Ollie's Bargain Outlet (OLLI) 4 Dec 182018 Q3 Earnings call transcript

Good afternoon and welcome to the Ollie's Bargain Outlet Conference Call to discuss financial results for the Third Quarter of Fiscal 2018. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from Ollie and as a remainder, this call is being recorded.

On the call today from management are Mark Butler, Chairman, President and Chief Executive Officer; John Swygert, Executive Vice President and Chief Operating Officer; and Jay Stasz, Senior Vice President and Chief Financial Officer. the started. to turn Relations, Fontana, now get to will call Jean over Investor I ahead, go Please Ma'am.

to financial contain this and remind want predictions, release that results and Relations limited outlook of third Act on XXXX section covering or remarks Private estimates, you press everyone the from statements, was mentioned forward-looking Thank forward-looking hello, found actual not call including Company's year call. this future XXXX. our company's expectations, and that be that quarter everyone. the considered Securities release items, can of of statements management’s in copy the could those Litigation and to XXXX a but should afternoon for fiscal A including be materially within press results may Reform differ performance, of of Any the issued Investor on fiscal today’s I such website. meaning

of speak forward-looking our place not update them should You information in no for We encourage future obligation Factors issued might earlier results any be including we or today or affect which undue of and not are may in to XX-K factors. as revise earnings release that to new on these on today, well and events. undertake future these our description our SEC control annual statements, Form review for these only reliance reports discussed more as filings, report quarterly you filings. our and Form on XX-Q, detailed as a

such EBITDA, call important are performance. Reconciliation believe the net in measures share these as I to included to to GAAP to our income that measures financial to Mark. the assess be will certain financial release. non-GAAP we adjusted turn earnings most over that, income, We closely comparable With our non-GAAP operating of investors per measures adjusted net financial today's referring will call diluted on be and may adjusted EBITDA,

hello today. excited and our everyone. strong bottom our us the joining the call we're Jean, very once as our business Thanks, exceeded continued in about again on and another expectations. delivered and line to top and We results for we Thanks quarter momentum

to three our me adjusted Many another that you which tight a deals, is the quarter. Ollie's heard of Nearly army. of net hallmark performance overall focus XX% said, flow, new great half line. in strong our This departments our comparable positive productive These store and of best increase. positive results say to income, drove and strategic floor is categories automotive. expense stores control our growing sales sales and robust these sales contributed ourselves comps deal on our on comped by electronics, and base, a times X.X% with growth, toys, consistent store consistent in store execution, included strong leveraging drivers; and was increase sales consecutive comp execution offering XXth our was performing pride terrific housewares, our XX% Key the Our driven we success. coverings great a increase and expanding of all top quarter our

For has to great XX over customers. deals years brought our Ollie's

a simple is This Ours do. we we sell cheap is just buy cheap. what business. We and

growing on to and that deals continue have are and We availability new we throughout existing vendors. deal entire our incredible the an see from store of

no with full definitely is slowing sight. pipeline in Our

yet other another state. our which our priority opened growth was Pennsylvania chain. store another our of store XXrd and named our Texas, new the give stores store, reduced brands is XX us to-date milestone opening Mechanicsburg, Our store. quarter-end, continued toy deals these to relocating quarter with customers pleased with they We buyouts Store have in I'm busy performed and first at prices. celebrated more strategic locations we've XXXth want, in of our what a allow had We we're new first thrilled very that expectations. and drastically how opening our remarkably outperform our well including the to Since

which Our new for our one XX line Included including store locations future. total long and excited year, properties. we're XX strengthens and recent Toys term real total Us estate about. sites really growth purchased stores great These sites, leased openings us relocation, us are six former in a bring Toys up set of the our former to pipeline into now "R" six acquired the a We've expectations. four of "R" XX in our Us new including with store and

profitable the when of the XXX the build stores opportunity on to our it broader I'm represent quarter XXX,XXX operational just for in land this new will development, to great saw service continue great proven fiscal closed expect serve all capacity space has to growth brand. place in first geographic or XXX distribution opportunity more think and a a support the state of DC we is feel on Texas and release, big for a facility eager XXXX. excited as we're you for our XXX as to completed. We're stores to thrilled the prospects and customers center. and expansion. be the path about our more be found model for even white The will Texas our in we during the new us. square as about with third Lancaster, area ever begun Construction have ahead nationwide. as to our a home The store As foot I continue we future we end we Ollie's result as our will This store we

accounts now Bargain XX% X.X for Battalion approximately sales. our totals Ollie's Army, million of the on members over Moving and

enhance these We're our in about out of initial mobile to the Ollie's response. efforts launched ranks. rolled the excited and As stages Army and experience, part the Ollie's we're of initiatives early Army we've app

Bargain of them coming existing the Army members. Battalion the loyalty the Our brand tremendous to incent lasting goal build keep and to is two-fold, customers We and the into back. aim relationships with new reward

Ollie's open exciting our Our doors our and year, Xth. this Ollie's busiest again thrilled Army of exclusively is the Night, members. most Army to once Sunday, to December We're night

tirelessly Our can't teams welcome evening. us deals to we loyal great wait special to Come have the for for our a tremendous the fill join with stores bargainauts. night worked and

an If yet, Army Ollie's and time see special you're there's savings, to you hope still fun not the member the and to in there. enlist we share

are of results. very offering all fourth guidance XX our year all opening working full Jay and and So over our that marks. for up, for day. detail. Simply XXXX Based year, to and quarter, earnings strategy are quarter thank to the only who know and I our do, third they on with your now commitment how at wrap holiday the we members more Thank the over I'll through to momentum performance business. controlling X,XXX sales more We're and combined We to team detail. than take continued of and new outlook expenses the harder you the results years of extra this our Over knows support the makes our them experience, the successful. to incredible it financial places Ollie's turn sincerely you expectations hitting grown every raising results our team Ollie's. in and for deals, has Jay we're call team It's will speak the which and of but to in successful stores. our season time ever. our our We're the not execute for on demands deliver associates of said, passion pleased

everyone. afternoon, Mark, good Thanks, and

had strong we said, very Mark As results. another our and quarter pleased with are

by $XXX.X increase million, store stack X.X% quarter of For The increased basket, the on basis. a X.X% two-year to slight a quarter partially reduction was the increase transactions. comparable X.X% a increase XX.X% in last and store in increased of on average in comp in net an driven increase a top by year sales sales sales third offset

we XX Michael. increase quarter period store stores sustained Hurricane ended new due including to opened the year-over-year. one and the stores damages our store in Parker, from of existing XXX in We count relocation a an XX with states, of Florida store in closed the XX.X% During

of due and increased expenses including stores per our new gross newly XX% million, stores the expenses from margin supply in these the by and Us sites. diluted quarter the expenses the $XX and to of $X.XX $XX.X XX.X% XX $XX.X costs XX.X%. higher benefits pleased year-over-year, the stores. borrowings income million cash, net year, primarily existing existing per gross the was new ended of increased to million. share associated Adjusted and openings. in the of compared $XXX,XXX above increased points chain Inventory to $XXX.X to new XX.X% Gross XX.X% prior "R" increased of of and at sales. the year basis over for to XX in to to At no income increased profit and in acquired million is third and the income XX period, openings margin by We outstanding Our related the of with sales expenditures store $XX.X EBITDA year. benefits million and We both store in result very had growth sales markets Toys we million XX.X%. former points with to $X.XX of million Toys third purchase per sites end end additional diluted to our diluted of used timing "R" due from operating "R" tax XX.X%. store increased $XX.X to net our Pre-opening and new Toys of XX.X% store period margin. basis income net a share XX in million margin of the Capital revolving our XX.X% adjusted deal the former increased increased to XX.X% to percentage new $XX.X under share to to prior base. of prior per XX% of XX.X% Net and million net base. SG&A remain volume $XX.X The sales, margin XX.X% Operating due XX.X% basis excludes in with quarter in cash of the SG&A expenses our due $X.XX net facility store new total merchandise compensation. having and quarter to across stock-based decreased to million purchase decrease our flow. net and the Us points approximately borrowings X.X% $X.X is with the $XX.X the income openings XX $X.XX. timing the EBITDA and deleveraged Us to increased adjusted increased Included store credit of selling basis $X.X $X.XX perform leveraged increased number to our continued primarily prior the to our diluted entire in as quarter timing to which productivity Adjusted share increased had the million partially offset from year, expectations we increased million points increased $XX.X

are Mark based guidance our earnings and expectations raising quarter. results year-to-date As the full mentioned, year fourth sales we and for on

average As operator range also and of share of tax billion the the now of $XXX million $XX which compensation XX% expenditures of related year X% fiscal the including million versus estimated to to $X.XX, store tax over low-end the such the store a $XXX debt; $XX income tax stock-based outstanding effective Parker, $X.XX of shares over related with X% $XXX rate the including construction which for exclude benefits net which lease for the million to own $X.XXX to the income billion, XXXX. Q&A $XX the excludes stock-based of high-end annual net closure period. $XX stores million X% pre-opening DC store; and million, $X.XXX the to quarter in full we new to Texas capital after-tax the weighted Texas of the X.X% DC I'll to of to includes the sales store diluted X% course investing expenses of relocation include higher our $XXX and of to through closures; increasing the million diluted total guidance of X% now which of million first the and turn of Florida net Adjusted anticipate to openings of an both compensation; the of income from year-end. one our range; of start million for benefits costs and fiscal the Operator? adjusted sales of loss to call our $XX the total expect project session. extinguishment new now increased growth the opening prior per to in of million impact two of to on back comparable XX to from the QX We the intend to operating

[Operator comes Boss Matthew question you. first Our of Thank from Instructions] JPMorgan.

is Your now open. line

Thanks on a quarter and congrats nice guys.

Thanks Matt.

line any bridge we Maybe that versus showing maybe to seen comp top the the model rank November? through trends how to talk Mark, continue drivers X% you would the about. way has momentum to used the the you model that legacy and X% been have just

our been brand Matt. to some have out we've definite is period long-term of in time deal This regards algorithm, the opportunities in the to marketplace. which expansion public and Yeah X% we of overall significant the that our seen with John. some flow, the has the awareness With to X% regards improvement increase overall been there a comp over

announced look given for the algorithm after the lot that for more toy comp and as we previously, with X% holiday it, have to we season business long obviously complete seem continue and do always to increased have we've the QX that to go As believe range we've the to we year visibility we the but right QX we this back X% at the the a well. fiscal run that into is as long-term we'll in business

In of comment how quarter, see as inter-quarter. the know, we terms don't we you

seen the where today. we're we're in We pleased continue have with at business, the momentum

one on And Great. then just margins.

would quarter side, and quarter if we to as any best chain supply headwind think initial and margin about what margins think year, fourth maybe merchandise how the versus On chain that supply the the this be on of magnitude gross thoughts headwind about helpful? was there's next

and merchandise XX offset Jay of the is quarter, was that year-over-year basis points was margin This by points. start XX the basis with up Matt. chain that. the Sure year-over-year I'll In and somewhat improvement supply

basis on about. out on improvement expecting basis at a talked in margin year we're XX estimates that this basis pretty full of think census basis, points. that still of we're are for So at look quarter look When we XX We're the gross I annual close. I when year an probably points XX.X% the targeting we've QX, margin the there, to

We to XX chain side. costs the headwind we're the expect start to chain about probably anniversary those XX decrease to a QX decrease because in supply going or to supply on of headwind,

little year-over-year we XX the would So we do then comparison basis points. merchandise margin bit the standpoint a expect to that and to up lessen expect from a be in to range XX

Great. That's helpful. Thanks.

Thanks Matt.

you. Thank

from Markets. Brad Our come question Capital next Thomas of will KeyBanc

now Your line is open.

Hey, XQ? good guys business was you the contributed and about bit wondering quarter on more doing I how a congratulations could it's comment far toy how little so XQ afternoon, if and in strong here. here a to

I'm locked, well, of well the Yeah Brad, the very We weekend as going I about weather. excited. performed the categories. quarter. is to loaded, we're performing out, coming with had ask we coupled very We and very, were was about excited. into one toys pointed we bargains excited very we're great did top know the or our we question somebody great next prospects holiday soon extremely fourth we were the

that ahead we're I'm what being very these doing said, where with a Night about really absolutely weekend we're have way of important purses. really really, including very, really, good at. and it we they're with The still Army lot So their well. showing customer feel wallets likes this That of and Toys all long and and are us offering thrilled. we there's weekends a

P&L that does our on into with then think it any center, year the models up? next the should ramp have that and you as factoring we Lancaster XQ for to about for how impact respect And Great. distribution

ready Brad. XXXX, I Yeah number. it XXXX. John. to very number of some from materiality terms XXXX and center. a With is in be This XXXX the modest in the DC expect fiscal on away clicking QX small start being retrofitting the travel starting It seeing related impact will and pretty the P&L you'll be regards Lancaster go. QX to But costs there'll in for in get it'll no distribution to impact of of fiscal pre-opening would Texas

when to DC said of we that XX John basis a like and points in get it experience in before, up like basis we XX XXXX, and margin. Brad, typically headwind we've call running said points the

Great. Thank you.

Thanks Brad.

Thank you.

question next Our Credit Suisse. Frommer will come of from Judah

Your line is now open.

freight to changed Hi guys. fuel, the it when is you'd for similar really to chain we're related last pressure, call in talking there taking Thanks that's the out? question. there Back is anything that labor supply and quarter

in, or and Judah, are but consistent and answer the John the Mark with no, chime is start very pressures this the and fuel may is Jay, I'll the short that, trucking.

wages continued the in We DC about invest to have like talked before. at the we've

that there's the well, a of it's really expense as little side. trucking So from but bit

obviously direct since necessarily more or Okay. some And broadly, in labor, retaining not talent the positions? your refilling any call, wages, of, issues last competitors, commentary but industry out

this John. impact hire. Judah, on have not the any really or retention ability We seen to is

to We good through we additional good market by have continue continuing any shape. have to pay good in the of we make be in the competitive in provide We turnover hours sure what stores to work but environment, stores a We're but wage so with that shape investing pretty in we we're need stores it. giving we to we and to market holiday believe are for retention, terms the the work season not when big a adjust changes. seen

they there some the more are other consumer, comment slightly on there last transaction with can elsewhere on And you count, year, think pulling of they going anything on? the traffic for back, there is called is was phenomenon or are comparison that the if I or could squeeze out I one spinner just more quarter negative you in prior going the in

Did four I I had tell six you, comp. a

You [it’s] people. did, but [ph] fewer

always don't deals very traffic the Judah, the for a X.X% the on as as transaction the count, mega slight were the negative we was it focus slight and you into drive we've comp that said the a able said count when to store, Jay see see very with and quarter. traffic driving transaction can we

put still to the we're that the basket on concerns customer base. maintain We're more people nothing seeing continuing and us. So in

we're So it. about excited

Thanks good luck. and enough. Fair

you. Thank

our Jefferies. And from you. of Thank question Randy next comes Konik

line Your is open. now

are How guys. you? Hey

Hey Randy.

chain supply the to back go to wanted costs. Just

you clear, I start So just the to and do those to be next dissipate want of get just those timeframe headwinds after quarter, or to see costs duration that.

start to the Jay on of a the I full will seeing we're Randy, in headwinds, transportation we side finish starting and annualize those on let basis. overall terms are the but year technicalities, and in the cost distribution

So we don't today point just them think of don't And were don't getting -- see see as than subsiding, annualizing. year. last the them see we we we headwinds at this worse they

So it'll to off. we start believe level

expect on order in a up after margin see leverage little norm of us headwind several new to another the some we've the that today. to of see has year more seen disruption side But years haven't new deliver other been going transportation continue. DC there's that to much XX% but DC the become able do ago. to the XXXX into all, new stabilize helps unless that as a margin that cost starting and the still than do will think with and it we it occurs or gross we know for up, you So yet it's long is type at but pressure I may two two see that some we term still if to with so with The was algorithm year-after-year don't you only that higher maintain poised to now, it so. years to that we're that bit fired seen we

think incremental then And cost, that kind bit you merchandise improvement you that those you're offset can of on seeing a margin what nice little do DC with continuing?

at margin that subside of to would in to XX year on to see the probably we see XX DC basis in We two when expect between if starting related we the at the tell you, XXXX, probably XX-X I our XXXX, somewhere you you look DC but in pressure us one to and we years points don't offset opened up XX-X, in saw XX-X, Georgia and think area. three, can --

significant, you that to I point freight the not XX% we offset savings would we first in maintain So the not tell able distribution we on in but this be probably count up our center is year would time. would at fire unless the that

technology be have that's the other in would center third just perspective DC, additional kind of other talk and own or versus and that's third learned it anything lease the reason to distribution the the from or just of terms the to different that the a In throughput applied going the way the up to to set it's different in center ability anything two from be you to from two? distribution

the of and than is be a I our of mods opening did We feel New we comfortable that that distribution up Jay XXXX, be add asset, feel owning from We center. a have in exact distribution to image that back as more distribution right is a that pretty in duplicate going model out building may very model the had footprint. we're to Randy, terms other building think feel next in center per automation built we the what right se, is in great the spitting I'll And in and the XXXX the to but that's little from for what bit pit address we're of that roll center the going that and we distribution the learned, the We duplicating that. York, the of actually perspective. Pennsylvania. centers much throughput third almost we first where the efficient well same that most prototype us it's for first

long buy, over the control capital to necessarily capital this We us, we could been a for term. want the strategic and to quickly do own to like not time. it. we've is these assets. it's The asset We've want got versus store on it calls about for talked This change we've asset, periods own different allocation. It of

it pay So thought buy sense those made versus lease to to it. it from standpoints premium that a all we

so Understood. Helpful much. Thank guys. you

Thanks Randy.

our Morgan question from comes Vincent Stanley. you. next Thank And Sinisi of

is line now open. Your

guys for afternoon. taking Okay. my questions. Terrific. Thanks Good

introduced wanted know of early Just we been traffic wondering the within you go whatnot some some the that there seeing in just was program, positive some again, comparison talk slight, but to we kind it's kind you've the has are of ranks but but frequency, you -- the of can back know just Army in -- just Judah's maybe turn and the during it's to the from maybe quarter a just the last seeing more since traffic terms on -- with will quarters to of of kind obviously higher but what on to question know whatnot? what of I case, ranks importantly you're couple

even of we have start need or tell of the We ranks two near color type you're any something it's more us we're really really but -- the months a too beginning talking digging We probably and data so early think anywhere roll would August, difference. ready you needle see give how really near a so to tell we're see seeing to -- quarters the belt on that's today. about moving of not talk activity. our just you I under couple that's to to to in here ranks shape it, what analyzing don't Vince, enough probably big for I and out the yet at into

the our was comment back top if of quarter, on we transactions, one look departments. to HBA one year-ago Just the

So transaction I maybe mean item. higher high that's obviously a velocity,

this to So some surprised we given that quarter weren't have standpoint, categories we transactions. from especially that top some of would headwind the too had

Thank just helpful, then Got That's a follow-up maybe quick to additional that. just Jay. And you. you.

place Army Night marketing kind this the then in or can any that whatnot holiday might increases now you ranks the one or more of to. season, holiday this don't in. week, With just if this to approaches slide I speak you And with and mind, up coming for changes

around of it's existing with new markets, know over initial new does Just time? but might become early, operational, the thoughts, how kind it of we once that the mix any change versus DC,

to member and decades on and on Mark, sale did be same customer, you is for Christmas in entire are there's before. all year all It's Army The the get Ollie's last is done absolutely XXX% greater the exact first this discounts products that to to Vin, Night. I'll toy on stores. Army an thing Ollie's in have got and we the go we store

wouldn't stores be zoo, going packed. the Army are busy ranks the there's moment, no with not be it but do that there's good to anything able change. so to the even going the future weather affect weather, night, pretty an not So on in affect. We're absolute especially The they're Hopefully watching would and looks and but so absolutely approach every we're you particular even market go be no in for this Ollie's the to ranks do with to change Ollie's Night. Army favorable,

of boys I'll the go. let part question, second The

believe DC we to going is opportunity, or a very obviously a overall markets, it this going are and regards very growth from large believe and of some is affords us, Vincent, whether we to neighbor With in XX existing John. it itself stores, us the lot opportunity going market to new good a be be a what Texas. store XX state of from Texas for is logistical it's markets to perspective. The be store

probably remaining from be DC terms believe and will will stores to So Mexico come and XX part New Jay out from much in Texas, how XX stores as to the store fill of Mississippi, Arkansas, count out. Oklahoma, the We of it's fully XXX had of Louisiana, when Tennessee built that market stores part mentioned servicing -- the XXX in out well.

area. the will servicing that So be

filling new distribution center. up still always we've we're said markets As lot Georgia from the the a of

XX% of markets a we've We to existing believe new XX% the So, in about and of of stores XX% our the to come probably have of out XX% opportunity will Florida. markets. we lot

Very right. luck. very guys. Awesome Thanks helpful. of All much. Best

Thank you.

Thank you. Paul Lejuez And our next of question comes Citigroup. from

is line now open. Your

attracted Hey the last about increased new to you this customers growth category? if curious the and quarter can you've versus I'm talk in active that on focus guys. if buy Can toy with quarter. tell customer you

customers Paul, annual think looked this at on quarter-over-quarter. active an at it I don't normally actually John. the we've is versus last new year year look basis. We this

So even on back wouldn't on I I have to for the you get answer but that you could that. today,

on that comp came the and not toy that was other that the with from came words specifically And also sale comp, Toys, then that toys itself, X.X% of in from much also attached by of much then how just sale driven traffic the but Toy how purchase.

calling get out so departments to to John Paul, that into And the really to extent comp, going contribution we the referring this is we're We their analytics haven't you're done to. really to them like that. the speak the don't said Jay. not

on and follow-up last one many have year. we've everybody, so for have we years, like Mark started year toys been toy it's retailer not remind and I Paul, just a have this is, didn't that

buy not be analysis it's basket, these like be that a perform all last or get attracting hard didn't so se same accurate we're necessarily more and very would the anyway. per to that toys new may So to toys people that we selling

categories in where inventory little then level, turns improvement? can turn higher just bit for your category, and And the what by are you a biggest you seen trends in opportunity biggest have improvement about maybe talk

Ollie's with deals the not are Paul, inventory drives this focuses turn. We years deal we company XX the now for on been and John. focus I've on is about business. that and a

product fashion to a We weeks. inventory consumer. XX the motivate inventory the good have a don't to of right retailer. manage X shelf we're to a not We manage there's to reason life So the

since turn just it's worse, So company been been it's gotten buy. that business our it's of we improved, X.X not has and turn way the a about nature X.X year the times here inventory the as I've not a to

So trying we're in We the on a really department. business deal consumer. focuses that not increase to to try a the to turn the increase

Thanks guys. luck. Good

Thank you.

Thank comes from question you. of Scot And RBC. our next Ciccarelli

now is line Your open.

would between you? typical inventory split Hey of XQ, and just does sell work guys. say toy question you seasonal and conceptually XQ the a on those basis the between had How typically toys split how to million two quarters, $XX be? another let's are So what for

annual toy the about last are talk sales just typically We roundabout which that. disclosed X.X% haven't we year. Scot, Yeah

In in We really talked to in quarter up that that's double and normal year number goes have we've talked it about a fourth QX. about about. the all that going

QX haven't talked between and split the QX. We about

just stores. have experience little you you guys have then of bit typically a second and an from transactions know do to open get up. strong the very of waterfall? new I you you or on back typically kind the kind traffic you guys guys lifted then of have new new number lifted dips you ratchets what traffic store a question, tend annualized as openings that And Do kind store

not we we Scot, a count I only. That's we know traffic. count said but at, something sales traffic concept, many and to we've think everyone that we don't look that times don't look I everybody. likes at

guys. Thanks follow-up. I'll Okay.

Stephens. comes question our Thank Rick you. And Nelson from next of

Your line is now open.

you could to up going Thanks. to XX%, having think Good year forward? about point of I'd have, afternoon. quarter. tax to up benefits to would some those invested ask do opportunity and are need or talked that like had you earlier you if speak you that to your we on Great you, spending the what in the reform

little bit Sure, an Rick. we by is in the In This We Jay. a much definitely that have we in talk invested quarter QX, spent quarter, of and uptick a benefits QX little of investments. that, kind we bit in in DCs. saw hadn't

in to invest wages the DC. in the continue We

market we across also invested across season our reinvestment of did and by said selling also continues. the so additional lot wages earlier in the hiring on hours raise markets, for stores didn't we not call, wages We invested all But wage. the we into like lot invested board, we the also of a stores in so seasonal key benefit our John a have minimum in certain for the markets

So planned QX about this $X.X is more that's year. normalized, We onward. we going through think had basically in million to QX and go

$X going about So million million if $X an would basis. say million $X I that is think you be for at on QX, probably next take annual year, to about out to investment I ongoing

if Also see affecting how back business? to on, ask they they on, are off, about you they I'd now like were tariffs, that go your

the Rick, bring sell, do some we we don't we to tariffs and price that are a of have tariffs, we a have setter, some price have as are this the not major is minor previously large, a sell. the we us do and in because we to product by But mentioned, we impact Mark, effect reactor.

to our is of the call what we off be is, goal what percentage a So at real stores.

and if likely don't paying So what the to price, they're delay know attention will that. consumer going off competitive the for their more they going to the product, just whatever what to any that be would have if certainly adjusted the to real know have market Certainly we hope think to situations and the we raise the of we're stores, is. their we with but percentage price are to accordingly the one they win, to a tariffs, in prices have of is be, those to pay

good Fair enough. and luck. Thanks

Rick. you, Thank

Piper is Jaffray. Thank question Peter you. And Keith next our from of

line Your now open. is

guys. Nice just Thanks a follow quarter. Hey. on Mark, up tariffs.

outs inventory off you sort dynamic, about an XXXX be of the again As opportunity potential past help for business. you look can about may we that import becomes at the change talked available? of that that buy Do close about to again an opportunities think to talk how excess on you've see I'm your the there always as curious,

your because aggressively tried are think and you you, it. Yes, disruption question. think, perspective and a From anytime happen people lot you I Always there's is your orders, Peter. to look, beat be personality, of they to point which going and cancelled we're might my timing a I know pursuing to my there

good but we that stock ahead to pretty with might early We have you have discontinued there overseas, are of items, very lots, the pursuing very, cancelled and this opportunity it thinking. be jump to orders, be XXX% on I remains it we run seen. but line a think, It's aggressively daily and in been our on are

question the run a exiting with relationship your level might you think one supplier be improving R out to year market? you're community now forward rate guess, within toys. each close One year. that toy concern I that Us the a difficult just you on at higher time the investors next going There's separate invest and lap it'll with can at another such XX with back business Toys categories

as good I question well. a think, that's

-- consecutive XX this I that my is welcome world. think -- to We've quarters.

or whether back. come to get but candles there's a people So do familiar did your think for get it save once toys HBA they going to I like with you be that habit familiar come we be the into enjoyed much and to and money what experience they them or the coffee, store that once you people

way got for brand toys a and So and to some lap and next to aggressively lot of to of think we're think I'm we've we're in now go fine. but the I to do it, long really products our think toys the here it's take got year. we're success name a and good for about Hopefully, really, are others have but we QX. going next year, going to QX, really excited just future ability the great able prospects continue I Certainly, going I task up and sell in to toys, we enjoyed pursuing been the in to we've we've

Okay.

luck. Thanks and terrific. Sounds good

Thanks Peter.

Wells Fargo. our question of Edward And you. Kelly Thank comes next from

Your open. now line is

to a and afternoon. guys. And on with freight follow up just start chain. the Good want supply I Hi

on probably Can pressure, drivers it that others guess, I would know, to to just down your cost should on next that we're of you call, hearing year. they I that? I really from may normalize you're think, but talk Just to be comments the the expect maybe expecting we normalize. not based like diesel the expect sounds about

drag. I to that. lot still to cost think a are as a be drives curious just what that expecting I'm

just What I think, Ed. to sure did we're clear, make we

is, I year-over-year. think that what we're saying annualizing we're

going It's level increasing. a year the what for been have at was now. be normalized not to So going same it back to it's as prior to just it

not to XX-month So we've worse now. what than that period seen a expecting we're get for

So back over not new that going what increase prior to for months to saw XX makes going norm, number to that normalized the and we're we you. to to the that hope just clear call annualize start I we becomes go ago. levels that We're

elevated I'm I of what that. rate year With P&L. that or No, again inflation is that and I the about asking next get guess not? cost in your the

We se. We at going continued that we're believe it's new not to levels out higher see this point flat line are at going the normalize, elevation seeing an year-over-year. to per

distribution it's higher perspective. be should to variances transportation a maintain offset have March large as you've overhead from to not margin that we what as So seen a but still challenge quarter-over-quarter our an

Jay. And is this

to pencil we I plan tag as mean, go out long to have for our still XXXX. Just way on, we a

talk yet about lot call, it. more call. it haven't on We we we'll a this don't really got QX talk there about Certainly, the whole and on

a question members say Understand. Did army. ask about guys I to just this I wanted right? quarter, you hear X.X was million Ollie's that

That is correct.

looks what about I taking that that's ask was mean, Is I'm it down unless than Can I it just less that because, numbers wrong, like right? quarter. last

Army back end Yes. done always our you the at period of have would year database That issue. of We and from go same year is October. notes last at and your same the if it's Ollie's purge the you time at to correct a once

decrease to you're customers unactive, clearing them. we're and QX going who to call, always So our be as those out a QX deem we from purge have we

diligently keep we numbers now don't working allow try to So quarterly call to to purge. growing. that what right get a to we We're

yet, We're place. it become there to take So have very for not starts close more getting starting becomes there we're to -- smooth to guys. you and that

same public, can been to same that's the to that's disappear so numbers So where we've now call be Year-over-year, thing it's right every case done as not and quarter-over-quarter. our won't we've people choppy QX many but to will see see the goal the QX you since quarter. and start the each gone from you

is So this probably I in the membership about way growth quarter, that is right correct? think that base, year-over-year

That Ed. is correct,

Yeah.

Great. Thanks guys. Okay.

you. Thank Ed. Thanks

from question Prykull And Chris comes you. next Goldman Sachs. our Thank of

Your line now is open.

in but elevated? just follow I question. come had Ed's freight contract exposed the you a rates spot like up are you taking because it the between year-over-year freight for still are quick spot to two rates more seeing to Thanks looks guys. those a contract Are in or And rates? rates Hi difference have rates question.

goods spot the purchase. the go every more coming buy we are we been are we really -- market, has on a buy and know where and because exposure market we time we way don't make our each -- from Chris, our to

inbound market not only we're the side on of freight the business. So the in spot

on this our and most We inbound all of we're side on headwind the the of has the the the been rate contract, contract on year are mostly on outbound basis business.

fourth then is but the correctly And incremental quarter, pre-opening around it in income in -- expense I the operating in that you was was slight the think, guidance, change primarily heard change I some accurate?

stores $X.X Yes, preopening primarily a to a improved in in ago. the up that's right. compared XXXX cadence just We increase opening year little million related expenses in over to just got increase

just sneak then one in, or color if early? And Fair or any mobile enough. last, one it I is the learnings it could too just initial app from rollout

the we north I think from and mobile we're of it's we the had a that little thing members excited so one has Chris, probably fast. on adoption than XXX,XXX our mobile the but now expect a higher early, did expected. not rate We're been rate who've too standpoint app adoption adopted app such

rapidly. So this see people up that to signed many we're for excited

holidays. much Thanks Great. good and the luck so over

Chris. Thanks

And answer back for and over conclude question does to like turn any this remarks. our gentlemen, and to to would call closing Butler you. ladies Mark I session. Thank

Ollie's. Thank of support Thanks in our Okay. you, your operator. everyone participating for call in

about our here well holiday season. we're the Ollie's. at the exciting believe for It's time of great feel we ahead, trends. remainder an positioned current Looking We

to and very fourth a and late Thank wish our you get our stores urge holidays. season call March. our are happy Happy packed everyone results all you we you to sharing incredible forward We out shop of very Our there and on holiday look in much. quarter with bargains.

participating today's program. conference. concludes in today's Ladies and you thank for This gentlemen,

day. may Everyone great have disconnect. a all You