Q2 2026 Ollie's Bargain Outlet Holdings Inc Earnings Call

September 2, 2026

Operator: Good morning, and welcome to Ollie's Bargain Outlet's conference call to discuss financial results for the second quarter of fiscal year 2026. 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.

Operator: Good morning, and welcome to Ollie's Bargain Outlet's Conference Call to discuss financial results for the Q2 of fiscal year 2026. 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 #2: Good morning, and welcome to Ollie's Bargain Outlet's conference call to discuss financial results for the second quarter of fiscal year 2026. 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.

Speaker #2: I would now like to introduce our host for today's call, John Rollo, Managing Director of Corporate Communications and Business Development for Ollie's. John, please go ahead.

Speaker #3: Thank you, Carmen. Good morning, everybody. We appreciate your time and participation. Joining me on today's call from Ollie's are Eric Vandervalk, President and Chief Executive Officer, and Robert Helm, Executive Vice President and Chief Financial Officer.

John Swygert: Thank you, Carmen. Good morning, 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 your questions. We ask that you please limit yourself to one question so that we can get to as many people as possible within the one-hour time limit. 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 #3: Following their prepared remarks, we will open the call for your questions. We ask that you please limit yourself to one question so that we can get to as many people as possible within the one-hour time limit.

Speaker #3: 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 #3: 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 press release and filings with the SEC, including the annual report on Form 10-K and quarterly reports on Form 10-Q.

John Swygert: Those risks and uncertainties are described in the company's earnings press release and filings with the SEC, including the annual report on Form 10-K and quarterly reports on Form 10-Q. Forward-looking statements are made 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 #3: Forward-looking statements are made 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.

Speaker #3: With all of that said, it's now my pleasure to turn the call over to Eric.

Speaker #4: Good morning, and thank you for joining us today. We delivered strong earnings growth in the second quarter and continue to execute against our strategic initiatives.

Eric van der Valk: Good morning, and thank you for joining us today. We delivered strong earnings growth in Q2 and continue to execute against our strategic initiatives. Comparable store sales declined 1.8% against a challenging multi-year stack. We believe our sales results were negatively impacted by the combination of less favorable weather, continued economic pressure on the consumer, and an elevated promotional environment, which all led to a more challenging backdrop than we originally expected. Outside of weather-impacted categories, the broader business performed generally in line with our expectations, and we continue to see customers actively seeking value. The consumer remains resilient but increasingly selective in how they choose to spend. Lower income customers are prioritizing needs over wants, shopping closer to need, and in many cases, delaying discretionary purchases where they can. While higher income customers continue to trade down in search of value.

Speaker #4: Comparable store sales declined 1.8% against a challenging multi-year stack. We believe our sales results were negatively impacted by the combination of less favorable weather, continued economic pressure on the consumer, and an elevated promotional environment, which all led to a more challenging backdrop than we originally expected.

Speaker #4: Outside of weather-impacted categories, the broader business performed generally in line with our expectations, and we continue to see customers actively seeking value. The consumer remains resilient, but increasingly selective in how they choose to spend.

Speaker #4: Lower-income customers are prioritizing needs over wants, shopping closer to need, and in many cases, delaying discretionary purchases where they can. Meanwhile, higher-income customers continue to trade down in search of value.

Speaker #4: For over 40 years, we have combined extreme value, well-known brands, and an ever-changing assortment to deliver a treasure hunt shopping experience unlike anything else in retail. Our assortment spans both the consumable products that customers need and the discretionary products that they want.

Eric van der Valk: For over 40 years, we have combined extreme value, well-known brands, and an ever-changing assortment to deliver a treasure hunt shopping experience unlike anything else in retail. Our assortment spans both the consumable products that customers need and the discretionary products that they want. Customers come to Ollie's because they know they can find good stuff cheap, and every visit offers something new and unexpected. The treasure hunt experience creates a sense of excitement and discovery that keeps customers coming back and helps build a deeper connection with our brand. The combination of price, brands, newness, and unexpected finds remains a powerful differentiator for us. Many of the same pressures affecting consumers today are also expanding closeout availability. Our deal flow remains extremely strong, giving us additional opportunities to sharpen our value proposition.

Speaker #4: Customers come to Ollie's because they know they can find good stuff cheap, and every visit offers something new and unexpected. The treasure hunt experience creates a sense of excitement and discovery that keeps customers coming back and helps build a deeper connection with our brand.

Speaker #4: The combination of price, brands, newness, and unexpected finds remains a powerful differentiator for us. Many of the same pressures affecting consumers today are also expanding closeout availability.

Speaker #4: Our deal flow remains extremely strong, giving us additional opportunities to sharpen our value proposition. At the same time, we are focused on controlling what we can control by optimizing our assortment and category mix.

Eric van der Valk: At the same time, we are focused on controlling what we can control by optimizing our assortment and category mix. Our flexible closeout model gives us the ability to pursue exceptional deals while strengthening categories that are driving demand. We are all about growth, and our growth starts with opening new stores and acquiring new customers. We opened 50 new stores during Q2 and 42 during H1 of the year, more than halfway to our full year target of 75. We are investing in our loyal customer base through events and programs that strengthen engagement and deepen our connection with customers. During the quarter, we held another successful Ollie's Army Night and wrapped our annual Ollie Days events around our country's 250th birthday celebration. Despite some weather related challenges, both events drove even stronger customer acquisition engagement than the year before.

Speaker #4: Our flexible close-out model gives us the ability to pursue exceptional deals while strengthening categories that are driving demand. We are all about growth, and our growth starts with opening new stores and acquiring new customers.

Speaker #4: We opened 50 new stores during the second quarter, and 42 during the first half of the year—more than halfway to our full-year target of 75.

Speaker #4: We are investing in our loyal customer base through events and programs that strengthen engagement and deepen our connection with customers. During the quarter, we held another successful Ollie's Army Night and wrapped our annual Ollie Days events around our country's 250th birthday celebration.

Speaker #4: Despite some weather-related challenges, both events drove even stronger customer acquisition and engagement than the year before. Ollie's Army members increased 13% versus last year, and we ended the period with over 18 million Bargain Notes.

Eric van der Valk: Ollie's Army members increased 13% versus last year, and we ended the period with over 18 million bargain nuts. At the same time, we are managing our assortment and floor space allocation to better align with today's customer while driving more value and newness. We are expanding categories with a strong product pipeline and white space in the market. Protein and energy products, beverage, seasonal decor, living room furniture, as well as decorative pillows were great examples of this. Most importantly, we are doing this through a disciplined test and learn approach that allows us to move quickly, make better merchandising decisions, improve the customer experience, and increase sales productivity. Beyond merchandising, we continue to invest in our supply chain to support growth, improve efficiency across the network, and enhance our ability to serve our customers.

Speaker #4: At the same time, we are managing our assortment and floor space allocation to better align with today's customer, while driving more value and newness.

Speaker #4: We are expanding categories with a strong product pipeline and white space in the market. Protein and energy products, beverages, seasonal décor, and living room furniture, as well as decorative pillows, were great examples of this.

Speaker #4: Most importantly, we are doing this through a disciplined test-and-learn approach that allows us to move quickly and make better merchandising decisions, improve the customer experience, and increase sales productivity.

Speaker #4: Beyond merchandising, we continue to invest in our supply chain to support growth, improve efficiency across the network, and enhance our ability to serve our customers.

Speaker #4: We recently completed the expansion of our Texas distribution center, and operations have now normalized. In the coming months, we will begin expanding our Illinois distribution facility, with a planned completion date around this time next year.

Eric van der Valk: We recently completed the expansion of our Texas distribution center and operations have now normalized. In the coming months, we will begin expanding our Illinois distribution facility with a planned completion date around this time next year. Together, these investments continue to expand capacity, improve execution, and support our long term growth plans. While we are not satisfied with our Q2 sales performance, we are moving swiftly to execute against our key strategic initiatives with the guiding principle of always putting the needs of our customers first. We are tempering our near term expectations to reflect the current environment, but that does not diminish in any way our confidence in the long term profitable growth of our business. Value always wins. It will remain our durable competitive advantage. Before I turn the call over to Rob, I want to thank our entire Ollie's team.

Speaker #4: Together, these investments continue to expand capacity, improve execution, and support our long-term growth plans. While we are not satisfied with our second quarter sales performance, we are moving swiftly to execute against our key strategic initiatives, with the guiding principle of always putting the needs of our customers first.

Speaker #4: We are tempering our near-term expectations to reflect the current environment, but that does not diminish in any way our confidence in the long term.

Speaker #4: Profitable growth of our business. Value always wins. It will remain our durable competitive advantage. Before I turn the call over to Rob, I want to thank our entire Ollie's team.

Speaker #4: Running a close-out retail business is hard work. It takes discipline, creativity, flexibility, and relentless execution every day. Our associates continue to work hard servicing our customers and bringing good stuff cheap to our loyal Bargainistas, and I appreciate them more than words could ever express.

Eric van der Valk: Running a closeout retail business is hard work. It takes discipline, creativity, flexibility, and relentless execution every day. Our associates continue to work hard servicing our customers and bringing good stuff cheap to our loyal bargain nuts, and I appreciate them more than words could ever express. Rob?

Speaker #4: Rob.

Speaker #5: Thanks, Eric. And good morning, everyone. We delivered strong earnings growth in the second quarter and managed a challenging environment. Earnings were better than expected, driven by IEPA tariff refunds received in the quarter, despite net sales performance below our expectations.

Robert Helm: Thanks, Eric, and good morning, everyone. We delivered strong earnings growth in the Q2 amid a challenging environment. Earnings were better than expected, driven by IEEPA tariff refunds received in the quarter, despite net sales performance below our expectations. Now let me walk you through the results for the quarter. Net sales increased 9.1% to $741 million, driven by new store openings. Comparable store sales decreased 1.8%, driven by flat transactions and a decrease in basket. As a reminder, the Q2 was a difficult comparison where we faced mid to high single-digit comp increases in each of the prior three years. Top-performing categories were toys, general merchandise, summer furniture, candy, and seasonal decor. We saw softer performance in weather-sensitive categories, particularly early in the quarter. Gross margin increased 360 basis points to 43.5%. The increase was driven primarily by IEEPA tariff refunds.

Speaker #5: Now, let me walk you through the results for the quarter. Net sales increased 9.1% to $741 million, driven by new store openings. Comparable store sales decreased 1.8%, driven by flat transactions and a decrease in basket.

Speaker #5: As a reminder, the second quarter was a difficult comparison, where we faced mid- to high-single-digit comp increases in each of the prior three years.

Speaker #5: Top-performing categories were toys, general merchandise, summer furniture, candy, and seasonal décor. We saw softer performance in weather-sensitive categories, particularly early in the quarter. Gross margin increased 360 basis points to 43.5%. The increase was driven primarily by IEPA tariff refunds.

Speaker #5: Tariff refunds benefited gross margin by 380 basis points in this year's second quarter. Merchandise margin decreased, primarily related to investments in price. Transport remained elevated, but this was more than offset by lower tariff rates.

Robert Helm: Tariff refunds benefited gross margin by 380 basis points in this year's Q2. Merchandise margin decreased, primarily related to investments in price. Transportation costs remain elevated, but this was more than offset by lower tariff rates. SG&A expenses as a percentage of net sales increased 80 basis points to 26.6%, primarily driven by the deleverage of fixed costs from the decline in comparable store sales and higher marketing expenses related to one incremental merchandise flyer in the quarter. Pre-opening expenses decreased 42% to $5 million, driven primarily from a fewer number of new store openings and lower dark rent expense. Moving down to the bottom line, adjusted net income increased 40% to $85 million, and adjusted earnings per share increased 43% to $1.42. Lastly, adjusted EBITDA increased 36% to $127 million, and adjusted EBITDA margin increased 330 basis points to 17.1% for the quarter.

Speaker #5: SG&A expenses as a percentage of net sales increased 80 basis points to 26.6%, primarily driven by the deleverage of fixed costs from the declining comparable store sales and higher marketing expenses related to one incremental merchandise flyer in the quarter.

Speaker #5: Pre-opening expenses decreased 42% to $5 million, driven primarily by a fewer number of new store openings and lower dark rent expense. Moving down to the bottom line, adjusted net income increased 40% to $85 million, and adjusted earnings per share increased 43% to $1.42.

Speaker #5: Lastly, adjusted EBITDA increased 36% to $127 million, and adjusted EBITDA margin increased 330 basis points to 17.1% for the quarter. Turning to the balance sheet, our total cash and investments increased 10% to $507 million, and we continue to have no meaningful long-term debt at quarter end.

Robert Helm: Turning to the balance sheet, our total cash and investments increased 10% to $507 million, and we continue to have no meaningful long-term debt at quarter end. We continue to deploy our capital opportunistically and again stepped up our buyback and repurchased $84 million of our common stock in the quarter. Through the H1 of the year, we have bought back 1.6 million common shares at a cost of $137 million. At the end of the Q2, $122 million remained available for future share repurchases under the current share repurchase authorization. Inventories increased 11% year-over-year, primarily driven by our new store growth. Capital expenditures were $43 million in the quarter, with the majority of the spending going towards the opening of new stores, improvements to existing stores, and the expansion of our Texas distribution center.

Speaker #5: We continued to deploy our capital opportunistically and, again, stepped up our buyback and repurchased $84 million of our common stock in the quarter.

Speaker #5: Through the first half of the year, we have bought back 1.6 million common shares at a cost of $137 million. At the end of the second quarter, $122 million remained available for future share repurchases under the current share repurchase authorization.

Speaker #5: Inventories increased 11% year over year, primarily driven by our new store growth. Capital expenditures were $43 million in the quarter, with the majority of the spending going toward the opening of new stores, improvements to existing stores, and the expansion of our Texas distribution center.

Speaker #5: Now let me wrap up with commentary about our outlook for the full fiscal year. Our updated outlook reflects two key changes. First, we have updated our second half sales assumptions to better align with recent sales trends and the current environment.

Robert Helm: Now let me wrap up with commentary about our outlook for the full fiscal year. Our updated outlook reflects two key changes. First, we have updated our H2 sales assumptions to better align with recent sales trends and the current environment. Second, the outlook now includes IEEPA tariff refunds received in the Q2, which we have already started deploying in additional price investments to strengthen our competitive position. Details of our revised fiscal 2026 outlook are included in our earnings press release issued this morning.

Speaker #5: Second, the outlook now includes IEPA tariff refunds received in the second quarter, which we have already started deploying in additional price investments to strengthen our competitive position.

Speaker #5: Details of our revised fiscal 2026 outlook are included in our earnings press release issued this morning. At a high level, our outlook assumes 75 new store openings, two store closures from storm damage, net sales of $2.928 to $2.941 billion, comparable store sales growth of flat to positive 0.5%, gross margin in the range of 41.3%, operating income of $345 to $350 million, adjusted net income of $275 to $279 million, and adjusted net income per share of $4.57 to $4.65.

Robert Helm: At a high level, our outlook assumes 75 new store openings, two store closures from storm damage, net sales of $2.928 billion to $2.941 billion, comparable store sales growth of flat to +0.5%, gross margin in the range of 41.3%, operating income of $345 million to $350 million, adjusted net income of $275 million to $279 million, and adjusted net income per share of $4.57 to $4.65. Let me provide you with a little more color on our guidance. Starting with comps, we are now planning the back half in line with our Q2 two-year stack, which translates into comp growth close to flat in the Q3 and up 1% in the Q4. Moving on to gross margin, there are a lot of dynamics at play here, but our core fundamental thinking around gross margin is unchanged.

Speaker #5: Let me provide you with a little more color on our guidance. Starting with comps, we are now planning the back half in line with our second-quarter two-year stack, which translates into comp growth close to flat in the third quarter and up 1% in the fourth quarter.

Speaker #5: Moving on to gross margin, there are a lot of dynamics at play here, but our core fundamental thinking around gross margin is unchanged. Our outlook now includes $28 million of tariff refunds, net of a 50 basis point investment in price, some of which we've already begun to deploy in the second quarter.

Robert Helm: Our outlook now includes $28 million of tariff refunds, net of a 50 basis point investment in price, some of which we have already begun to deploy in the Q2. On the supply chain side, we have assumed that current tariff rates and fuel costs remain in place for the balance of the fiscal year. Depreciation and amortization expense is planned at $62 million, inclusive of $15 million included in cost of goods sold. Pre-opening expenses of $21 million. Interest income of $22 million, which includes $1 million of interest associated with the tariff refund in the Q2. An annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation. Diluted weighted average shares outstanding of approximately 60 million, which now includes a higher share repurchase level of $175 million, and capital expenditures in the range of $103 million to $113 million.

Speaker #5: On the supply chain side, we have assumed that current tariff rates and fuel costs remain in place for the balance of the fiscal year.

Speaker #5: Depreciation and amortization expenses are planned at $62 million, inclusive of $15 million included in cost of goods sold. Pre-opening expenses are $21 million. Interest income is $22 million, which includes $1 million of interest associated with the tariff refund in the second quarter.

Speaker #5: An annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation; diluted weighted average shares outstanding of approximately 60 million, which now includes a higher share repurchase level of $175 million.

Speaker #5: And capital expenditures in the range of $103 to $113 million. In closing, while our outlook reflects a more measured view of the near term, our confidence in the long-term growth opportunity remains unchanged.

Robert Helm: In closing, while our outlook reflects a more measured view of the near term, our confidence in the long-term growth opportunity remains unchanged. We continue to see significant runway for growth, maintain a strong balance sheet, and are making disciplined investments to strengthen our value leadership position, support our future growth, and create long-term shareholder value. Before turning it back to Eric, let me also express a heartfelt thanks to all of our hardworking team members across the country. I am grateful for everything they do to serve our customers each day. Eric?

Speaker #5: We continue to see significant runway for growth, maintain a strong balance sheet, and are making disciplined investments to strengthen our value leadership position, support our future growth, and create long-term shareholder value.

Speaker #5: Before turning it back to Eric, let me also express a heartfelt thanks to all of our hardworking team members across the country. I'm grateful for everything they do to serve our customers each day.

Speaker #5: Eric, thanks, Rob.

Eric van der Valk: Thanks, Rob.

Speaker #3: Our team is focused on execution across the business and passionately committed to serving our communities by delivering extreme value on products people want and need.

Eric van der Valk: Our team is focused on execution across the business and passionately committed to serving our communities by delivering extreme value on products people want and need. We offer real bargains on real brands in a thrilling, fun, and quirky environment that is like no other in retail. The treasure hunt remains alive and well at Ollie's. We are Ollie's. Operator, we are now ready for questions.

Speaker #3: We offer real bargains on real brands in a thrilling, fun, and quirky environment that is like no other in retail. The treasure hunt remains alive and well at Ollie's.

Speaker #3: We are.

Speaker #2: Ollie's!

Speaker #3: Operator, we are now ready for questions.

Speaker #4: Thank you so much. And as a reminder, to ask a question, press *11 on your telephone, and wait for your name to be announced.

Operator: Thank you so much. As a reminder, to ask a question, press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. As a reminder, please limit your questions to one. One moment for our first question, please. It comes from Brad Thomas with KeyBanc Capital Markets. Please proceed.

Speaker #4: To remove yourself, press star 11 again. And as a reminder, please limit your questions to one. One moment for our first question, please. It comes from Brad Thomas with KeyBanc Capital Markets.

Speaker #4: Please proceed.

Speaker #5: Good morning. Thanks for taking the question. I appreciate the updated guidance and wanted to ask about changing behaviors on the consumer front. We know that was starting to occur within Q2 to some extent, and just wondering if you all could speak to how the consumer may be shopping stores differently or visiting less based on some of the factors out there, like higher gasoline prices, price investments from the competitors, things like that.

Brad Thomas: Good morning. Thanks for taking the question. I appreciate the updated guidance and wanted to ask about changing behaviors on the consumer front. We know that that was starting to occur within Q1 to some extent, and just wondering if you all could speak to how the consumer may be shopping stores differently or visiting less based on some of the factors out there like higher gasoline prices, price investments from the competitors, things like that. Again, just speaking about what you are seeing from your consumer. Thank you.

Speaker #5: Again, just speaking about what you're seeing from your consumer. Thank you.

Speaker #6: Sure. Thanks for your question, Brad. The consumer remains resilient; we do continue to see strong engagement. Traffic was—just to remind you—traffic was flat for the quarter.

Eric van der Valk: Sure. Thanks for your question, Brad. The consumer remains resilient. We do continue to see strong engagement. Just to remind you, traffic was flat for the quarter, which was relatively consistent to the first quarter. Shopping frequency was down slightly and new customer acquisition was up. Consistent with the previous quarter, the lower income consumer is being very selective, prioritizing needs, meaning a little bit more heavier in the consumable related businesses, shopping a little bit less frequently.

Speaker #6: Which was relatively consistent to the first quarter. Shopping frequency was down slightly, and new customer acquisition was up. Consistent with the previous quarter, the lower income consumer is being very selective, prioritizing needs, and may be leaning a little bit heavier in the consumable-related businesses.

Speaker #6: Shopping a little bit less frequently. Consumers, to your point about fuel, we're continuing to see that dynamic that started in March of Q1, where customers are staying closer to home.

Eric van der Valk: Consumers, to your point about question about fuel, we are continuing to see that dynamic that started in March of Q1 where customers are staying closer to home if they live outside of a certain radius of our stores, and that does tend to connect to income, meaning the lower that consumer is on the income scale, the less likely it is for them to travel if they are outside of a certain radius, depending on whether they are in a suburban or a rural area. They are potentially willing to drive a little bit further in a rural area. But when you look at this by region in our western trade areas, which includes parts of the Midwest and Texas, we are seeing where they tend to have longer drive times that there is even more of a headwind related to fuel with that consumer.

Speaker #6: If they live outside of a certain radius of our stores—and that does tend to connect to income—meaning the lower that consumer is on the income scale, the less likely it is for them to travel if they're outside of a certain radius.

Speaker #6: Depending on whether they're in a suburban or a rural area, they're potentially willing to drive a little bit further in a rural area. But when you look at when you look at this by region in our western trade areas, which includes parts of the Midwest and Texas, we're seeing where they have long tend to have longer drive times that there's even more of a headwind related to fuel with that consumer.

Speaker #6: And finally, just to speak to the trade down, we are continuing to see higher-income customers trading down. And we're drawing that line at around $100,000 household income and above.

Eric van der Valk: Finally, just to speak to the trade down, we are continuing to see higher income customers trading down, and we are drawing that line at around 100,000 household income and above.

Operator: One moment for our next question, please. It comes from Steve Smesch with RBC Capital Markets. Please proceed.

Speaker #4: One moment for our next question, please. It comes from Steve Shemesh with RBC Capital Markets. Please proceed.

Speaker #7: Good morning, and thank you for taking the question. As I think about your 2026 comp guide, it implies a modest acceleration in the back half if we adjust for the flyer timing shift.

Operator: Good morning, and thank you for taking the question. As I think about your 2026 comp guide, it implies a modest acceleration in the back half if we adjust for the flyer timing shift. Can you speak to the comp cadence throughout the quarter, where you are trending Q3 to date, and just anything else that is giving you confidence in that acceleration? Thank you.

Steve Smesch: Good morning, and thank you for taking the question. As I think about your 2026 comp guide, it implies a modest acceleration in the back half if we adjust for the flyer timing shift. Can you speak to the comp cadence throughout the quarter, where you are trending Q3 to date, and just anything else that is giving you confidence in that acceleration? Thank you.

Speaker #7: Can you speak to the comp cadence throughout the quarter, where you're trending Q3 to date, and just anything else that's giving you confidence in that acceleration?

Speaker #7: Thank you.

Robert Helm: Hi, Steve. This is Robert. I will take that question. For the Q2, high level, the weather just did not play out as favorably as we had hoped when we set the guidance in June. From when you click into the trends, we entered the Q2 with a down transactions trend. We are very encouraged to see that during each month of the quarter, that sequentially improved. It actually ended the quarter with a positive transaction trend. So that was good to see. Basket followed a very similar trajectory, and basket ended the quarter flat. However, it was not enough to make up for the dip in seasonal performance early in the quarter as the weather sensitive categories were most impacted. Consumables continue to perform well. We see that trend at mid-single digits as we have seen in prior quarters.

Speaker #2: Hi, Steve. This is Rob. I'll take that question. So, for the second quarter, high level, the weather just did not play out as favorably as we had hoped.

Speaker #2: When we set the guidance in June, from when you click into the trends, we entered the second quarter with a down transactions trend. We're very encouraged to see that during each month of the quarter, that sequentially improved.

Speaker #2: We also actually ended the quarter with a positive transaction trend, so that was good to see. Basket followed a very similar trajectory, and basket ended the quarter flat.

Speaker #2: However, it wasn't enough to make up for the dip in seasonal performance early in the quarter, as the weather-sensitive categories were most impacted.

Speaker #2: Consumables continue to perform well. We see that trend in the mid-single digits, as we’d seen in prior quarters. And then, similar to Q1, we saw some softness in home improvement categories, which has more or less remained the same.

Robert Helm: Similar to Q1, we had saw some softness in the home improvement categories, which has more or less remained the same. From an August to date perspective, we updated our guidance today. Our comp guidance is flat for the Q3. Right now our August results are running ahead of the plan that we used to build that guidance. That assumes the flyer shift as you mentioned, and a Labor Day shift as well.

Speaker #2: From an August-to-date perspective, we updated our guidance today. Our comp guidance is flat for the third quarter. Right now, our August results are running ahead of the plan that we used to build that guidance.

Speaker #2: That assumes the flyer shift, as you mentioned, and a Labor Day shift as well.

Speaker #4: And for our next question, that comes from Randy Connick with Jefferies. Please proceed.

Operator: For our next question that comes from Randal Konik with Jefferies. Please proceed.

Randal Konik: Thanks a lot and good morning. I guess maybe Rob, for you, maybe unpack the gross margin a bit, ex item in the quarter. Looking out a bit longer term balance of the year and into next year, just give us some perspective of how you guys are balancing price investment with the margin generation as we think about tariffs and different moving pieces with the consumer going forward. Thanks, guys.

Randy Konik: Thanks a lot and good morning. I guess maybe Rob, for you, maybe unpack the gross margin a bit, ex item in the quarter. Looking out a bit longer term balance of the year and into next year, just give us some perspective of how you guys are balancing price investment with the margin generation as we think about tariffs and different moving pieces with the consumer going forward. Thanks, guys.

Speaker #7: Thanks a lot, and good morning. I guess maybe, Rob, for you—can you give us, maybe, unpack the gross margin a bit, ex-citing in the quarter?

Speaker #7: And then, looking at a bit longer term—balance of the year and into next year—just give us some perspective on how you guys are balancing price investment with margin generation, as we think about tariffs and different moving pieces with the consumer going forward.

Speaker #7: Thanks, guys.

Speaker #2: Thanks, Randy. I'll take the first part and then hand it off to Eric for the second part. From the gross margin perspective, it was certainly a noisy quarter, with the tariff at 380 basis points, as I mentioned in my prepared remarks.

Robert Helm: Thanks, Randy. I will take the first part, and I will hand it off to Eric for the second part. From the gross margin perspective, it was certainly a noisy quarter with the tariff refund. The tariff refund accounted for 380 basis points, as I mentioned in my prepared remarks. That was offset by a price investment related to those tariff refunds and mainly concentrated around weather-sensitive categories. Quantify that about 70 basis points. Ex those, that is about 310 basis points. Our gross margin would have been above our guides for the quarter, which was 39.9%. We would have came in around 40.3% to 40.4%.

Speaker #2: That was offset by a price investment related to those tariff refunds and mainly concentrated around weather-sensitive categories. Quantify that at about 70 basis points.

Speaker #2: Ex those, that's about 310 basis points. Our gross margin would have been above our guide for the quarter, which was 39.9%. We would have come in around 40.3% to 40.4%.

Speaker #6: Yeah, I'll take the second part of your question. Just thinking about where we are, how we navigated Q2, and then how we're looking at the balance of the year.

Eric van der Valk: Yeah, I will take the second part of your question, just thinking about where we are, how we navigated Q2, and then how we are looking at the balance of the year. I think it is important it be said that we are an everyday low price retailer. We build trust with customers by being the lowest price in the market on items every day. Promotional pricing like high-low pricing, excessive coupons, we believe for us, erodes customer trust and damages our value proposition, which we take very seriously. We balance price and margin very carefully, selectively around items, deals, and categories. When you look back on the second quarter, our price investments were primarily in existing Ollie's Army loyalty events, making those events even more compelling. Like Ollie's Army Night, Ollie Days. We discounted seasonally relevant products such as fan and ACs, lawn and garden, and patio furniture.

Speaker #6: I think it's important it be said that we are an everyday low-price retailer. We build trust with customers by being the lowest price in the market on items every day.

Speaker #6: Promotional pricing, like high-low pricing and excessive coupons, we believe for us erodes customer trust and damages our value proposition, which we take very seriously.

Speaker #6: We balance price and margin very carefully, selectively around items, deals, and categories. So, when you look back on the second quarter, our price investments were primarily in existing Ollie's Army loyalty events, making those events even more compelling.

Speaker #6: Like Ollie's Army Night and Ollie Day, we discounted seasonally relevant products such as fans and ACs, lawn and garden, and patio furniture. These were extremely relevant and were businesses that were challenged as of mid-quarter, which timed well with our Ollie Day and Ollie's Army Night events.

Eric van der Valk: Extremely relevant, and they were businesses that were challenged as of mid-quarter, which timed well with our Ollie Days and Ollie's Army Night events. We planned the event at 7 days versus 5 days, so 2 days in addition to LY, which was really planned that way around Independence Day and the timing of mega pay week. We extended actually that event by 2 days as we looked at the promotional climate and the weather lineup. We ended up extending it by 2 days. We also tested a personalized offer to incentivize our customers, motivate them if they are outside of a certain drive radius of stores. We call it the five for the drive, which is a $5 discount on a basket threshold.

Speaker #6: We planned the event at seven days versus five days, so two days in addition to last year, which was really planned that way around Independence Day and the timing of Mega Pay Week.

Speaker #6: We also tested well; we actually extended that event by two days as we looked at the climate, the promotional climate, and the weather lineup.

Speaker #6: We ended up extending it by two days. We also tested a personalized offer to incentivize our customers—motivating them if they're outside of a certain drive radius of stores.

Speaker #6: We called it the "Five for the Drive," which is a $5 discount on a basket threshold. On the product side, we invested in trend-right and seasonally relevant product.

Eric van der Valk: On the product side, we invested in trend-right and seasonally relevant products that we know will drive traffic, meaning made price investments to make the prices even more sharp to really get attention of customers. Some examples of that, trend toys, patio furniture, and pool chemicals. So that informs our strategy for the back half of the year, and we have learned as a result of some of this, these tactics we have deployed, what is most productive in motivating the customers. As we move into the third quarter, we are lighter on Ollie's Army promotional activities, so our price investments are more focused on flyer events and special deals in flyers. We are planning for the full year to invest approximately $50 million in price investments, and we will not hesitate to invest beyond this level to strengthen our price leadership position.

Speaker #6: That we know will drive traffic, meaning we've made price investments to make the prices even sharper, to really get the attention of customers. So some examples of that trend— toys.

Speaker #6: Patio furniture and pool chemicals—so that informs our strategy for the back half of the year. We've learned, as a result of some of these tactics we've deployed, what is most productive in motivating the customers.

Speaker #6: So as we move into the third quarter, we're lighter on Ollie's Army promotional activities. So our price investments are more focused on flyer events and special deals in flyers.

Speaker #6: We are planning for the full year to invest approximately $15 million in price investments, and we will not hesitate to invest beyond this level to strengthen our price leadership position.

Speaker #6: We do believe this is the most supportive element of our model customers, and it's the best thing for us over the long term.

Eric van der Valk: We do believe this is the most important element of our model to build trust with our customers, and it is the best thing for us over the long term.

Speaker #4: Thank you. Our next question comes from Jeremy Hamlin with Craig-Hallum Capital Group. Please proceed.

Operator: Thank you. Our next question comes from Jeremy Hamblin with Craig-Hallum Capital Group. Please proceed.

Speaker #7: Thanks for taking the question. There are a lot of moving parts here, and I just want to make sure I understand the change in expectations.

Jeremy Hamblin: Thanks for taking the question. A lot of moving parts in here, and just want to make sure to understand the change in expectations. First, just in Q2, I think if we back out the tariff refunds, it looks like it is maybe about a $0.35 impact to EPS on the quarter. Just wanted to confirm that. As we think about the change in comp expectations, and what obviously did not execute from early June when you guided through the end of the quarter to what you are expecting now. I think you said that you are expecting flattish comps here in Q3 and then +1 in Q4. The compares are a little bit tougher in Q4. Just want to understand if that is more a reflection of you thinking the price investments are going to have a more meaningful impact.

Speaker #7: First, just in Q2, I think if we back out the tariff refunds, it looks like it's maybe about a $0.35 impact to EPS on the quarter. Just wanted to confirm that.

Speaker #7: And then as we think about the change in kind of comp expectations, and what obviously didn't execute from early June, when you guided through the end of the quarter to what you're expecting now.

Speaker #7: I think you said that you're expecting flattish comps here in Q3 and then plus one in Q4. The compares are a little bit tougher in Q4.

Speaker #7: So I just want to understand if that's more a reflection of thinking the price investments are going to have a more meaningful impact, and then just confirming that you're running ahead of kind of that flat expectation in Q3 so far.

Jeremy Hamblin: Just confirming that you are running ahead of that flat expectation in Q3 so far.

Speaker #2: Thank you, Jeremy. That's a mouthful, so I'll try to answer all those as succinctly as I can. From a Q2 perspective, the quarter obviously did not play out as we had hoped when we set our guidance back in June.

Robert Helm: Thanks, Jeremy. That is a mouthful. I will try to answer all those as succinctly as I can. From a Q2 perspective, the quarter obviously did not play out as we had hoped when we set our guidance back in June. The major shortfall was on the top line. It is hard for us to parse out how much of that was weather versus promotional environment versus state of the consumer, since all that more or less happened at the same time. The environment around tariffs and the impacts, you are right, it is $0.35. That was offset by a 70 basis point investment in price, which we believe probably would not have happened if these tariff refunds were not available out there to fund promotions across the space. We kind of tethered those both together, and that had an impact.

Speaker #2: The major shortfall was on the top line. And we think a lot of it is; it's hard for us to parse out how much of that was weather.

Speaker #2: Versus promotional environment versus state of the consumer, since all that more or less happened at the same time. Now, the environment around tariffs and the impacts—you're right, it's $0.35.

Speaker #2: That was offset by a 70-basis-point investment in price, which we believe probably would not have happened if these tariff refunds were not available out there to fund promotions across the space.

Speaker #2: So we kind of tethered those both together, and that had an impact. Two other items within Q2: we continue to see shrink forming favorably.

Robert Helm: Two other items within Q2, we continue to see shrink performing favorably. We continue to see supply chain efficiencies, and we are starting to burn in really the benefits from the Princeton DC and having that operating at scale. SG&A, delevered obviously on the negative comp. Depreciation pre-opening tax were all in line with our expectations. Then obviously, share repo was opportunistic and above our expectations, which supported earnings. From an outlook perspective, we lowered the sales guidance in the H2. We did that to reflect the trends that we saw in the H1 and the environment. There is a slight acceleration in the Q4, which I think Eric will touch on in a moment, our thought process there.

Speaker #2: We're continuing to see supply chain efficiencies, and we're starting to realize the benefits from the Princeton DC and having that operating at scale.

Speaker #2: SG&A delivered, obviously, on the negative comp, but depreciation, pre-opening, and tax were all in line with our expectations. And then, obviously, share repo was opportunistic and above our expectations, which supported earnings.

Speaker #2: From an outlook perspective, we lowered the sales guidance in the second half. We did that to reflect the trends that we saw in the first half and the environment.

Speaker #2: There is a slight acceleration in the fourth quarter, which I think Eric will touch on in a moment—our thought process there. But for the rest of the guide, gross margin was higher, between, I think it was like 52 or 53 basis points.

Robert Helm: From the rest of the guide, gross margin was higher between, I think it was like 52 or 53 basis points, which is really driven by the tariff refunds, which is roughly 100 basis points on the year, offset by 50 basis points of price investment, including what we have already done in Q2. We also flowed through a small benefit relative to lower shrink and supply chain costs. There is some slight deleverage in the lower sales. We did take the opportunity to step up the share repurchase in our guidance to $177 million today.

Speaker #2: This is really driven by the tariff refund, which is roughly 100 basis points on the year, offset by 50 basis points of price investment.

Speaker #2: Including what we've already done in the second quarter, we also flowed through a small benefit relative to lower shrink and supply chain costs.

Speaker #2: There is some slight deleverage in the lower sales. And we did take the opportunity to step up the share repurchase in our guidance to $175 million today.

Speaker #6: Yeah, I think Jeremy just had a little color on Q4. We're particularly excited about Q4, in part because there are some really big shopping days and events that occur in Q4.

Eric van der Valk: Yeah, I think, Jeremy, just to add a little color on Q4. We are particularly excited about Q4, in part because there are some really big shopping days and events that occur in Q4. Black Friday is an example, or Ollie's Army Night and the days leading up to Christmas, which have been increasingly strong for us over the years. We are very excited about the deal flow that we are seeing and what we are able to secure to excite the customer in that period. Also, we have a little bit of flexibility around how we invest in those events that time of the year. It is just a different time of the year. Also, on a macro basis, buyers, we are seeing customers shop closer to need, and that tends to be sort of the nature of the holiday season. So we kind of like the macro setup.

Speaker #6: Black Friday is an example, where Ollie's Army night and the days leading up to Christmas—which have been increasingly strong for us over the years.

Speaker #6: And we're very excited about the deal flow that we're seeing and what we're able to secure to excite the customer in that period. And also, we have a little bit of flexibility around how we invest in those events. That time of the year is just a different time of the year.

Speaker #6: And also, on a macro basis, buyers—we're seeing customers shop closer to need. And that tends to be sort of the nature of the holiday season.

Speaker #6: So we kind of like the macro setup, but this is more about deal flow and Ollie's Army loyalty-related events. Our, let's say, slight optimism on the acceleration in Q4, in the Q4 guide.

Eric van der Valk: This is more about deal flow and Ollie's Army loyalty related events are, let us say, slight optimism on the acceleration in the Q4 guide.

Speaker #7: Thank you.

Jeremy Hamblin: Thank you.

Operator: One moment for our next question, please. It comes from Steven Zaccone with Citi. Please proceed.

Speaker #4: One moment for our next question, please. It comes from Steven Chacone with Citi. Please proceed.

Steven Zaccone: Steven, good morning. Thanks very much for taking my question. I wanted to follow up on the category performance in Q2. Can you help us isolate how much seasonal was a drag? Then help us understand some of the category productivity initiatives you have and more color on some of the merchandise assortment changes you are making.

Speaker #5: Thank you. Good morning. Thanks very much for taking my question. I wanted to follow up on the category performance in the second quarter. Can you help us isolate how much seasonal was a drag?

Speaker #5: And then help us understand some of the category productivity initiatives you have, and give us more color on some of the merchandise assortment changes you're making.

Robert Helm: Hey, Steve. It is Rob. I can quantify the seasonal drag. Just the straight math on lawn garden and room air, the categories themselves would have been just over 100 basis points of drag year over year. However, those are businesses that drive traffic and drive folks into our store. You have been to our store before, it is hard not to put another item in your basket. Given the attachment and everything else associated with that, we would anticipate the drag to be even more meaningful than that. Calling out an exact number, it is hard to parse out the difference between weather, the consumer, and the elevated promotional environment. I do not want to give you an imprecise number, but it was meaningful and above the straight category math.

Speaker #2: Hey, Steve. It's Rob. I can quantify the seasonal drag. So, just a straight math on lawn and garden and room air—the categories themselves would have been just over 100 basis points of drag year over year.

Speaker #2: However, those are businesses that drive traffic and drive folks into our store. And you've been to our store before—it's hard not to put another item in your basket.

Speaker #2: So, given the attachment and everything else associated with that, we'd anticipate the drag to be even more meaningful for that than that. Calling out an exact number is hard; it's difficult to parse out the difference between whether it's the consumer or the elevated promotional environment.

Speaker #2: So, I don't want to give you an imprecise number, but it was meaningful and above the straight category math.

Speaker #6: Yeah, Steve. In terms of category performance, we're pleased with the progress that we're making in improving category productivity, especially in seasonal and the furniture businesses.

Eric van der Valk: Yeah, Steve, in terms of category performance, we are pleased with the progress that we are making in improving category productivity, especially in seasonal and the furniture businesses. It is not necessarily material enough for us to move the needle in Q2, but we are continuing to make progress. We are taking this test and learn approach, informed by both data analysis and a qualitative evaluation of categories, reallocating inventory and space to categories where we see the white space in the market away from categories with low sales productivity that we believe are crowded by competition. Most importantly, decisions to introduce or expand categories start with the existence of a robust sourcing pipeline of deep discount closeout product. We have been methodical in our approach to ensure we understand the customer response before we make any major changes.

Speaker #6: It's not necessarily material enough for us to have moved the needle in Q2, but we are continuing to make progress. We're taking this test-and-learn approach, informed by both data analysis and a qualitative evaluation of categories.

Speaker #6: We are reallocating inventory and space to categories where we see white space in the market, away from categories with low sales productivity that we believe are crowded by competition.

Speaker #6: Most importantly, decisions to introduce or expand categories start with the existence of a robust sourcing pipeline of deep discount, closeout product. We've been methodical in our approach to ensure we understand the customer response.

Speaker #6: Before we make any major changes, we test and learn in a handful of stores and really try to understand what's working, what isn't working.

Eric van der Valk: So test and learn in a handful of stores and really try to understand what is working, what is not working, and then roll from there. A lot more to come on this. We are very excited about the progress we are making.

Speaker #6: And then roll from there. So, a lot more to come on this. We're very excited about the progress we're making.

Steven Zaccone: Exactly. Done.

Speaker #5: I'm sorry, Peter.

Speaker #4: Thank you. Our next question comes from Edward Kelly with Wells Fargo. Please proceed.

Operator: Thank you. Our next question comes from Edward Kelly with Wells Fargo. Please proceed.

Speaker #5: Yeah, hi. Good morning, guys. Thanks for taking my question. Can we just take a step back on the comp? I'm just kind of curious, as you sort of assess things in here.

Edward Kelly: Yeah. Hi. Good morning, guys. Thanks for taking my question. Eric.

Eric van der Valk: Of course.

Edward Kelly: Could we just take a step back on the comp? I am just kind of curious as you sort of assess things in here. You talk a little bit about assortment optimization. I am curious as to whether you think any of the weakness in the business relates to the availability of, let's call it, wow discretionary items. Let's call it newness in the flyer, newness in the stores. The availability of that product versus what we know is availability of closeout overall. Is that having any impact? The second question here, just again, trying to dissect comps. How are the Big Lot stores comping as they are rolling in relative to the base?

Speaker #5: You talked a little bit about assortment optimization, and I'm curious as to whether you think any of the weakness in the business relates to the availability of, let's call it, "wow" discretionary items.

Speaker #5: Let's call it newness in the flyer, newness in the stores, and the availability of that product versus what we know is availability of closeout overall.

Speaker #5: Is that having any impact? And then the second question here, just again, trying to dissect comps—how are the big lot stores comping as they are rolling in relative to the base?

Speaker #7: Sure, yeah. And I'll take the first part of the question. The closeout pipeline continues to be strong. So the short answer to your question is no.

Eric van der Valk: Sure, yeah. Ed, I will take the first part of the question. The closeout pipeline continues to be strong. The short answer to your question is no. Closeout availability is not a reason for a softer comp in Q2. I would point to all the things Rob just mentioned, that the collision of a promotional environment, unfavorable weather, and a consumer that is under some pressure is more the reason for Q2 coming in below expectations. You think about the product categories that are most important that time of the year, we were very happy with the deal flow related to those categories. But the categories do not necessarily resonate when the weather does not cooperate. It is an opportunity, too, to just talk about deal flow in general as we move forward and where we sit. We feel very good about our deal flow. It remains strong.

Speaker #7: Closeout availability is not a reason for a softer comp. And for Q2, I would point to all the things Rob just mentioned—that kind of the collision of a promotional environment, unfavorable weather, and a consumer that's under some pressure—is more the reason for Q2 coming in below expectations.

Speaker #7: Think about the product categories that are most important that time of year. We were very happy with the deal flow related to those categories.

Speaker #7: But the categories don't necessarily resonate when the weather doesn't cooperate. And it's an opportunity, too, to just talk about deal flow in general as we move forward and where we sit.

Speaker #7: We feel very good about our deal flow. It remains—and it remains—strong. We look at this environment we're in, and the causation of deal flow in this moment.

Eric van der Valk: We look at this environment we are in and causation of deal flow in this moment and this competition for customer attention, especially some of these very rapidly moving price investments, tend to be focused more on consumables. Or if you look back on Q2, on some of the seasonal categories that I believe we were all struggling to sell, especially the first half of the quarter. Those price investments, that price competition, that competition for market share, for attention, they all create closeouts, and we are seeing that. The other comment to add color is the deal flow in summer seasonal weather impacted categories is especially strong in this moment. That makes for a very good setup for next year in terms of the value we could deliver to the consumer when we come up on Q2.

Speaker #7: And this competition for customer attention, especially some of these very rapidly moving price investments, tends to be focused more on consumables or, if you look back on Q2, on some of the seasonal categories that I believe we were all struggling to sell.

Speaker #7: Especially the first half of the quarter. Those price investments and price competition, that competition for market share, for attention—they all result in creating closeouts, and we're seeing that.

Speaker #7: And then the other comment to add color is the deal flow and summer seasonal weather-impacted categories is especially strong in this moment. So that makes for a very good setup for next year in terms of the value we could deliver to the consumer.

Speaker #7: When we come up on Q2.

Speaker #2: From a Big Lots store's perspective, we talked about this a bit over the last couple of quarters. They're in the second year now, up against the honeymoon period from their grand opening.

Robert Helm: From a Big Lots stores perspective, we talked about this a bit over the last couple of quarters. They are in the second year now up against the honeymoon period from the grand opening. Typically, our model would be to see a reverse waterfall where we would see a negative mid-single digit to even a high single digit negative in the second year. We are seeing that moderate in part because of the soft opening approach that we have taken. So we are seeing more of a low to mid. That trend still is holding, Ed.

Speaker #2: Typically, our model would be to see a reverse waterfall where we'd see a negative mid-single-digit to even a high single-digit negative.

Speaker #2: In the second year, we're seeing that moderate in part because of the soft opening approach that we've taken. So we're seeing more of a low-to-mid.

Speaker #2: And that trend is still holding, Ed.

Speaker #4: One moment for our next question. That comes from Matthew Voss with J.P. Morgan. Please proceed.

Operator: One moment for our next question. That comes from Matthew Boss with JPMorgan. Please proceed.

Speaker #5: Great, thanks. So, Eric, on the flat same store sales this year versus the 2% algorithm that you had laid out multi-year—so, continued strong deal flow you cited.

Matthew Boss: Great. Thanks. Eric, on the flat same store sales this year versus the 2% algorithm that you had laid out multi-year. Continued strong deal flow you cited and the price investment this year. I guess, what do you think is making up the 200 basis point delta for this year? What is your confidence to anniversary all of these actions and re-accelerate comps next year?

Matt Boss: Great. Thanks. Eric, on the flat same store sales this year versus the 2% algorithm that you had laid out multi-year. Continued strong deal flow you cited and the price investment this year. I guess, what do you think is making up the 200 basis point delta for this year? What is your confidence to anniversary all of these actions and re-accelerate comps next year?

Speaker #5: And the price investment this year—what do you think is making up the 200 basis point delta for this year? And then, what's your confidence in being able to anniversary all of these actions and re-accelerate comps next year?

Speaker #7: Sure. So, when you look at Q2, a lot of this pressure that we're talking about occurred in the first half of the quarter.

Eric van der Valk: Sure. When you look at Q2, a lot of this pressure that we are talking about occurred sort of the first half of the quarter. It was challenging to have the crystal ball as to how the quarter would play out, related especially the pressure on seasonal business. So, we believe that as we move into Q2 of next year, first of all, that we would have a more average weather related condition. We believe that a lot of what we were doing with price investments is a reaction to the competitive environment and ensuring that our values continue to stand out in an environment where a lot of our competitors were investing in price, especially the liquidation of weather impacted categories. That is an unusual environment.

Speaker #7: And it was challenging to have the crystal ball as to how the quarter would play out, related especially to the pressure on seasonal business.

Speaker #7: So, we believe that as we move into Q2 of next year, first of all, that we’ll have more average weather-related conditions. And we believe that a lot of what we were doing with price investments is a reaction to the competitive environment and ensuring that our values continue to stand out in an environment where a lot of our competitors were investing in price, especially with the liquidation of weather-impacted categories.

Speaker #7: So that's an unusual environment. So I guess, that said, in very plain English, there isn't going to be this windfall of tariff refund to the extent that we know it.

Eric van der Valk: So I guess, Matt, said in very plain English, there is not going to be this windfall of tariff refund to the extent that we know it this time next year, which does not provide the checkbook for accelerated price investments, along with weather that just did not cooperate. I cannot speak for the state of the consumer a year from now. I have a hard time speaking for the state of the consumer a month from now. So that is a question where fuel prices may land, too, is a question.

Speaker #7: This time next year, which doesn't provide the checkbook for accelerated price investments, along with whether that just did not cooperate. I can't speak for the state of the consumer a year from now.

Speaker #7: I have a hard time speaking for the state of the consumer a month from now. So that's a question—where fuel prices may land too is a question.

Speaker #2: And Matt, overall, our model is built to comp. Our buyers are able to buy the best values in the marketplace, which gives us the opportunity to drive comps year in, year out.

Robert Helm: Our model is built to comp. Our buyers are able to buy the best values in the marketplace, which gives us the opportunity to drive comps year in, year out. Stores of all vintages continue to comp, even some of our oldest stores. As you know, you have been following the story a very long time. Our track record on comp has been very good. Over the 10-year time horizon where we have been a public company, I think only 3 years where we have negatively comped during that time period. Most of that was related to COVID and some of our own internal challenges. So I think after this environment clears, to Eric's point, I think that this is a weird year and that we will be back to operating like Ollie's in 2027 beyond.

Speaker #2: Stores of all vintages continue to comp, even some of our oldest stores. And as you know, you've been following the story a very long time.

Speaker #2: Our track record on comp has been very good. Over the 10-year time horizon where we've been a public company, I think there have only been three years where we've negatively comped during that time period.

Speaker #2: And most of that was related to COVID and some of our own internal challenges. So, I think after this environment clears, to Eric's point, I think that this is a weird year and that we'll be back to operating like Ollie's in '27 and beyond.

Speaker #5: Helpful color. Best of luck.

Matthew Boss: Helpful color. Best of luck.

Matt Boss: Helpful color. Best of luck.

Speaker #7: Thanks, Matt.

Robert Helm: Thanks, Matt.

Speaker #4: Thank you. Our next question comes from Anthony Chacumba with Loop Capital Markets. Please proceed.

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

Speaker #6: Good morning. Thank you so much for taking my question. I had a question about seasonal, more from the perspective of, is there anything we have to be concerned with for winter, right?

Anthony Chukumba: Good morning. Thank you so much for taking my question. I had a question about seasonal, more from the perspective of, is there anything we have to be concerned with winter, right? In other words, obviously, you were definitely negatively impacted in air conditioners and outdoor furniture. As you said, it was at least 100 basis points of comp, probably more. Is there any big winter product seasonal sales that we need to be aware of or keep an eye on, or is it much more of a summer phenomenon? Thank you.

Speaker #6: In other words, obviously, you were definitely negatively impacted in air conditioners and outdoor furniture. As you said, it was at least 100 basis points of comp, probably more.

Speaker #6: Are there any big winter product seasonal sales that we need to be aware of or keep an eye on, or is it much more of a summer phenomenon?

Speaker #6: Thank you.

Speaker #7: Thanks, Anthony. It's definitely more of a summer phenomenon. So, when you look at the back half of the year, there's a little bit of a question around October-November, as you're kind of transitioning from Q3 into Q4, as to where the weather falls.

Eric van der Valk: Thanks, Anthony. It is definitely more of a summer phenomenon. When you look at the back half of the year, there is a little bit of question around October, November, as you are transitioning from Q3 into Q4 as to where the weather falls. It has some impact, but it is really a matter of weeks. If you look at the meaningfulness, the materiality of the winter weather impact to categories, it is less than it is in the summer. It is not nothing, but it is less material.

Speaker #7: It has some impact, but it's really a matter of weeks. When you look at the meaningfulness, the materiality of the winter weather-impacted categories, it's less than it is in the summer.

Speaker #7: So it's not nothing, but it's less material.

Speaker #2: And so, when we look at stacks, Anthony, as well, the third and fourth quarter—when you look farther back in the three- and four-year stacks—we're up against much more moderated stacks.

Robert Helm: When we look at stacks, Anthony, as well. The Q3 and Q4, when you look farther back in the 3 and 4 year stacks, we are up against much more moderated stacks. The Q2 was by far the toughest comparison that we are going to have all year long, and probably one of the toughest comparisons we have had as a company because we have had multi-year strength in the Q2.

Speaker #2: The second quarter was by far the toughest comparison that we're going to have all year long, and probably one of the toughest comparisons we've had as a company, because we've had multi-year strength in the second quarter.

Speaker #4: Thank you. Our next question is from Peter Keith with Piper Sandler. Please proceed.

Operator: Thank you. Our next question is from Peter Keith with Piper Sandler. Please proceed.

Sarah Morin: Hi, good morning. This is Sarah Morin for Peter Keith. Thanks for taking our question. Just looking towards 2027, how much visibility do you have into the new store pipeline? Have you been seeing any changes in quality or availability of the locations given the current retail environment?

Speaker #8: Hi, good morning. This is Sarah Moron for Peter Keith. Thanks for taking our question. Just looking towards 2027, how much visibility do you have into the new store pipeline?

Speaker #8: And have you been seeing any changes in quality or availability of the locations, given the current retail environment?

Robert Helm: No real change to the environment. Real estate availability remains very good. We continue to be ahead of the pipeline, and we feel very confident about next year. We have our pipeline mainly in place for the upcoming year. 2028 and beyond, we are not speaking about yet, and we will update it at a point in the future.

Speaker #2: No real changes to the environment. Real estate availability remains very good. We continue to be ahead of the pipeline, and we feel very confident about next year.

Speaker #2: We have our pipeline mainly in place. For the upcoming year, 2028 and beyond, we're not speaking about yet. And we'll update it at a point in the future.

Speaker #4: One moment for our next question. It comes from Scott Ciccarelli with Truist. Please proceed.

Operator: One moment for our next question. It comes from Scot Ciccarelli with Truist. Please proceed.

Speaker #5: Good morning, guys. Thanks for the time. I guess I still have some questions around your comments on the promotional environment. I guess just given your closeout model, I don't really recall competitive promotions as a big factor you've historically faced, or at least noted in the past.

Scot Ciccarelli: Good morning, guys. Thanks for the time. I still have some questions around your comments on the promotional environment. I guess just given your closeout model, I do not really recall competitive promotions as a big factor you have historically faced or at least noted in the past. So, any color around that would be helpful. And then also, why could not we see an acceleration in promotional intensity as it seems like a lot of retailers are planning to invest back in price in the back half? Thanks.

Speaker #5: So any color around that would be helpful. And then, also, why couldn't we see an acceleration in promotional intensity, as it seems like a lot of retailers are planning to invest back in price in the back half?

Speaker #5: Thanks.

Speaker #7: I'm not sure I understand the second part of your question, but what do you mean by acceleration, Scott? Just...

Eric van der Valk: I am not sure I understand the second part of your question. What do you mean by acceleration, Scot?

Speaker #5: Well, just in terms of most of the companies that have reported over the last couple of weeks, they're all talking about investing more in price in the back half.

Scot Ciccarelli: Well, just in terms of most of the companies that have reported over the last couple of weeks, they are all talking about investing more in price in the back half. So, if we saw heightened promotional activity for you guys in Q2, is that kind of built into the model? You guys are assuming it is going to be even deeper promotions from all the competitors out there.

Speaker #5: And so if we saw heightened promotional activity for you guys in the second quarter, is that kind of built into the model? Are you assuming it's going to be even deeper promotions from all the competitors out there?

Speaker #7: I gotcha. Okay. Yeah. In the second quarter, you're right in what you're saying, Scott. We typically don't talk about the promotional environment. This was a highly unusual environment.

Eric van der Valk: I got you. Okay. Yeah. In Q2, you are right in what you are saying, Scot. We typically do not talk about the promotional environment. This was a highly unusual environment. I think with the combination of tariff-fueled price investments that were more exaggerated in the middle of the quarter, in addition to drag on seasonal weather, summer weather impacting categories and some of the clearance activity that took place out there that was much more aggressive than we have seen in the past. It did cause us to think a little bit differently about how we liquidate businesses and how we price certain goods. And I called out some examples earlier. As you look into the back half of the year, we have communicated that we are spending $50 million over the course of the year, and I think $10 million-ish of that is in the back half.

Speaker #7: I think with the combination of tariff-fueled price investments that were more exaggerated in the middle of the quarter, in addition to drag on seasonal weather—summer weather impacted categories—and some of the clearance activity that took place out there that was much more aggressive than we've seen in the past.

Speaker #7: It did cause us to think a little bit differently about how we liquidate businesses and how we price certain goods. And I called out some examples earlier.

Speaker #7: As you look into the back half of the year, I mean, we've communicated that we're spending $15 million over the course of the year.

Speaker #7: And I think $10 million or so of that is in the back half. So, we are expecting to continue to invest in price. And I'll just emphasize, not knowing with certainty what the environment is going to look like from a promotional standpoint, that if we need to invest more than $50 million, we will.

Eric van der Valk: We are expecting to continue to invest in price. I will just emphasize, not knowing with certainty what the environment is going to look like from a promotion standpoint, that if we need to invest more than $50 million, we will. We will ensure that we are the price leader, and we will ensure that we maintain our price gaps and that we have the attention of the customer as we move into the back half of the year. I cannot speak to what retailers did in Q2 versus the back half of the year, and how they chose to report that out, how they invested, and whether some of those investments are more back-half weighted, I could only tell you what we are doing. Primarily, that is to make sure we are the best price in the market.

Speaker #7: We'll ensure that we are the price leader. We'll ensure that we maintain our price gaps and that we have the attention of the customer as we move into the back half of the year.

Speaker #7: I can't speak to what retailers did in Q2 versus the back half of the year, and how they chose to report that out, how they invested, and whether some of those investments are more back-half weighted. I can only tell you what we're doing.

Speaker #7: And primarily, that is to make sure we're the best price in the market.

Speaker #5: Understood. Thank you.

Scot Ciccarelli: Understood. Thank you.

Speaker #7: Thanks.

Eric van der Valk: Thanks.

Speaker #4: Thank you. Our next question comes from Simeon Gottman with Morgan Stanley. Please proceed.

Operator: Thank you. Our next question comes from Simeon Gutman with Morgan Stanley. Please proceed.

Speaker #5: Hey, thanks. Good morning, guys. So, if you look back at when Ollie's had comped negative, it was almost always lapping a big compare the prior year—which you are—a little bit following a lot of rapid store growth, which you've had.

Simeon Gutman: Hey, thanks. Good morning, guys. If you look back at when Ollie's had comped negative, it was almost always lapping a big compare to the prior year, which you are. A little bit following a lot of rapid store growth, which you have had, and then you have also cited some weather effects. You have always recovered from it. Can you try to isolate the weather effects? Not all regions probably have the same impact. As far as rapid store growth, are there regions where there is perhaps less cannibalization? Are you able to pinpoint maybe a little more with more precision some of these sort of one-time headwinds to your comps so we can understand, I guess, the recovery back? Thank you.

Speaker #5: And then you've also cited some weather effects, and you've always recovered from it. But can you try to isolate the weather effects? Not all regions probably have the same impact. And then, as far as rapid store growth, are there regions where there's perhaps less cannibalization?

Speaker #5: So are you able to pinpoint, maybe with a little more precision, some of these sort of one-time items? I guess I’m trying to understand the recovery back.

Speaker #5: Thank you.

Speaker #2: Sure. Simeon, this is Rob. I'll take that. I gave some quantification earlier; that's about the best that I can quantify. I can add, qualitatively, that we've seen the most softness in comp in parts of the Midwest and Texas.

Robert Helm: Sure. Simeon, this is Rob. I will take that. I gave some quantification earlier. That is about the best that I can quantify. I can add the qualitative that we have seen the most softness in comp in parts of the Midwest and Texas. The challenge that we have in terms of isolating and pinpointing is there are two dynamics at play in those regions. One, they had the greatest degree of unseasonable weather. Two, they happen to have the longest driving times, which are impactful when you are thinking about an elevated gas price environment. Both of those phenomena we would deem to be somewhat transitory. I hope in a nutshell in there, that gives you the answer that you are looking for in terms of when you can think about a return to a more regular comp cadence.

Speaker #2: The challenge that we have, in terms of isolating and pinpointing, is there are two dynamics at play in those regions. One, they had the greatest degree of unseasonable weather.

Speaker #2: And two, they happen to have the longest driving times, which are impactful when you're thinking about an elevated gas price environment. Both of those phenomena, we would deem to be somewhat transitory.

Speaker #2: So, hoping that, in a nutshell, gives you the answer you're looking for in terms of when you can think about a return to a more regular comp cadence.

Speaker #5: Thank you.

Simeon Gutman: Thank you.

Speaker #4: Thank you so much. Our next question is from Chuck Grom with Gordon Haskett. Please proceed.

Operator: Thank you so much. Our next question is from Chuck Grom with Gordon Haskett. Please proceed.

Speaker #6: Hey, thanks. Just as we exit 2026, can you clarify what the jumping point is going to be for gross margins? You're guiding to 41.3%.

Chuck Grom: Hey, thanks. As we exit 2026, can you clarify what the jumping point is going to be for gross margins when you are guiding to 41.3? I think there is a 50 basis point net positive impact here from the refunds. How do we think about the jumping point from that? Can you just remind us when you move a circ or a flyer from one quarter to another, how much that positively impacted Q2 results? The last one from me, just on the quarter to date, I know you do not like to go there, but it does sound like it is positive. I think you are net neutral now on flyers. I know you just dropped one this morning. Just three quick ones for me. Thank you.

Speaker #6: I think there's a 50 basis point net positive impact here from the refunds. Just, how do we think about the jumping-off point from that?

Speaker #6: And then can you just remind us, when you move a circ or a flyer from one quarter to another, how much that positively impacted Q2 results?

Speaker #6: And then the last one from me, just on the quarter-to-date. I know you don't like to go there, but it does sound like it's positive.

Speaker #6: But I think you're net neutral now on flyers. I know you just dropped one this morning. So, just three quick ones from me. Thank you.

Speaker #2: I'll answer about the gross margin, also. And then I think Eric will take the flyer, and then hopefully somebody else can take the third question.

Robert Helm: I'll answer about the gross margin algo.

Eric van der Valk: Take the flyer.

Robert Helm: I think Eric will take the flyer, then hopefully somebody else will take the third question. From an algo perspective, our views on the business haven't really changed over the longer term, even though we're in this short-term kind of moment in time. We are still on the long-term target of 40.5%. You're right to call out the additional 50 basis points from the net tariff noise from the refunds, less the price investments. In the short term, our view is the current pricing environment is being fueled in large part by tariff refunds, which are finite in terms of dollars and represent a moment in time. We think that likely plays out over the balance of this year, to some of the earlier comments that were made.

Speaker #2: From an algo perspective, our views on the business haven't really changed over the longer term, even though we're in this short-term kind of moment in time.

Speaker #2: We are still on the long-term target of 40.5%. You're right to call out the additional 50 bps from the net tariff noise, from the refunds less the price investments.

Speaker #2: In the short term, our view is the current pricing environment is being fueled in large part by tariff refunds, which are limited—finite in terms of dollars—and represent a moment in time.

Speaker #2: We think that likely plays out over the balance of this year, to some of the earlier comments that were made. Zooming out beyond this year, our strategy remains being the lowest price in the market anywhere.

Robert Helm: Zooming out beyond this year, our strategy remains being the lowest price in the market anywhere and maintaining our leadership position and value in price gaps over retailers. Our flexible buying model allows us to drive this value with customers while delivering great returns to shareholders, and we continue to see more leverage from scale. We're not ready to change any thinking relative to how we think about gross margin.

Speaker #2: And maintaining our leadership position in value and price gaps over retailers. Our flexible buying model allows us to drive this value with customers while delivering great returns to shareholders.

Speaker #2: And we continue to see more leverage from scale, but we're not ready to change any thinking relative to how we think about gross margin.

Speaker #7: Yeah, Chuck, I'll take the flyer question. It's probably important to talk about why we did what we did, and I think we talked a little bit about this.

Eric van der Valk: Yeah, Chuck, I'll take the flyer question. It's probably important to talk about why we did what we did. I think we talked a little bit about this on the Q1 call. We do routinely make changes to flyer timing based on the way the calendar sets up primarily. In this case, we actually made the change because in the past we've not run a flyer event between Ollie Days and early to mid-August. So we've been kind of blank, dark on communicating in that way to the customer over a fairly elongated period of time when you consider we're out there at least monthly, if not more often the rest of the year. We saw white space and deep discount close out product for back to school and back to college and didn't like that we were dark for that elongated period of time.

Speaker #7: On the Q1 call, we do routinely make changes to flyer timing based on the way the calendar sets up, primarily. In this case, we actually made the change because, in the past, we've not run a flyer event between Ollie Days and early to mid-August.

Speaker #7: So we've been kind of blank, dark on communicating in that way to the customer over a fairly elongated period of time, when you consider we're out there at least monthly, if not more often, the rest of the year.

Speaker #7: We saw white space and deep-discount closeout product for back-to-school and back-to-college, and didn't like that we were dark for that elongated period of time.

Speaker #7: So we shifted the flyer, as you indicated, from August into the last week of July. I think it's important to consider that that flyer occurred at the very end of July.

Eric van der Valk: We shifted the flyer, as you indicated, from August into the last week of July. I think it's important to consider that that flyer occurred at the very end of July, so it was just a handful of days that fell into August. The reason I think the setup for the thought process on why we made the move is important is it was the launch introduction of newness with the back to college, back to school businesses. It wasn't just about the flyer event and the impact of marketing around that event on one quarter versus another. It was about getting out in front of the customer with product that we felt was very relevant at a time that aligned with need. We like what we saw out of that. It had a relatively immaterial impact on Q2, but it's definitely been more meaningful for Q3.

Speaker #7: So it was just a handful of days that fell into August. And the reason I think the setup for the thought process on why we made the move is important is it was the launch, introduction of newness, with the back-to-college, back-to-school businesses.

Speaker #7: So, it wasn't just about the flyer event and the impact of marketing around that event on one quarter versus another. It was about getting out in front of the customer with product that we felt was very relevant, at a time that aligned with need.

Speaker #7: And we like what we saw out of that. It had a relatively immaterial impact on Q2, but it's definitely been more meaningful for Q3.

Speaker #7: And again, that's not about the flyer shift. It's about the setup of those businesses. And I don't know if the quarter-to-date question—I think that was the last—the flyer shift in the...

Eric van der Valk: Again, that's not about the flyer shift, it's about the setup of those businesses. I don't know, the quarter-to-date question, I think, was the last. The flyer shift and the-

Robert Helm: Well, the flyer shift we literally get no benefit from as of yet, Chuck, because it just literally dropped this morning. Our stores are just opening now.

Speaker #2: Well, the flyer shift is we literally get no benefit from it as of yet, Chuck, because it just literally dropped this morning. Our stores are just opening now.

Speaker #7: Yeah, I think the advice for those that are looking at the weekly or daily cadence of our business is to wait until the end of next week—not this week, but next week.

Eric van der Valk: Yeah. I think the advice for those that are looking at the weekly or daily cadence of our business is to wait until end of next week. Not this week, but next week because there are inter-quarter shifts we are making as well. I would attempt to read our business mid-September. Trying to compare quarter-to-date trends to last quarter is extremely difficult. We have done it, and it has informed our guide. I think that is the most important point to make to everyone out there.

Speaker #7: Because there are inter-quarter shifts we're making as well, I would attempt to read our business mid-September. Trying to compare quarter-to-date trends to last quarter is extremely difficult.

Speaker #7: We've done it, and it's informed our guide. So I think that's the most important point to make to everyone out there.

Chuck Grom: Great. Thanks, guys.

Speaker #6: Great. Thanks, Chris.

Speaker #7: Thanks.

Eric van der Valk: Thanks.

Speaker #4: Thank you so much. One moment for our next question. State of America, please proceed.

Operator: Thank you so much. One moment for our next question. It comes from Mary Sport with Bank of America. Please proceed.

Speaker #8: Hey guys, good morning. I was wondering if you could just provide a few more details on performance by income cohort. I know you mentioned that you're still seeing high-income trading down, but what did you see for the middle and lower incomes?

Mary Sport: Hey, guys. Good morning. I was wondering if you could just provide a few more details on performance by income cohort. I know you mentioned that you are still seeing high income trading down, but what did you see for the middle and lower incomes? If there was some trade-out, did you see a return of those customers after you were able to implement some of those price investments during the quarter? Thanks.

Speaker #8: And if there was some trade-out, did you see a return of those customers after you were able to implement some of those price investments during the quarter?

Speaker #8: Thanks.

Speaker #7: Sure. Yeah. When you look at Q2, it was relatively consistent. In Q1, we saw on the income side—I already mentioned—we saw the higher-income consumer trading down, kind of drawing the line around $100,000 household income.

Eric van der Valk: Sure. When you look at Q2, it was relatively consistent to Q1. On the income side, I already mentioned we saw the higher income consumer trading down, kind of drawing the line around 100,000 household income. On the trade-out side, or not trade-out, but less frequent shopping headwind that we were seeing with lower income consumer, we saw that relatively consistent to Q1, and we are drawing that line at 65,000 in income or below. I think it is also important to note because we are very focused on attracting a younger customer, that we are continuing to see great momentum in attracting and retaining younger consumers in, I am going to define it today as ages 35 to 55, especially with some strength in the 35 to 45 range. So we are very encouraged by that.

Speaker #7: On the trade-down side—or not trade-down, but less frequent shopping—headwind that we were seeing with the lower income consumer, we saw that relatively consistent to Q1.

Speaker #7: And we're drawing that line at $65,000 in income or below. And I think it's also important to note, because we're very focused on attracting a younger customer, that we're continuing to see great momentum in attracting and retaining younger consumers. I'm going to define that today as ages 35 to 55, especially with some strength in the 35 to 45 range.

Speaker #7: So we're very encouraged by that. We do think that our product offering—some of our products, anyway—has become more appealing to younger customers, and that is deliberate.

Eric van der Valk: We do think that our product offering has become, some of our product anyway, has become more appealing to younger customers, and that is deliberate, and we are shouting about it to consumers in a place where they tend to be looking. Meaning in various digital platforms so that we are able to reach them with our continued increasing sophistication in digital marketing. Did I get all your questions, Mary? I do not know if I missed.

Speaker #7: And we're shouting about it to consumers in a place where they tend to be looking—meaning in various digital platforms—so that we're able to reach them with our continually increasing sophistication in digital marketing.

Speaker #7: Did I get all your questions, Mary? I don't know if I missed any.

Mary Sport: Yeah. Super helpful. Thank you.

Speaker #8: Yeah, super helpful. Thank you.

Eric van der Valk: Okay. All right. Thanks.

Speaker #7: Okay. All right. Thanks.

Speaker #4: Thank you. One moment for our next question. It comes from Mark Carden with UBS. Please proceed.

Operator: Thank you. One moment for our next question. It comes from Mark Carden with UBS. Please proceed.

Speaker #6: Hi, this is Matthew Rothway. I'm for Mark. Thank you for taking our question. So, as it relates to your fuel price assumption, are you still expecting a roughly 20 to 30 basis point margin headwind from fuel? Has anything changed around your thinking there?

Mathew Rothway: Hi, this is Mathew Rothway on for Mark. Thank you for taking our question. As it relates to your fuel price assumptions, are you still expecting a roughly 20 to 30 basis point margin headwind from fuel? Has anything changed around your thinking there? Any initial thoughts on how you are approaching your fuel assumptions for next year? Thank you.

Speaker #6: And then any initial thoughts on how you're approaching your fuel assumptions for next year? Thank you.

Speaker #2: Thanks, I'll take that. You're spot on. The fuel pressure continues to be in the range of, say, 20 to 30 basis points. That's what we saw in the second quarter, and that's what we've got baked into the balance of the year, which is not new news.

Robert Helm: Thanks. I will take that. You are spot on. The fuel pressure continues to be in the range of, say, 20 to 30 basis points. That is what we saw in Q2, and that is what we have got baked into the balance of the year, which is not new news. We had that in our previous guidance as of the last call. In Q2, however, that was completely more than offset by tariff refunds. When we think out to next year, it is just a little bit early for us to start talking about guidance for next year. We still have a lot of year to go this year. We will give you an update when we have our Q3 call.

Speaker #2: We had that in our previous guidance as of the last call. In the second quarter, however, that was completely offset—more than offset—by tariff refunds.

Speaker #2: When we think out to next year, it's just a little bit early for us to start talking about guidance for next year. We still have a lot of year to go this year.

Speaker #2: We'll give you an update when we have our third quarter call.

Speaker #4: And, ladies and gentlemen, this will conclude our Q&A session and conference for today. We want to thank everyone for participating, and you may now disconnect.

Operator: Ladies and gentlemen, this will conclude our Q&A session and conference for today. We want to thank everyone for participating, and you may now disconnect.