Ollie's Bargain Outlet Holdings Inc Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : Yes, hi. Good morning and congratulations to everyone on the new opportunities ahead.

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : Sure, John. My question was really, if you could comment a little bit more on the health of the consumer and your outlook over the next few quarters as you're up against these tough comparisons. We're certainly seeing some mixed data points in terms of out of the consumer spending, and any more color around how you're feeling in your medium-term outlook would be helpful. Thanks.

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : That's helpful. And as a follow-up, John, I was wondering, if you could talk a little bit more about how your conversations are going with suppliers as you talk about potentially having more strategic partnerships with them rather than just doing closeouts and how do you think about that opportunity longer term?

Question: Peter Keith - Piper Sandler & Co. - Analyst : Hi. Thanks. Good morning. Congrats from me as well on the promotions. For the full-year guide, are you raising the rest of the year? It looks like, with Rob, you kind of maintained your quarterly cadence, but it does seem to hit the midpoint of the comp guide that the numbers might be a little bit above what you were thinking a couple of months ago? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 12:30PM, OLLI.OQ - Q1 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call

Question: Peter Keith - Piper Sandler & Co. - Analyst : Okay. Maybe just to stick on those stores. So can you give some characteristics around the size of them? And I guess just going backwards into history, but there was in history of Toys "R" Us and opening up a lot of stores at once caused some operational difficulties. So if you can just talk about the cadence of opening those and managing the supply of the stores?

Question: Kate McShane - Goldman Sachs - Analyst : Hi. Good morning. Thanks for taking our question. We were wondering just how the competitive environment looks right now with regards to going after closeout deals, and outside some of the CPG commentary where you're seeing some of the more compelling closeout opportunities.

Question: Anthony Bonadio - Wells Fargo Securities - Analyst : Yeah. Hey. Good morning, guys. It's Anthony on for Ed. Thanks for taking our questions. So first, I wanted to ask about the gross margin. It looks like a record for Q1. It came in a lot higher than most for modeling and obviously running well above your full year number. Can you just talk a little bit more about what's driving that strength and then how we should be thinking about the cadence of the rest of the year in terms of guidance?

Question: Anthony Bonadio - Wells Fargo Securities - Analyst : Got it. That's helpful. And then just on the Q1 comp, I know you guys mentioned some calendar noise in Q1 given the 53rd week. Can you just talk us through the magnitude of that impact in a little more detail? Just trying to understand how clean over that number is?

Question: Joseph Civello - Truist Securities - Analyst : Hey, good morning, guys. This is Joe on for Scot. Thanks for taking my question. I was just wondering, if you could talk a little bit more about line of sight for sourcing this year and where you see the most opportunities across categories.

Question: Joseph Civello - Truist Securities - Analyst : Got you. Great. And if I could just do a quick follow-up on how you're thinking about consumers versus like general merchandise in terms of demand and sourcing out there would be great. Thanks.

Question: Matthew Boss - JPMorgan - Analyst : Thanks, and congrats on a nice quarter.

Question: Matthew Boss - JPMorgan - Analyst : So John, could you elaborate on new customer acquisition trends, maybe key initiatives to capture competitive opportunities in the landscape? And then, just near term, have you seen any change in consumer behavior so far in the second quarter versus that strengthening in the comps that you cited as the first quarter progressed?

Question: Jeremy Hamblin - Craig-Hallum Capital Group - Analyst : Congrats on the momentum and the promotions. I wanted to ask about shrink. And you were still hearing a ton of retail peers that are struggling with shrink control. You guys have identified a subset of stores that I think are causing the majority of your shrink. But I want to get an update because I think the last time you said it's still a little bit elevated. I wanted to get an update on where you are on that -- on the shrink front? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 12:30PM, OLLI.OQ - Q1 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call

Question: Jeremy Hamblin - Craig-Hallum Capital Group - Analyst : Great. And then I just want to come back to the 99 Cents Only Stores. And thinking about the economics of the box a little bit smaller box, in terms of thinking about kind of the returns on that, presumably, we might be modeling these at 80% productivity of a full line Ollie's store, but how do we think about the kind of the EBITDA or four wall cash generation that you're getting from these stores, given that it sounds like you've got some favorable rent economics?

Question: Melanie Nunez - BofA Securities, Inc. - Analyst : Hey. Good morning. Thanks for taking my question. I just wanted to see what you're seeing in terms of the promotional landscape across the space and how your buying teams really monitor that and factor that into your buying and pricing strategies?

Question: Eric Cohen - Gordon Haskett Research Advisors - Analyst : Good morning. Thanks for the question. Great quarter and congrats on all the promotions. Just want to ask on the guidance. You guys called out the big Q1 beat. How much of that is just flowing through or in other words, I guess, now that you have the 99 Cents Only Stores you're going to have dark rent until they open. Could the full year guidance have been raised even higher if it wasn't for the 99 Cents store acquisitions?

Question: Eric Cohen - Gordon Haskett Research Advisors - Analyst : Got it. And historically, 70% of your sales have been from closeout for the last four years, it's dipped down to 65%, understandably during 2020, 2021 with strong demand and less closeout opportunity it shrunk. But even as the retail environment has stabilized, it still stayed at that 65%. So is that the right way to think about it, the business going forward? And does increase in that everyday value mix actually make the comps more consistent?

Question: Mark Carden - UBS Investment Bank - Analyst : Great. Thanks so much for taking my questions and congrats guys on the promotions. So to start, I wanted to ask another one on the 99 Cents Only Stores. You guys mentioned they're a bit smaller. How do you think about assorting them? Would you expect to keep a similar closeout, non-closeout mix? Would you expect to trim back in any particular categories? Just want to dig in if there's any differences on that front.

Question: Mark Carden - UBS Investment Bank - Analyst : Got it. Makes sense. And you guys have seen a lot of momentum in higher income customers over the past few quarters. At this stage, are your tailwinds in this cohort skewing more towards repeat buyers or are you still bringing in a lot of new high-end customers into your ecosystem? Thanks.

Question: Simeon Gutman - Morgan Stanley - Analyst : Good morning, everyone. I have one question, one follow-up. The first question is on gross margins. You mentioned first quarter seasonally typically a little bit better. Can you talk about what's imputed in terms of freight and supply chain costs? And if we've gotten sort of the peak benefit in the numbers now? And what is that -- what -- how does that flow throughout the rest of the year? And then I have one follow-up.

Question: Simeon Gutman - Morgan Stanley - Analyst : Okay. And then to follow up to that, that means the caution was justified so far. And then I'll just throw my second question. The second question was back to traffic and ticket. I think you said basket and transactions were both positive. In the basket piece, is that the number of items that are being purchased or I don't know, if there's an average ticket that you can proxy given the changing merchandise? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 05, 2024 / 12:30PM, OLLI.OQ - Q1 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call