Ollie's Bargain Outlet Holdings, Inc. Q4 FY2024 earnings call

• Fourth quarter comparable store sales growth of 2.8% was in line with expectations and adjusted earnings were better than expected despite operational complexity from the compressed holiday season.
• Acquired 40 additional store leases of former Big Lots locations, which are in existing trade areas, have below-market rents, and long-term leases for up to 30 years.
• Net sales were $667 million, driven by new stores and comparable sales growth. Comparable store sales increased 2.8% due to transactions and basket growth. Army members increased over 8% to over 15.1 million, with sales to members over 80% of total sales.
• Ended the quarter with 559 stores in 31 states, an increase of 9% YOY, having opened 13 new stores in the quarter and 50 for the fiscal year.
• SG&A expenses included a one-time $5.5 million expense, and excluding that, SG&A as a percentage of net sales increased 50 basis points due to accelerating store growth and earlier new store openings.

Net sales increased 3% to $667 million in the fourth quarter, driven by new stores and comparable sales growth, partially offset by the impact of last year's 53rd week. Excluding the extra week, net sales increased 8.5%. Comparable store sales grew 2.8%, with fairly equal increases in transactions and basket. Best-performing categories were Housewares, Food & Candy, Electronics, and room air. Ollie's army members increased over 8% to over 15.1 million in the quarter, with sales to members representing over 80% of total sales. The company ended the quarter with 559 stores in 31 states, an increase of 9% year-over-year. Gross margin increased 20 basis points to 40.7%, primarily from lower supply-chain costs, partially offset by a slightly lower merchandise margin driven by mix.

• Fiscal 2025 plan: Approximately 75 new store openings. Total net sales expected to be $2.564 billion to $2.586 billion. Comparable store sales growth of 1% to 2%. Gross margin approximately 40%. Operating income $283 million to $292 million. Adjusted net income $225 million to $232 million. Adjusted net income per diluted share $3.65 to $3.75. Estimates include depreciation/amortization of $54 million, reopening expenses of $21 million (including dark rent of ~$5 million), annual effective tax rate of 25%, and capital expenditures of $83 million to $88 million.

• Tariffs creating uncertainty across the retail landscape. - Transitory expenses related to bankruptcy-acquired stores impacting near-term earnings. - Difficulty in predicting the impact of Big Lots store closures on comparable store sales growth as the majority of Big Lots stores are still closing or recently closed, and sample size is small.

Q: Steven Zaccone asked about consumer state and gross margin.

A: Eric van der Valk said consumers are under pressure but respond to deals, trade-down continues. Robert Helm said gross margin algo is 40%, supply-chain costs expected to be flattish, buying environment could be good mid-year.

Q: Chuck Grom asked about Big Lots impact on sales and learnings.

A: Robert Helm said Big Lots impact was not as expected due to deal falling through, but momentum seen now. Eric van der Valk said operational lineup with Big Lots employees has been successful in recruiting leaders.

Q: Alexia Morgan asked about dead rent and Big Lots stores vs 99 Cents Only.

A: Robert Helm said dead rent impacts 2025 earnings but 2026 expected to have higher earnings growth. Eric van der Valk said Big Lots conversions are bullish as stores are warm and similar to customer cohort.

Q: Matthew Boss asked about Q1 comps and tariffs.

A: Robert Helm said February was tough but recent trends positive. Eric van der Valk said tariffs lead to excess inventory available in back half of 2025.

Q: Brad Thomas asked about store growth outlook.

A: Eric van der Valk said confident in exceeding 10% long-term algo due to Big Lots store acquisitions and pipeline.

Q: Lauren Ng asked about Big Lots store ramps and Easter shift.

A: Robert Helm said Big Lots stores opened in February with strong results, Easter shift gives elongated spring selling season.

Q: Scot Ciccarelli asked about cannibalization and operations.

A: Robert Helm said cannibalization considered with algorithms, Eric van der Valk said supply chain capacity now sufficient for growth.

Q: Kate McShane asked about gross margin and consumables.

A: Robert Helm said consumables business strong, gross margin guidance 40% with no immediate upside planned. Eric van der Valk said focus on productivity enhancements.

Q: Anthony Chukumba asked about consumables and chant.

A: Eric van der Valk said consumables businesses strong, lease terms for Big Lots stores up to 30 years.

Q: Jeremy Hamblin asked about category performance and pre-opening expense.

A: Eric van der Valk said consumables strong, discretionary down; Robert Helm said pre-opening expense flows with store cadence, second quarter highest.

Q: Matt Rothway asked about 99 Cents Stores and Big Lots lease terms.

A: Eric van der Valk said 99 Cents Stores strong initially, Robert Helm said Big Lots leases up to 30 years.