Ollie's Bargain Outlet Holdings Inc Q4 2024 Earnings Call Transcript

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

Question: Steven Zaccone - Citi - Analyst : Hi, good morning. Thanks very much for taking my question. I was curious for your assessment on the consumer. You kind of gave some commentary there about how trends have performed quarter-to-date. But if you take a step back, how do you think about the state of your consumer? How is that factored into your outlook for 2025?

Question: Steven Zaccone - Citi - Analyst : Okay, thanks for that. My follow-up is on gross margin. So 2024 came in better than your 40% algo. The guide is for 40% this year. Can you just help us think through the puts and takes, like in supply chain costs still be a good guide as we think about 2025?

Question: Steven Zaccone - Citi - Analyst : Great, thanks for all the detail.

Question: Chuck Grom - Gordon Haskett - Analyst : Hey, good morning, Eric. Good morning, Rob. On the biggie front, was the headwind to sales commensurate with your plan of about 50 basis points in the fourth quarter. And more recently, now that the liquidations have passed at most of the locations, have you seen an inflection in sales? And then just bigger picture zooming out, what have been the biggest learnings thus far on the Big Lots front from an operational and talent front?

Question: Chuck Grom - Gordon Haskett - Analyst : Great answer. That's great to hear. Just quick follow-up. Just can you discuss the progress you made with the rollout of the private label credit card? Maybe how many states or stores now off of the card and (technical difficulty)

Question: Alexia Morgan - Piper Sandler - Analyst : Hi, this is Alexia Morgan on for Peter Keith at Piper Sandler. Thanks for taking our questions. I was wondering if you could speak more to the dead rent dynamic on a going-forward basis? Do you quantify dark rent as $5 million in 2025. So it seems like it could impact flow through this year. So we were wondering then how to think about flow through dynamics in the model from 2025 to 2026. How it could change?

Question: Alexia Morgan - Piper Sandler - Analyst : Okay, thank you. And then maybe just one more. You had already talked a little bit about the Big Lots opportunity, but one more about that. How are you thinking about the new Big Lots stores opening as compared to the new 99 Cents Only stores which you had acquired, which seems -- seem to be very strong and successful right out of the gate. So we were just wondering how the Big Lots stores could have a similar experience?

Question: Alexia Morgan - Piper Sandler - Analyst : Great, thank you.

Question: Matthew Boss - JPMorgan - Analyst : Great, thanks. So Eric, maybe could you elaborate on the cadence of first quarter to date same store sales? What you saw early versus the exit rate in February and more recent trends you've seen in March? And have you embedded any lift in the full year guide for potential market share opportunity tied to Big Lots?

Question: Matthew Boss - JPMorgan - Analyst : Got it. And then maybe just a follow-up. Eric, could you argue Ollie's could actually be a net beneficiary of tariffs as we tie in availability and product that you're seeing? And Rob, on the SG&A front, if we exclude the dead rent, how best to think about the comp needed to leverage SG&A in 2025? And then multiyear, what's the right comp leverage point you think for the model? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 19, 2025 / 12:30PM, OLLI.OQ - Q4 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call

Question: Matthew Boss - JPMorgan - Analyst : It's great color, best of luck.

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : Hi, thanks and good morning. Maybe just a follow-up on Matt's question on tariffs. Can you talk a little bit more about how those are baked into your guidance overall, and the exposure that you have on the direct import side?

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : Great, and if I could follow up just on the store growth outlook, looking past 2025, really feels like you have an incredible pipeline and opportunity in front of you with all the retailers that are closing stores in the United States right now. I guess, could you just speak to your confidence in driving growth and what you think that growth rate will be over the next few years?

Question: Brad Thomas - KeyBanc Capital Markets Inc. - Analyst : Very helpful. Thank you so much.

Question: Scot Ciccarelli - Truist Securities - Analyst : Good morning guys. I know it's very early, but you did comment that the stores near the Big Lots location that have closed are comping burden in the base. Can you give us any color on the magnitude of that performance gap?

Question: Scot Ciccarelli - Truist Securities - Analyst : Got it. And then given the acceleration of store openings in '25, what are you guys building in for cannibalization? And then how do investors get comfortable that we won't see any kind of operational strains like the company had back in the Toys R Us acquisition phase? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 19, 2025 / 12:30PM, OLLI.OQ - Q4 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call

Question: Scot Ciccarelli - Truist Securities - Analyst : Got it. And on the operational front?

Question: Scot Ciccarelli - Truist Securities - Analyst : I mean, I know it was before versus (multiple speakers) '19.

Question: Scot Ciccarelli - Truist Securities - Analyst : Got it. Thanks guys.

Question: Kate McShane - Goldman Sachs - Analyst : Hi, good morning. I wanted to follow up on the gross margin question that was asked earlier. It sounds like merch margins were lower due to mix and the consumables mix. Was this more than what you expected? Can we expect consumables to weigh on merch margin mix into 2025? And then just a longer term question. You discussed before maybe allowing gross margin to go a little bit higher to offset some of the inflation seen on the labor side in SG&A that's been driving up costs. Should we not think of that upside as a potential any longer for the longer term outlook for gross margin? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 19, 2025 / 12:30PM, OLLI.OQ - Q4 2024 Ollie's Bargain Outlet Holdings Inc Earnings Call

Question: Kate McShane - Goldman Sachs - Analyst : Thank you. And then our second question, you quantified that it could be $2.7 billion in addressable sales that were left behind here by the bankruptcy. Do you have an estimate of how much you can capture over time or what the transfer rate could look like given your overlap with other retailers?

Question: Kate McShane - Goldman Sachs - Analyst : Thank you.

Question: Anthony Chukumba - Loop Capital Markets - Analyst : Good morning. Thank you for taking my question. So I couldn't help but notice at the end of your prepared remarks, the timing was a little bit off with the Ollie's chant. Is that something that investors should be concerned with?

Question: Anthony Chukumba - Loop Capital Markets - Analyst : Got it. So just following up on the question on consumables. I mean one thing I definitely noticed in my store businesses, you always have Tide pods, right? And it seems like you're buying a bit more directly for manufacturers. And I just wonder if you had any update on that because I definitely agree with you, right? If I know I can always go in and get my Tide pods, I buy my Tide pods, but obviously, I'm there and I'm doing the whole treasure hunt and so that's a benefit for you. So any update there?

Question: Anthony Chukumba - Loop Capital Markets - Analyst : Got it, that's very helpful. Thank you.

Question: Jeremy Hamblin - Craig-Hallum Capital Group - Analyst : Thanks and congrats to the team on the success. I wanted to talk about category performance as we've moved into fiscal '25. You noted some choppiness in February, and you've also noted some improvements here in recent weeks since the end of February. I wanted to get a sense for where you're seeing some of that category performance, if you could get a little bit granular in terms of where maybe you saw some softness in February and where you've now seen some pickup here as we've moved into March.

Question: Jeremy Hamblin - Craig-Hallum Capital Group - Analyst : Got it. And then I think you called out pre-opening expense as $21 million for the year. I wanted to see if you could provide us with a little bit more guidance in terms of how you expect that to play out or unfold over the course of the year? I think you said 65% of your store openings you expect in the first half of the year. How do you expect that pre-opening expense to flow?

Question: Jeremy Hamblin - Craig-Hallum Capital Group - Analyst : Great. Thanks for the color. Best of luck this year.

Question: Matt Rothway - UBS - Analyst : Hi, this is Matt Rothway on for Mark. I was wondering if you can talk about the 99 Cent stores and when you think they might reach full sales productivity, it sounds like they've opened up really nicely. And then a quick follow-up. I couldn't hear if you've mentioned how long the lease agreements are for the Big Lots stores that you acquired. Thank you.

Question: Matt Rothway - UBS - Analyst : That's great. Thank you.