Ollie's Bargain Outlet Holdings, Inc. Q1 FY2025 earnings call

• Opened 25 new stores in the first quarter, a record, with most being former Big Lots locations that are performing well.
• Delivered strong financial results with total sales, comparable store sales, and adjusted earnings ahead of expectations.
• Deal flow and product access remained strong, with a flexible operating model allowing nimble purchasing.
• Enhanced loyalty program: completed co-branded credit card rollout, added new private shopping events for Ollie's Army members, and made Ollie's days promotion exclusive to members.
• Confident in delivering against accelerated growth plan and reaffirming financial outlook for fiscal year 2025.

Total sales increased 13% to $577 million driven by new store openings and comparable store sales growth. Comparable store sales in the first quarter increased 2.6% driven by an increase in transactions. Adjusted net income was $46.1 million and adjusted earnings per share were $0.75. Adjusted EBITDA was $72.2 million with an adjusted EBITDA margin of 12.5% for the quarter. Inventories increased 16% year over year primarily due to accelerating store growth.

• Reaffirmed earnings outlook for fiscal 2025, including 75 new store openings, net sales of $2.579 to $2.599 billion, comparable store sales growth of 1.4% to 2.2%, gross margin of 40%, operating income of $283 to $292 million, and adjusted net income and adjusted net income per share of $225 to $232 million and $3.65 to $3.75 respectively.
• Second quarter comp expected to be at the lower end of 1% to 2% range, third and fourth quarters at the higher end of that range.
• Assumes current tariffs remain in place, slightly higher SG&A levels due to medical and casualty trends, and preopening expenses including dark rent related to acquired Big Lots locations.

• Retail store closures and supply chain disruptions creating excess inventory and impacting deal flow.
• SG&A pressure from higher medical and casualty claims.
• Tariff impacts on pricing and supply chain costs.

Q: Elaborate on the state of closeout availability, areas of concern, and opportunities from disruption?

A: Eric VanderVlok said there's strong deal flow with inventory up 16% at end of Q1, access to more products due to retail bankruptcies, and more product expected in back half of year with no particular category pressure yet.

Q: Elaborate on traffic trends and confidence in second quarter comp?

A: Robert Helm said traffic was strong, built throughout quarter, seasonal categories impacted by weather at tail end, but core comp for second quarter running in low to mid-single-digit range and confident in guiding lower end of 1% to 2% range.

Q: How is tariff environment affecting negotiations with suppliers and pricing?

A: Eric VanderVlok said working collaboratively with vendors, fiercely committed to maintaining value proposition and price gaps, buying alternative products and reducing reliance on Chinese imports.

Q: State of real estate pipeline and store signings?

A: Robert Helm said setup for 2026 is strong, but not ready to guide 2026 yet, surmising potential above-algo year in 2026 for real estate.

Q: Quantify headwind from Big Lots liquidations and lift from Big Lots stores?

A: Robert Helm said Big Lots liquidations had a less than 25 basis point headwind in first quarter, Big Lots stores closed prior to Christmas seeing low to mid-single-digit lift.

Q: Cadence of comp in quarter and details on Ollie's Army loyalty program enhancements?

A: Robert Helm talked about comp cadence with February down, March up, April impacted by unseasonable weather; Eric VanderVlok discussed enhancing Ollie's Army program with digital marketing and exclusive events for members.

Q: Phasing of gross margin and impact of tariffs?

A: Robert Helm said gross margin phasing with third quarter above 40%, second and fourth below to average 40% for year, tariffs incurred a few million dollars and included in numbers.

Q: Pricing strategy and competition?

A: Eric VanderVlok said feels good about price gaps, fiercely committed to maintaining value proposition, maintaining price gaps by not buying products without strong value.

Q: Quantify SG&A item in first quarter and impact on forward quarters, and earnings power in 2026?

A: Robert Helm said preopening expense was a headwind, SG&A pressure from medical claims, expecting SG&A impact to trail off, and potential earnings power in 2026 from real estate openings.

Q: Ollie's Army sign-up performance in new stores and midyear private shopping event expectations?

A: Eric VanderVlok said outsized performance in converting to Ollie's Army in newer stores, midyear private shopping event not expected to perform at level of December event but marginally accretive.

Q: Second quarter comp and gross margin expectations?

A: Robert Helm said second quarter comp running in line with guidance, first quarter gross margin slightly better than expected due to deal flow and shrink.

Q: Incremental deal flow from Big Lots exit and impact of store growth on margins?

A: Eric VanderVlok said seeing abandoned product pipelines, particularly in CPG; Robert Helm said store growth has meaningful impact on margins but stores will become profitable as they mature.

Q: Motivation behind second Ollie's Army Night and CPG relationships?

A: Eric VanderVlok said introduced event to value loyal members and make Ollie's days exclusive, CPG relationships expanding well.

Q: Tariffs and gross margin guidance, reliance on imports?

A: Robert Helm said tariffs included in supply chain costs, reduced reliance on Chinese imports to 10% range, maintaining value proposition and pricing gaps.

Q: Comp in Q2 and inventory outlook?

A: Robert Helm said Q2 comp running in line with guidance, Eric VanderVlok said confident in inventory content and pipeline across categories.

Q: Supply chain costs and tariffs?

A: Robert Helm said tariffs included in supply chain costs, offset by favorable ocean contract, positive domestic transportation rates, and efficient DC operations.

Q: Seasonal categories impact on comp and long-term gross margin potential?

A: Robert Helm said seasonal categories had ~50 basis point headwind in first quarter, Eric VanderVlok said long-term potential for better terms with growth in closeout business.