.

Speaker #6: Retail consolidation that's happened somewhat recently has opened up white space in what I would characterize as the deep discount furniture business, with kind of opening price point living room furniture being what we're going after.

Speaker #6: With our opportunistic buying model, we're well positioned to chase the business and move in and out of categories we begin testing expanded furniture last year actually late last year in some stores and we liked the results of the test.

Eric van der Valk: We were looking forward at what we believe to be an outsized tax refund season and seize what we thought would be a unique opportunity to introduce the business in a very big way in almost every store at the same time as the tax refunds were coming in. To answer your question about is this, is this transitory, is it deal, are we driving it now, and what does it mean for future? We're, you know, early innings at this. We're about seven weeks or so into the introduction of the business. Presidents' Day weekend was kind of the grand introduction of it. We do believe it has a place in our stores long term, and we're gonna stay at the business. It may not be every store, but it's probably most stores, or at least more than half the stores.

Speaker #6: We were looking forward to what we believe to be an outsized tax refund season and to seize what we thought would be a unique opportunity to introduce the business in a very big way in almost every store.

Speaker #6: At the same time as the tax refunds were coming in, but to answer your question about is this transitory, is it deal, are we driving it now, and what does it mean for future?

Speaker #6: We're early innings at this. We're about seven weeks or so into the introduction of the business. President's Day weekend was kind of the grand introduction of it.

Speaker #6: We do

Speaker #1: Do you believe it has a place in our stores long term ? And we're going to stay at the business . It may not be every store , but it's probably most stores , or at least more than half the stores .

Eric van der Valk: This being said, the most challenging decisions that we make here are what not to buy, whether that's deals or categories. Those challenging decision we have to make, that we have made for about half the stores, is that we're going to exit the wall-to-wall carpet business, which is relatively unproductive. We like what we're seeing in furniture. We believe that's an adequate replacement and that we'll get more sales productivity out of furniture versus wall-to-wall carpet in, again, more than half our stores. Again, early read, we like what we see. I wouldn't speak today about, you quoted the $130 sales per sq ft, about what the roadmap looks like around that. At this point, we have strategies around category mix management that will drive improved selling productivity.

Speaker #1: This being said , the most challenging decisions that we make here are what not to buy . Whether that's deals or categories . So the most challenging decision we have to make that we have made for about half the is that we're going to exit the wall to wall carpet business , which is relatively unproductive .

Speaker #1: And we like what we're seeing in furniture . We believe that's an adequate replacement and that we'll get more sales productivity out of furniture versus wall to wall carpet in again , more than half our stores .

Speaker #1: So again , early read , we like what we see I wouldn't speak today about you quoted $130 sales per square foot about what the roadmap looks like around that At this point , we have strategies around around category mix management that will drive improved selling productivity .

Eric van der Valk: We're not making a specific commitment to what that looks like in future years today.

Speaker #1: We're not making a specific commitment to what that looks like in future years. Today,

Chuck Grom: Got it. Thanks, Eric.

Speaker #2: Got it. Thanks, Eric.

Eric van der Valk: Thanks, Chuck.

Speaker #1: Thanks , Chuck .

Operator: Our next question comes from the line of Matthew Boss with JPMorgan. Please proceed.

Speaker #3: Our next question comes from the line of Matthew Boss with J.P. Morgan. Please proceed.

Matthew Boss: Great, thanks. Eric, on the inflection point that you cited to kick off the call, two questions. First, could you elaborate on the comp strength relative to plan that you saw in November and December? How best to quantify the weather impact on Q4? And have you seen any change in comp momentum so far in Q1 relative to the 3 to 4 comps that you delivered in Q4? And Rob, separately, I guess could you just elaborate on the performance that you're seeing in your new stores relative to plan and just expectations for productivity that you embedded in the guide for this year relative to 2025?

Speaker #4: Great . Thanks . So , Eric , on on the inflection point that you cited to to kick off the call . So two questions .

Speaker #4: First , could you elaborate on the comp strength relative to plan that you saw in November and December ? How best to quantify the weather impact on the fourth quarter ?

Speaker #4: And have you seen any change in comp momentum so far in the first quarter ? Relative to the 3 to 4 comps that you delivered in the fourth quarter And Rob , separately , I guess , could you just elaborate on the performance that you're seeing in your new stores relative to plan and just expectations for productivity that you embedded in the guide for this year relative to 2025 .

Eric van der Valk: Thanks.

Robert Helm: Sure.

Eric van der Valk: Yeah, thanks.

Robert Helm: This is Robert. I think I'll take all of that.

Speaker #1: Thanks . This is Rob . I think I'll take all of that . So the comps of Q4 , we were pleased with the comp results .

Eric van der Valk: Yeah.

Robert Helm: So the comps at Q4, we were pleased with the comp results. It was driven by both increases in transactions and baskets. It was basket-led, with basket taking two-thirds of it and transactions a third. The monthly cadence traded in a pretty tight range. We were pleased with the holiday season. We had a very nice holiday season. In January, our exit rate would have been the strongest comp of the quarter had it not been for the winter storm impact, which was very significant, where we had hundreds of stores closed for a number of days in that last week of the quarter. Momentum has spilled over into Q1. We're pleased with where we're positioned. We feel like we can deliver on our guidance.

Speaker #1: It was driven by both increases in transactions and baskets It was basket led with basket taking account of two thirds of it . And transactions .

Speaker #1: A third . The monthly cadence traded in a pretty tight range . We were pleased with the holiday season . We had a very nice holiday season and January .

Speaker #1: Our exit rate would have been the strongest comp of the quarter, had it not been for the winter storm impact, which was very significant.

Speaker #1: Where we had hundreds of stores closed for a number of days in that last week of the quarter , and momentum has spilled over into Q1 .

Speaker #1: We're pleased with where we're positioned . We we feel like we can deliver on our guidance , our deal flow is amazing and our assortment for the spring season is incredible .

Robert Helm: Our deal flow is amazing, and our assortment for the spring season is incredible. From a new store perspective, I think it's important to put all of it into context. You know, first, the majority of our stores deplanned for the full year, so we're very pleased with that result. Second, the new stores were impacted, actually disproportionately from the comp stores during that last week of the quarter because of geography. That was also a piece. In terms of trend and what we're seeing, what we saw in Q4 was a timing dynamic which related to our soft opening strategy, which flattened the early sales curve, but it improved execution of these stores.

Speaker #1: From a new store perspective , I think it's important to put all of it into context You know , first , the majority of our stores be planned for the full year .

Speaker #1: So we're very pleased with that result Second , the new stores were impacted actually disproportionately from the from the comp stores during that last week of the quarter , because of geography .

Speaker #1: So that was also a piece . But in terms of trend and what we're seeing , what we saw in Q4 was a timing dynamic dynamic , which related to our soft opening strategy , which flattened the early sales curve .

Speaker #1: But it improved execution of these stores . This improved execution helped us open these stores earlier and really helped us step up from the historical cadence , from 50 stores to 86 stores .

Robert Helm: This improved execution helped us open these stores earlier and really helped us step up from the historical cadence from 50 stores to 86 stores this last year. We knew this would impact the maturity curve in some way, but what we feel that it does is we feel that it impacts the shape of the curve, but not the long-term productivity, profitability, or opportunity in any of these stores over the longer term. In terms of what we've embedded in guidance, we've considered this performance in the Q4 into our guidance, into our new store productivity. The way that the street calculates new store productivity is slightly higher this year versus last year because of the step-up in the 86 stores coming into the store base.

Speaker #1: This last year . We knew this would impact the maturity curve in some way , but what what we feel that it does is we feel that it impacts the shape of the curve .

Speaker #1: But not the long term productivity , profitability or opportunity in any of these stores . Over the longer term . In terms of what we've embedded in guidance , we've considered this performance in the fourth quarter into our guidance , into our new store productivity .

Speaker #1: The way that you get , the way that the street calculates new store productivity , it's slightly higher this year versus last year because of the step up in the 86 stores coming into the into the store base .

Robert Helm: We're comfortable with our guidance, and we feel that we're in a good position to deliver.

Speaker #1: But we're comfortable with our guidance and we feel that we're in a good position to deliver

Matthew Boss: It's a great color. Best of luck.

Speaker #4: Great color. Best of luck.

Robert Helm: Thank you.

Eric van der Valk: Thanks, Matt.

Speaker #1: Thank you .

Speaker #5: Thanks , Matt .

Operator: Our next question comes from Steven Shemesh with RBC Capital Markets. Please proceed.

Speaker #3: Our next question comes from Steven Shemesh with RBC Capital Markets . Please proceed

Steven Shemesh: Great. Thank you, and appreciate you taking the question. There are obviously a lot of consumer crosscurrents at the moment if we think about an evolving tariff landscape. Inflation may be picking up a bit, higher tax refunds, as you alluded to, and now the Middle East situation impacting gas prices and consumer confidence. Anything you can share on the overall state of the consumer and kind of what you're seeing from a consumer behavior standpoint. And a related question, I mean, I think there's always an ongoing debate about closeout availability. You somewhat alluded to this in your response to an earlier question, but maybe just a state of the union there as well of your confidence in maintaining a high degree of quality in stores, especially as you ramp up store growth. Thank you.

Speaker #4: Great . Thank you .

Speaker #6: And I appreciate you taking the question . There are obviously a lot of consumer cross-currents at the moment . If we think about an evolving tariff landscape , inflation may be picking up a bit higher tax refunds , as you alluded to .

Speaker #6: And now the Middle East situation impacting gas prices and consumer confidence Anything you can share on the overall state of the consumer and kind of what you're seeing from a consumer behavior standpoint and a related question .

Speaker #6: I mean , I think there's always an ongoing debate about closeout availability You somewhat alluded to this in your response to an earlier question , but maybe just a state of the union there as well .

Speaker #6: Of your confidence in maintaining a high degree of quality in stores , especially as you ramp up store growth ? Thank you

Eric van der Valk: Sure. Thanks, Steve. Thanks for your questions. In terms of the state of the consumer, consumers are seeking value, and we're here for them. The strength we're seeing in trade down has continued. With our upper income cohorts, there's momentum there in trade down. The lower income, the lowest of our cohorts, is a little bit weak. The trade down is more than offsetting the weakness in the lower income cohorts. We're also seeing strength in consumables, which is indication of where the consumer's mindset is. It's continuing to be a very strong business for us. The deal flow is lining up very, very nicely, which is a good segue to deal flow with the consumer demand in consumables for us.

Speaker #5: Sure . Thanks , Steve . Thanks for your questions . In terms of the state of the art of the consumer , consumers are seeking value .

Speaker #5: And and we're here for them . The the strength we're seeing in trade down has continued in with our upper income cohorts . It's there's momentum there in trade down the lower income , the lowest of our cohorts is a little bit weak .

Speaker #5: The trade-down is more than offsetting the weakness in the lower income cohorts. We're also seeing strength in consumables, which is an indication of where the consumer's mindset is.

Speaker #5: It's continuing to be a very strong business for us. The deal flow is lining up very, very nicely, which is a good segue into deal flow.

Speaker #5: With the consumer demand in consumables . For us , the deal flow for us . It's off the charts with the consolidation of retail that's taking place .

Eric van der Valk: The deal flow for us, it's off the charts. With the consolidation of retail that's taken place, definitely outsized consolidation in retail over the past year. We are seeing deal flow in just about every category that's off the charts. Again, I mentioned consumables, but that's definitely been a strong pipeline for us in consumables. We, you know, we're extreme value retailer. We're comfortable with where we are from a price cap standpoint, very competitively positioned. We're in good shape.

Speaker #5: Definitely outsized consolidation of retail over the past year . We are seeing deal flow and just about every category that's off the charts .

Speaker #5: And again , I mentioned consumables , but that's definitely been a strong a strong pipeline for us in in consumables . So we , you know , we're extreme value retailer .

Speaker #5: We're comfortable with where we are for a price gap standpoint , very competitively positioned . So we're , we're in good shape .

Steven Shemesh: That's great. Thank you. Best of luck.

Speaker #6: That's great . Thank you . Best of luck .

Eric van der Valk: Thanks, Steve. Yeah, appreciate it.

Speaker #5: Thanks , Steve . I appreciate it .

Operator: Thank you. Our next question comes from Steven Zaccone with Citi. Please proceed.

Speaker #3: Thank you . Our next question comes from Steven Cohen with Citi . Please proceed .

Steven Zaccone: Great, good morning. Thanks very much for taking my question. Wanted to ask about the real estate environment. Just help us understand how you're balancing new store growth versus investing in some of these initiatives to drive higher store productivity. Then this year calls for 75 new stores, which is slightly above 10% unit growth. Should we expect this, you know, unit growth above 10% to continue for a couple of years?

Speaker #7: Greg good morning . Thanks very much for taking my question I wanted to ask about the real estate environment . Just help us understand how your balancing new store growth versus investing in some of these initiatives to drive , drive higher store productivity And then this year , calls for 75 new stores , which is slightly above 10% unit growth .

Speaker #7: Should we expect this , you know , unit growth above 10% to continue for a couple of years

Robert Helm: Thanks, Steve. It's Rob. I'll take that question. The real estate environment remains strong and availability is very good. 2025 was actually one of the biggest years of store closures that we've seen over the last 10. We're focused on building a long-term, durable business model that compounds earnings growth year after year. We feel that the best way to do this now is by balancing our new store growth with other initiatives to improve the in-store shopping experience across the remainder of our fleet. Touching on the go forward, we think that 10% unit growth is probably the right way to think about it, beyond 2026. 2025 and 2026 were really above algo because the outside consolidation of stores that we've seen in the last 12 to, say, 24 months.

Speaker #1: Thanks , Steve . It's Rob . I'll take that question The real estate environment remains strong and availability is very good . 2025 was actually one of the biggest years of store closures that we've seen over the last ten .

Speaker #1: But we're focused on building a long term , durable business model that compounds earnings growth year after year . We feel that the best way to do this now is by balancing our new store growth with other initiatives to improve the in-store shopping experience across the remainder of our fleet But touching on the go forward , we think that 10% unit growth is probably the right way to think about it .

Speaker #1: Beyond 2026 , 2025 , and 2026 were really above algo because the the outside consolidation of stores that we've seen in the last 12 to say 24 months

Peter Keith: Great. Thanks for the detail. Best of luck.

Steven Zaccone: Great. Thanks for the detail. Best of luck.

Speaker #7: Great . Thanks for the detail . Best of luck

Robert Helm: Thank you.

Eric van der Valk: Thanks.

Speaker #5: Thank you . Thanks .

Operator: Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed.

Speaker #3: Our next question comes from the line of Cate McShane with Goldman Sachs . Please proceed .

Kate McShane: Hi, good morning. Thanks for taking our question. Is there a way to quantify the comp growth of Ollie's membership versus what is coming from new store growth? We were wondering if the Ollie's Army demographic is changing in line with what you are seeing just in the stores.

Speaker #8: Hi . Good morning . Thanks for taking our question Is there a way to quantify the comp growth of Ali membership versus what is coming from new store growth ?

Speaker #8: And we were wondering if the Ali Ahmed demographic is changing in line with what you are seeing just in the stores.

Robert Helm: I'll take the first part, and then I'll hand it off to Eric for the second part. We haven't separated that out in the past historically. We think about Ollie's Army as a single metric, and, you know, we're looking to grow it through new stores predominantly. What I would say is all vintages continue to comp on Ollie's Army store growth, and it's an important goal that we set for our store teams in communicating the benefits out to our customers each and every day.

Speaker #1: I'll take the first part and then I'll hand it off to Eric for the second part . I we haven't separated that out in the past .

Speaker #1: Historically , we think about Ali's army as a single metric . And , you know , we're looking to grow it through new stores predominantly .

Speaker #1: But what I would say is, all vintages continue to comp on Ollie's Army store growth. And it's an important goal that we set for our store teams in communicating the benefits out to our customers each and every day.

Eric van der Valk: Yeah. I mean, we're very pleased overall with the Ollie's Army performance on the quarter and on the year in terms of the growth, the excitement that our customers have around the program, the enhancements to the program, the conversion that our stores have driven with the customers, the new customers that are coming in to make them part of the Army, to make them part of our loyal bargain outlet-

Speaker #5: Yeah , I mean , we're very pleased overall with the performance on the quarter . And , and on the year . In terms of the growth , the excitement that our customers have around the program , the enhancements to the program , the conversion that our stores have driven with the customers , the new customers that are coming in to make them part of the army , to make them part of our loyal Argonauts , part of our Ali's family .

Robert Helm: Part of our-

Eric van der Valk: Ollie's family. You know, that's. We're firing on all cylinders as it concerns Ollie's Army.

Speaker #5: So , you know , that's we're firing on all cylinders as a concerns . Ali's army .

Kate McShane: Thank you.

Speaker #8: Thank you

Eric van der Valk: Thanks, Kate.

Speaker #5: Thanks , Kate

Operator: Our next question comes from Anthony Chukumba with Loop Capital Markets. Please proceed.

Speaker #3: Our next question comes from Anthony Chukumba with Loop Capital Markets . Please proceed

Anthony Chukumba: Good morning. Thank you for taking my question. Congrats on a strong 2025.

Speaker #9: Good morning . Thank you for taking my question . Congrats on a strong 2025 . Thank you . I was interested in the seasonal business in the fourth quarter .

Eric van der Valk: Thank you.

Anthony Chukumba: I was interested in the seasonal business in Q4, specifically, how much of that strength was closeout as opposed to some of the direct source stuff that you did, particularly in terms of decorations and also gifts? Thank you.

Speaker #9: Specifically , how much of that strength was closeout as opposed to some of the direct source stuff that you that you did , particularly in terms of decorations and also gifts ?

Speaker #9: Thank you

Eric van der Valk: Sure. The seasonal business typically is more non-closeout, more sourced, more production goods. Last year, we did see a fairly healthy pipeline of closeout goods, of excess inventory that was out there as a result of retail consolidation with manufacturers and product that was left behind from retailers that are out of business, that was in transit, et cetera. It was a combination. I'm not gonna quote the percentage on it, but it was actually a fairly healthy combination of closeouts that is somewhat unusual for that business. Gift is the same to an extent. We don't usually get into specific deals on this call, but we did have outsized gift-related deals a year ago we were up against that were closeout related.

Speaker #5: Sure . The seasonal business typically is more non closeout , more sauce , more production goods . Last year we did see a fairly healthy pipeline of of closeout goods of excess inventory that was out there as a result of retail consolidation with manufacturers and product that was left behind from retailers that are out of business That was in transit , etc.

Speaker #5: . So it was a combination . I'm not going to quote the percentage on it , but it was actually fairly healthy combination of closeouts .

Speaker #5: That is somewhat unusual for that business gift is a the same to an extent . We we don't usually get into specific deals on this call , but we did .

Speaker #5: We did have outsized gift-related deals a year ago that we were up against that were closeout-related. Some of what we bought was closeout, and some of what we bought was production.

Eric van der Valk: Some of what we bought was closeout, and some of what we bought was production, and we had a very strong gift business this year, so we were able to comp our business that was a little bit more closeout-driven in 2024 with a little bit less closeout-driven product in 2025. We were very proud of our value proposition, our price gaps on that product. It does speak to the evolution of our business as we continue to grow, being maybe more like an off-pricer with closeouts as the most important driver of our value prop, and that's how we see our business as we move forward, especially as we continue to grow in size and scale.

Speaker #5: And we had a very strong gift business . This year . So we were able to comp our business . That was a little bit more closeout driven in 24 with a little bit less closeout driven product in 25 .

Speaker #5: And we were very proud of our value proposition , our price gaps on that product . It does speak to the evolution of our business as we continue to grow , being maybe more like an off pricer with Closeouts is the most important driver of our value prop , and that's how we see our businesses move forward , especially as we continue to grow in size and scale

Anthony Chukumba: Thank you.

Speaker #9: Thank you .

Operator: Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed.

Speaker #3: Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed.

Simeon Gutman: Hey, good morning, and good job in 2025. If you take a look at this newer financial model compared to the previous FY 2022, it's a little bit higher than what you were comfortable underwriting. Gross margin's certainly higher. Can you just tell us then what happens on the other side of it? Are you saying that margin grows at a faster rate than EPS grows faster, or is there something inhibiting, you know, higher SG&A? I'm sorry if I missed that piece, but I'm trying to put the before and after together.

Speaker #10: Hey , good morning . And good job in 25 . If you take the sort of this newer financial algo compared to previous .

Speaker #10: So two , it's a little bit higher than what you were comfortable underwriting gross margin certainly higher . Can you just tell us then what happens on the other side of it ?

Speaker #10: Are you saying that margin grows at a faster rate to an EPS grows faster , or is there something inhibiting higher sG&A ? I'm sorry if I missed that piece , but I'm trying to put one the before and after together

Robert Helm: Hey, this is Rob, Simeon. I'll take that question. We're not thinking about margin growth necessarily differently under this algo. You know, what we're moving from is a 1% to 2% to a 2%, you know, which shows the confidence that we have based on this inflection point, based on our size and scale. Margin, we're thinking as the current baseline target, we're thinking not to exceed 40.5% in the short term. We think that this is the right balance between price and margin at the moment. If we have the opportunity to exceed, we would reinvest that back into customer loyalty to drive additional market share at this moment.

Speaker #1: Hey , this is Rob Simeon . I'll take that question . We're not thinking about margin growth necessarily differently under this algo . You know what we're moving from is a 1 to 2% to a 2% , you know , which shows the confidence that we have based on this inflection point , based on our size and scale margin , we're thinking as a current baseline target , we're thinking not to exceed 40.5 in the short term .

Speaker #1: We think that this is the right between price and margin . At the moment . And if we have the opportunity to exceed , we would reinvest that back into customer loyalty to drive additional market share at this moment .

Robert Helm: From an SG&A perspective, at the 2% comp, we would expect a 10 basis points of leverage, which is built into our guidance. EPS will grow in the mid-teens on the bottom line, and that'll be supplemented by share repurchases, but that's not how we're getting there. We're getting there through the core strength of the algo throughout the P&L.

Speaker #1: From an SGA perspective, at the 2% comp, we would expect for a ten basis point to leverage, which is built into our guidance.

Speaker #1: And then EPS will grow in the mid-teens . On the bottom line , and that'll be supplemented by by share repurchases . But that's not that's not how we're getting there .

Speaker #1: We're getting there through the core strength of the algo throughout the P&L.

Eric van der Valk: Yeah, Simeon, I just wanna stress the point on margin about reinvesting in price. Nothing has changed here. We reinvest in price. 40.5 is the new 40.0, period.

Speaker #5: Yeah , I just want to stress the point on margin about reinvesting in price . Nothing has changed here . We reinvested price 40.5 is the new 40.0 period

Edward Kelly: Okay. Thanks guys. Good luck.

Simeon Gutman: Okay. Thanks guys. Good luck.

Speaker #10: Okay . Thanks guys . Good luck .

Robert Helm: Thanks.

Eric van der Valk: Yeah, appreciate it.

Speaker #5: Thanks . Yeah . Appreciate it

Operator: Our next question comes from Scot Ciccarelli with Truist. Please proceed.

Speaker #3: Our next question comes from Scott Ciccarelli with Truist. Please proceed.

Joshua Young: Hi. Good morning, guys. This is Josh Young on for Scott. How much benefit do you think you're capturing at this stage from Big Lots? And could we see sales slow in the back half as you cycle those orphan sales that you were able to capture?

Speaker #11: Hey . Good morning guys . This is Josh young on for Scott . So how much benefit do you think you're capturing at this stage for Big Lots ?

Speaker #11: And could we see sales slow in the back half as you cycle those orphaned sales that you were able to capture

Robert Helm: Thanks. This is Rob. I'll take that one. The stores that have overlapped the former Big Lots locations, whether they closed, never came back or they closed and reopened under the Variety Wholesalers umbrella, are some of the strongest locations in our fleet over the past year. Similar to COVID, when we were talking about two-year, three-year, four-year comp stack, Big Lots is in the rear view mirror, and what they were is not coming back. We will continue to benefit from their absence in real estate and access to product and sourcing and talent, all while continuing to win share of wallet with our incredible deals and bargains. Our model has always thrived on the long-term consolidation of retail, and Big Lots is no different.

Speaker #1: Thanks . This is Rob . I'll take that one . The stores that have overlapped before , the former Big Lots locations , whether they closed , never came back or they closed and reopened under the variety Wholesale Wholesalers umbrella are some of the strongest locations in our fleet over the past year , but similar to Covid , when we were talking about two year , three year , four year comp stack , Big Lots is in the rear view mirror and what they were is not coming back .

Speaker #1: We will continue to benefit from their absence in real estate and access to product and sourcing and talent, all while continuing to win share of wallet with our incredible deals and bargains.

Speaker #1: But our model has always thrived on the long term consolidation of retail and Big Lots is no different

Joshua Young: Understood. Thanks.

Speaker #11: Understood . Thanks

Operator: Our next question comes from the line of Jeremy Hamblin with Craig-Hallum Capital Group. Please proceed.

Speaker #3: Our next question comes from the line of Jeremy Hamblin with Craig-hallum Capital Group . Please proceed

Speaker 16: Thanks, and I'll add my congratulations on a really strong year.

Jeremy Hamblin: Thanks, and I'll add my congratulations on a really strong year.

Speaker #12: Thanks. And I'll add my congratulations on a really strong year. I wanted to ask about dark rent, which you saw impact in 2025.

Robert Helm: Thank you.

Speaker 16: I wanted to ask about dark rent, which you saw impact in 2025. What was the total dark rent in 2025? And if you have some dark rent that you're expecting in 2026, what would that amount be? And then also, you talked about returning capital to shareholders maybe in a little bit bigger way. You've got well over half a billion dollars in cash and generated about $300 million of operating cash flow in 2025. Would you think about stepping up like the share repurchase plan to a, you know, $300 to $400 million dollar level? Just something that, you know, given the cash flow that you generate, and current balance and strong balance sheet, just curious if that's under consideration.

Jeremy Hamblin: I wanted to ask about dark rent, which you saw impact in 2025. What was the total dark rent in 2025? And if you have some dark rent that you're expecting in 2026, what would that amount be? And then also, you talked about returning capital to shareholders maybe in a little bit bigger way. You've got well over half a billion dollars in cash and generated about $300 million of operating cash flow in 2025. Would you think about stepping up like the share repurchase plan to a, you know, $300 to $400 million dollar level? Just something that, you know, given the cash flow that you generate, and current balance and strong balance sheet, just curious if that's under consideration.

Speaker #12: What was the total dark rent in 25 ? And if you have some dark rent that you're expecting in 2026 , what would that amount be ?

Speaker #12: And then also, you talked about returning capital to shareholders, maybe in a little bit bigger way. You've got well over half a billion dollars in cash and generated about $300 million of operating cash flow in '25.

Speaker #12: Would you think about stepping up like the share repurchase plan to a , you know , three , $400 million level ? Just something that , you know , given the cash flow that you generate and current balance and strong balance sheet .

Speaker #12: Just curious if that's under consideration .

Robert Helm: Sure. This is Rob. I'll take those questions. Dark rent expense was $5 million for the Big Lots locations in 2025. Not all of this was incremental. Typically our organic locations incur some level of dark rent. It's typically in the range of a month or so as we merchandise the store. We do have more normalized assumptions included within pre-open this last year. But as you do the math, I think the piece that you're trying to solve for is our investment in improving the shopping experience and the remodel program, which we have now added back into 2026 as included our guidance numbers. That's on the pre-opening side. On the buyback side, you know, the way we're thinking about buybacks is it's a supplement to our algo.

Speaker #1: Sure . This is Rob . I'll take those questions . Darkman expense was $5 million for the Big Lots locations in 2025 . Not all of this was incremental .

Speaker #1: And typically our organic locations incur some level of dark brown . It's typically in the range of a month or so as we merchandise the store .

Speaker #1: We do have a more normalized assumptions included within pre-opening . This last year . But as you do the math , I think the , the piece that you're trying to solve for is our investment in improving the shopping experience and the remodel program , which we have now added back into 2026 .

Speaker #1: It's included in our guidance numbers. So that's on the pre-opening side. On the buyback side, you know, the way we're thinking about buybacks is it's a supplement to our algo.

Robert Helm: It's not a substitute for earnings growth. We're very comfortable with the commitment of returning 50% of our free cash flow generation back to the shareholders. The $100 million, we believe, is a conservative target. If we're able to generate higher levels of operating cash flow, we'll aim to stick to that 50% return of free cash flow. We're not looking to, you know, do a short-term pop. We're looking for steady compounding earnings growth over time.

Speaker #1: It's not a substitute for for earnings growth . We're very comfortable with the commitment of returning 50% of our free cash flow generation back to the shareholders .

Speaker #1: The $100 million , we believe is a conservative target . If we're able to generate a higher levels of operating cash flow , we'll aim to stick to that 50% return of free cash flow .

Speaker #1: We're not looking to , you know , do a short term pop . We're looking for steady compounding earnings growth over time

Speaker 16: Got it. Thanks so much. Best wishes.

Jeremy Hamblin: Got it. Thanks so much. Best wishes.

Speaker #12: Got it. Thanks so much. Best wishes.

Robert Helm: Thank you. Thank you.

Speaker #5: Thank you .

Operator: Thank you. Ladies and gentlemen, as a reminder, if you do have a question, simply press star one one to get in the queue. We have a question from Edward Kelly with Wells Fargo. Please proceed.

Speaker #3: Thank you thank you . And ladies and gentlemen , as a reminder , if you do have a question , simply press star one one to get in the queue We have a question from Edward Kelly with Wells Fargo .

Speaker #3: Please proceed .

Edward Kelly: Hi. Good morning, guys. Thanks for taking my question and nice quarter. On the marketing side, I was hoping that you could touch on maybe some of the changes in the marketing strategy, and you mentioned optimization. Related to this, on the flyer, any shifts on the flyer that we should be thinking about this year or other special promotions for 2026?

Speaker #13: Hi . Good morning guys . Thanks for taking my question . And nice quarter on the marketing side . I was hoping that you could touch on maybe some of the changes in the marketing strategy .

Speaker #13: And you mentioned optimization and then related to this on the flyer , any shifts on the flyer that we should be thinking about this year or other special promotions for , for 26 .

Eric van der Valk: Hi, Ed. I love that you ask flyer questions. Count offers in flyers as well. On the marketing question, before I get into flyers, you know, we continue to optimize our marketing through our dynamic media mix model. It allows us to reallocate spend towards higher return channels, and it's more fluid in terms of timing. This has been a journey, multi-year journey at this point, as we reduce our reliance on what I call the inevitable reduction of print media. It's been in decline for many years, continues to be in decline. It's really not about spending more, it's about using data to be more precise and more efficient.

Speaker #5: I , I love that you asked for our questions And Cao Cao offers the flyers as well on the marketing question . Before I get into flyers , we continue to optimize our marketing through through our dynamic media mix model .

Speaker #5: It allows us to reallocate , spend towards higher return channels . And it's we're fluid in terms of timing . This has been a journey , multi-year journey at this point , is we reduce our reliance , reliance on what I call the inevitable Reduction of print media .

Speaker #5: It's been in decline for many , many years . Continues to be in decline . It's really not about spending more . It's about using data to be more precise and more efficient .

Eric van der Valk: We've already seen the result of some of that work over the past six months, as you can see from a reduction of marketing spend over the last six months. Again, it's not about reducing, it's about a more efficient spend. We also have meaningfully reduced our print spend over time, a little ahead of the decline of the print media that's available to purchase, which is where all the reduction is coming from. The approach gives us much more flexibility, as I touched on. Digital is much more flexible, which helps facilitate responding to deal flow, seasonality. Customer engagement is much more fluid and flexible. It's near real time. We can stay very disciplined on expense control.

Speaker #5: We've already seen the result of some of that work over the past six months . As you can see from a reduction of marketing spend over over the last six months .

Speaker #5: Again , it's not not about reducing . It's about a more efficient spend . We also have meaningfully reduced our print spend over time .

Speaker #5: A little ahead of the decline of the print media . That's available to purchase , which is where all the reduction is coming from .

Speaker #5: The approach gives us much more flexibility . As I touched on , digital is much more flexible , which helps facilitate responding to deal flow seasonality , customer engagement is much more fluid and flexible .

Speaker #5: It's a near real time and we can stay very disciplined on on expense control in terms of your flyer related questions , we so we , you know , our history here is that flyers are big events in the material of the quarter , we're not thinking of it that way anymore .

Eric van der Valk: In terms of your flyer-related questions, we, you know, our history here is that flyers are big events in the majority of the quarter. We're not thinking of it that way anymore, and I am not going to talk about changes to flyer timing, going forward. I get a little bit concerned with our growing size and scale and approaching $3 billion in sales next year with, you know, as to quote Uncle Ben from Spider-Man, "With great power comes great responsibility." We have great buying power in the closeout business. I'd rather not project to the vendor community and to our competitors out there what we're doing with flyers, or what we're doing with managing our mix on a go-forward basis, et cetera. We're committed to the 2% algo, period, every quarter.

Speaker #5: And I am not going to talk about changes to flyer timing going forward I get a little bit concerned with our growing size and scale and and approaching 3 billion in sales next year with , you know , as to quote Uncle Ben from Spider-Man with great power comes great responsibility .

Speaker #5: And we have great buying power . And the closeout business . And I'd rather not project to the vendor community and to our competitors out there what we're doing with flyers or what we're doing with managing our mix on a go forward basis , etc.

Speaker #5: . So we're committed to the 2% algo period every quarter . So that's how we're looking at it . So that is the answer to your question .

Eric van der Valk: That's how we're looking at it. That is the answer to your prior question.

Edward Kelly: Great. Thanks, guys.

Speaker #13: Great . Thanks guys .

Eric van der Valk: Thank you.

Operator: Thank you. Ladies and gentlemen, this will conclude our conference for today. Thank you for participating. You may now disconnect.

Speaker #5: Thank you .

Speaker #3: Thank you . And ladies and gentlemen , this will conclude our conference for today . Thank you for participating . You may now disconnect

Eric van der Valk: Thank you.

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