Ollie's Bargain Outlet Holdings, Inc. Q4 FY2025 earnings call

Managed noted a strong fourth quarter with record 86 store openings in 2025. OLLI's Army Loyalty Program saw 23% new membership growth and over 12% total customer file increase. In 2026, planning to open 75 stores. Focus on 2% comparable store sales growth and 40.5% gross margin. Also, focus on improving in-store customer experience, optimizing marketing media mix, and developing IT applications.

Net sales increased 17% to $779 million. Comparable store sales grew 3.6%. Top-performing categories included seasonal, consumable, hardware, stationary, and sporting goods. Gross margin was 39.9%, above plan but 80 basis points lower than last year. SG&A expenses were well managed. Adjusted net income increased 16% to $85 million, and adjusted EPS increased 17% to $1.39. Inventory rose 18% year over year. Capital expenditures were $18 million. Stock repurchased totaled $74 million for the full fiscal year, with $259 million remaining under the current authorization.

2026 guidance: Plan to open 75 stores. Net sales expected to be $2.985 to $3.013 billion. Comparable store sales growth around 2%. Gross margin around 40.5%. Operating income $339 to $348 million. Adjusted net income $270 to $277 million, adjusted EPS $4.40 to $4.50. Capital expenditures expected $103 million to $113 million, including expansion of Texas and Illinois distribution centers.

Risks include fluid tariff situation which could bring margin pressure, and weather impact on business operations.

Q: Could you give the thought process and why you're doing that now on the algo change?

A: We believe we're at an inflection point with growing size and scale leading to better access to merchandise and deals, making 2% comp target sustainable.

Q: On sales productivity and furniture category: A: Thinking differently about space productivity, testing furniture, exiting wall-to-wall carpet in more than half stores, early read on furniture is positive.

Q: Elaborate on comp strength relative to plan in Nov and Dec, weather impact, and Q1 momentum: A: Comps driven by transactions and baskets, January exit rate strong before winter storm impact, momentum spilled over into Q1.

Q: State of consumer and deal flow: A: Consumers seeking value, trade down continuing with upper income cohorts, deal flow off the charts in various categories.

Q: Real estate environment and store growth: A: Real estate environment strong, balancing new store growth with initiatives to improve in-store experience, 10% unit growth likely beyond 2026.

Q: Comp growth of OLLI membership vs new store growth, and demographic change: A: Consider Ali's Army as single metric, predominantly grown through new stores, overall pleased with Ollie's Army performance.

Q: Seasonal business strength in Q4: A: Seasonal business a combination of closeout and source goods, strong gift business.

Q: Margin and EPS under new algo: A: Thinking margin as current baseline target, 40.5% balance between price and margin, EPS growth in mid-teens.

Q: Benefit from Big Lots and dark rent: A: Benefit from Big Lots' absence in real estate and sourcing, dark rent expense $5 million in 2025.

Q: Dark rent and stock repurchase: A: Dark rent expense $5 million in 2025, plan to return 50% of free cash flow to investors through share repurchases.

Q: Marketing strategy and flyer: A: Optimizing marketing through dynamic media mix, reducing reliance on print media, not projecting flyer changes due to great buying power.