Ollie's Bargain Outlet Holdings, Inc. Q3 FY2025 earnings call

• Store Openings: Opened a record 86 stores in the year, with 32 in Q3, representing 18% growth. Long-term target is 1,300 stores with a goal of at least 10% annual unit growth.
• Loyalty Program: Ollie's Army membership grew 30% year over year, and the customer file increased 12%. Younger and higher-income groups were the fastest-growing cohorts, driven by marketing to digital consumers seeking value.
• Merchandising: Utilized a flexible buying model, expanded seasonal assortment (especially fall harvest, Halloween, Christmas), and saw strong deal flow in consumable items. The holiday gift program, initially tested last year, was well-received.
• Marketing: Shifted to a digital-first strategy, reallocating print spend to digital media. October was the strongest month of the quarter with reduced print campaigns, demonstrating the effectiveness of the digital shift.
• Supply Chain: Plan to expand Texas distribution center by 150,000 sq ft and start expansion of Illinois distribution center next year, aiming to increase service capacity and drive throughput.

Net sales increased 19% to $614 million in the third quarter. Comparable store sales grew 3.3%, driven by a mid-single-digit increase in transactions but offset by a decrease in average ticket price. The top five performing categories were food, seasonal, hardware, stationery, and lawn and garden. Revenue contribution % wasn't explicitly stated for each segment, but the focus was on overall sales and category performance.

• Raised full-year sales and earnings outlook. Net sales expected to be $2.648 to $2.655 billion, comparable store sales growth 3.2 to 3.5%, gross margin in the range of 40.3%, operating income $293 to $298 million, adjusted net income $236 to $239 million, and adjusted EPS $3.81 to $3.87.
• 86 new store openings in 2025, with 75 new stores planned for 2026, front-loaded.
• Assumes current tariffs remain in place, depreciation and amortization of $55 million, preopening expenses of $25 million, annual effective tax rate ~24%, and capital expenditures of ~$88 million.

• Challenges in the retail environment, including store closures and distressed retailers affecting market share capture. Unknown risks and uncertainties related to tariffs and other factors could cause actual results to differ from forward-looking statements, as outlined in the company's SEC filings.

Q: Charles P. Grom asked about the state of the consumer and vendor relationships.

A: Eric VanderVlok discussed CPG relationships, noting strong deal flow in CPG due to abandoned product space from consolidated retailers, and the consumer segments, mentioning strength in upper middle and higher-income consumers offsetting slight weakness in lower-income consumers.

Q: Matthew Robert Boss inquired about Q3 comp components and fourth-quarter comp outlook.

A: Robert F. Helm said comps were above expectations with mid-single-digit transaction growth and lower average ticket price. Eric VanderVlok added on AUR, stating investment in low AUR deals drove traffic. Cadence showed momentum returning in October and carrying into November with quarter-to-date trends ahead of guidance.

Q: Steven Emanuel Zaccone asked about customer acquisition trends and Ollie's Army Night.

A: Eric VanderVlok said customer acquisition was strong, with retention also good. Ollie's Army Night in December was adjusted to start earlier based on June event learnings, with no significant incremental contribution factored into guidance.

Q: Bradley Bingham Thomas asked about SG&A levers and marketing transformation.

A: Robert F. Helm talked about long-term positioning for 5-10 years, expecting benefits from new store annualization and roll-off of dark rent. Eric VanderVlok elaborated on marketing transformation, reallocating print spend to digital for better top-line drive.

Q: Sarah Moore asked about sales productivity, category mix optimization, and consumables impact on gross margin.

A: Eric VanderVlok discussed steering category mix with size and scale, and Robert F. Helm mentioned gross margin guidance above long-term target due to closeout environment, lower markdowns, and shrink, offset by some supply chain costs.