Ollie's Bargain Outlet (OLLI) 20 Mar 242024 Q4 Earnings call transcript

Good morning, and welcome to Ollie's Bargain Outlet Holdings to discuss financial results for the fourth quarter and fiscal year 2023. [Operator Instructions]

Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without express written authorization of Ollie's.

Joining us on today's call from Ollie's management are John Swygert, President and Chief Executive Officer; Eric van der Valk, Executive Vice President and Chief Operating Officer; and Robert Helm, Senior Vice President and Chief Financial Officer.

Litigation may within statements safe statements the of Private today pursuant are harbor are made XXXX the and of known to meaning Securities subject comments to constitute Such and and forward-looking made provisions as both Certain amended. Act Form unknown forward-looking Reform statements. annual of uncertainties uncertainties on are and that results on report risks quarterly risks Form XX-Q cause and and to differ the earnings in our with Those actual could materially on XX-K from SEC such release. press file described reports and the

Forward-looking statements undertake this any as the not call, update to date these statements. made of today are obligation do and we of

measures. measures On comparable release. most the today's also earnings non-GAAP in to be call, will of financial GAAP Reconciliation closely company financial non-GAAP measures press referring our are financial included those certain to

Mr. With over program that go to Please I'll sir. turn said, Swygert. ahead, the

call you good and you, Thank fiscal year. quarter our morning, a We appreciate strong fourth and joining today. We everyone. had

fourth increased For sales bottom results. and line delivered of top comps. better-than-expected store we consecutive our Comparable positive seventh X.X%, quarter, quarter the

categories sales Our of product with the was comping quarter. positive over growth our in XX% broad-based comp store

deliver addition us very a In we in XX% points basis solid in Gross sales margin XXX helped also store increase strong earnings growth, the to comp delivered increased growth. which share. per margin to turn adjusted XX.X%,

a great and execution the hallmark capped for on off to consistent strong marked fourth The and return Ollie's. Fiscal performance quarter year Ollie's. XXXX financial a our

of a past this year, records team's included are We our proud and milestones. of number achievements which

returned XX We in X the crossed almost the XX-year to our of record Ollie's strong. billion results. long-term beat Army million importantly, gross year in generated estimates returned $X million first most and consistent We for year. to target our And members state. entered full We store raised and and margin all second algo we grew record XXXX, new quarters. and X.X history. pattern XXXth half time We mark execution earnings XX% XXth the our our financial strong in fiscal active of added a sales to the net and a we our opened members In and of sales

of very feel business recently in the We on and years U.S. our completed growth. areas real out trend density about changing rural up a is supports We X,XXX migration our few estate previous for stores, and a third-party latest trend long-term a good target positive larger over which suburban markets underlying metropolitan study, of our trends landscape. long-term the feasibility demographic The and and from a past data Ollie's, into across our utilizes X,XXX. analysis focus new

win. community, seek built around trusted effective consumers vendor experienced distribution sizes buyers and XX shapes doing in sell following. typically to cheap, our as set In And the closeouts bargain. good positioned over and an and deals and up all cost developed handle the agile loyal deep to relationships of developed we manner team have of throughout a customer a so, talented are network ago, to and founding XX% loves that built to prices name have high-quality stuff bargains. Everyone fancy We XX% we Since we value, our stores. brand our and years model below products

packaging the and the growth this changes driving working manufacturers, market. can supply are At their partners supplied new bargains, closeout strong and developing orders for looking them Today, are Larger chains. who larger help larger and inventory to and trusted looking flow. consumers in same and by introducing retailers constantly to and endless disruptions is chain. the time, and manufacturers and new marketplace are This around products, manufacturers are lead product for being manage supply

market. We our XX-year has credibility and experience, products. the king size, and scale reliable and partner closeouts, closeout manufacturers history built are and and Nobody in excess we are environment. this over we a trusted With closeout for the for know relationships, are of extensive

becoming power As vendor purchasing a to is growing, result, and our we more and more are community. meaningful the

significant and have to made We investments productivity. execution enhance drive

We have management store our distribution the wages invested the across our center. in entire field stores, support and centers, company, teams

capabilities, loss implemented We real have as supply expanded our digital the teams capabilities. and marketing, and remodel expanded such campaigns operational initiated our retooled and a program systems prevention, our store new chain, enhanced major technology marketing and estate distribution

off. are paying Clearly, these investments

is well levels base are well costs customer results. and and financial consistent our and In increasing short, productivity strong we are executing expanding, Our are our control. under delivering

let turn to the over Eric. Now me call

good Thanks, morning, John, and everyone.

supply drive and to fourth deals, year marketing across in strength and and team strong the the Our quarter organization. of hard reflect results. and fiscal Process of results continue chain, and work better our stores people, and the our execution our we made investments have our productivity commitment improvements

Our focused number our operating on core digital drive and execution. efficiencies through store Ollie's deals, amazing new reach investments offering marketing expanding of to growth openings, is and a initiatives, Army, leveraging

half was In back in the fiscal record. and new we a fourth target the quarter, The of new XX the the store stores openings year. year new opened openings of our hit X for XX-store

marketing growth contiguous strategy leverages real and reach to chain. that We awareness, brand a supply pursue our continue estate

store XX our With the in opening in states. of City, operate now Iowa we XXXth

good to open in a markets these XX XXXX, approximately are with we fiscal In and new Midwest. the stores existing portion of targeting

Over our been our designs. are applying base and has existing we opening and stores addition store now new through remodel to our both store existing to learnings to In new remodeled, continue stores, our we program. XX% of upgrade stores

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and hear Are us? Ladies resume and please will to program your gentlemen, stand by, momentarily. you able Ladies gentlemen,

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may All right. proceed. you Great. Yes,

everybody. portion. Again, to Eric resume the difficulties. you, going with on back the apologize Thank for Ollie's technical in everybody, call we We're conference starting his

thank Thank John Rouleau right. Swygert. you, All you, John -

morning, Good everyone.

of reflect people, to our team Our supply fourth our work year results. organization. and and the strength the productivity Process chain, investments we stores hard have deals, of and across commitment the marketing execution drive strong and continue improvements quarter in and made the fiscal and better our results

growth on number through Our offering digital deals, of store our and core leveraging and and openings, amazing a reach Army to Ollie's operating marketing is new execution. initiatives: expanding efficiencies focused investments drive

the opened fiscal the half the In stores new hit record. in year target and the openings of fourth was openings for XX a new quarter, back The we store XX-store X of year. new our

marketing leverages supply to pursue continue growth awareness, We reach brand chain. our real estate strategy that and a contiguous

Iowa in operate With states. XX the now opening City, of our XXXth in we store

we new to in a with portion XX targeting approximately XXXX, the are existing good and open fiscal In markets Midwest. stores these of

stores our our both upgrade of stores In addition stores, and new are learnings Over our opening existing new has now base we XX% through continue program. remodel we store to and our design. to applying been store to existing remodeled,

distribution full support is of in Our year. in and start operations our the on the to second will new center in half up Illinois track continued growth Midwest this

investments XXX over the year, Our to combining fourth capacity this ability distribution with past will stores. made to stores. center to up XXX expands have service the XXX to additional service our When we've we an

digital social dollars to into On platforms, TikTok, advertising various including the media front, marketing shift and we Facebook. across Instagram influencers continue and

in millions a of views of YouTube. channels, impressions we tested video For generated Black formats X that Friday series ad billion and over including Google Christmas, and

Our over users. Instagram impressions XXX with digital Facebook flyer million registered and

customers. with us Our top existing marketing birthplace the helping new of and mind bargains, expanded younger digital customers is and program of to reach Ollie's keeping

Our growing customer base Ollie's is our Army reflected numbers. in

over with attracting, customers demographic As we seeing in we customer to are are million had in alone. added John Ollie's this with customer younger mentioned, year also year a growth additions Army line X.X the growth in Ollie's Army. In we younger joining customers record the

retention years. have quarters renegotiated the where few to the past Lastly, trade-down annual customer May. and seeing cohort. for is every are international we supply moment, on over made the several this improvements chain effect an over contracts we have continue strong significant are from This we our Touching experienced benefit carrier a from area last

our We have and visibility team, number execution, carrier of in direct improve new to increased the relationships. brought overhauled systems and

terms. favorable in volume have negotiate Most contracts to importantly, leveraged we our annual

covered requirements Now contract. almost foreign shipping XX% under are of our

exposure As market. spot result, we very to the a have little

overall As around are our XX% a of imports. purchases reminder,

the we have addition, In Canal and controlled. from through import the Suez seen our costs not remain well disruptions shipping any meaningful impact

buying customers compelling we as negotiate on Like margin prices the tariffs pricing other adjust on increase retailers, do to that relatively value based to we to delivering the were and would don't tariffs, know basis. but a our what a want new targeted accordingly implementation we result fluidly could the presidential within our everyone parameters. of short-term while our the remind same election, offer marketplace If in to prices upcoming happen from import of

real We watch to continue estate closely. the market

bit this with forthcoming seize closures arises. moment, balance positioning and to loosen more and tight the provides particularly recent up and of potentially While the some we the The business the at our model market it bankruptcies. is of this store think could a our strength sheet, with us start opportunity to as

moment to I to is when Rob, this to quarter, in, our take of team executing and we to the across incredible obsessed out. associates Before possible a day day for the value working delivered over I call together alluded entire thank the like different execute the business. would John our business to is our areas turn consistent to this committed results and team only

Rob?

came and by margin morning, quarter driven and which results, pleased our good in Thanks, sales full growth fourth our year ahead of and extremely Eric, healthy expectations, with expansion. strong everyone. We're

per quarter number fourth record Ollie's. new a was earnings Our share adjusted for

points achieved earnings by billion by and XX%. adjusted sales, we a $X.X XXX basis net expanded gross year, the in margin share increased record per For

XX% XXrd growth week. store quarter, sales the store million, to and driven fourth increased the growth, by net In sales comparable $XXX new selling

transactions. comparable was and driven Our X.X% increased sales primarily by store

comping was strength positive. XX% over categories broad-based product of category with Our our

categories best-performing food, sporting Our goods. seasonal, housewares were and candy,

sales quarter. $XX the million XXrd week added Finally, selling in the to net approximately

to total XX our sales million XX% and members, X.X% over increased Army represented to Ollie's of members sales.

added Eric we growth million of XXXX, net mentioned, well Army record Ollie's purging This a number bode should for in forward. and from member X.X going members John is and both the nonactive members As moderating.

our new X line we quarter, the models. of stores but quarter, ending The with and new ramp store XX slightly store openings perform timing impact expectations year-over-year. continue in opened in of the forma an in stores, stores productivity states, with did our increase our During pro to new and X.X% XXX new

leverage by Gross XXX of sales. driven on year, increased to sales expenses favorable fixed a partially to XX to points higher net due on basis as costs strength. primarily margin lower and driven merchandise higher basis margin supply increase by XX.X% in points compensation, percentage SG&A offset last by incentive XX.X% net improved expenses compared the chain a to

million, increased XX.X% Adjusted income Operating adjusted the XXX increased to $X.XX earnings XX% $XX million, net to year. last basis $XX XX.X% share to margin $X.XX increased income was per and quarter. points compared and in to operating

points and basis XX.X% the increased adjusted EBITDA margin to to Adjusted XXX XX% increased for EBITDA $XXX million, quarter.

Turning to the sheet. balance

position which X we extended cash hand cash with borrowings remains economics no market current and $XXX revolving favorable million outstanding between for short-term on another at Our facility, under strong our years to and the conditions. investments credit

For by impact growth, increased X.X% $XXX full of primarily from million Inventory freight $XXX in the year, the lower driven partially by offset million, capitalized operations. we cash generated store costs. new to

development quarter the and of and in existing Capital were of primarily distribution for expenditures new our center the new stores, construction of for stores the Illinois. totaled the million remodeling $XX

growth we working quarter, remain our current through our million the to million share invested share repurchased $XX $XX We the returning During shares to to remaining capital common and authorization. investors our repurchase while our capital strategic balancing program repurchase of We during needs. $XX year on million repurchases, and have stock. committed opportunities

Turning XXXX. outlook our to for

improved As well closeout John to benefit execution our strong business. many as continue we market of across from mentioned, a as facets

purposes for cost a momentum, our year year planned X% long-term setting comp structure algo to While nice around of with we always we initially of the positive points. X% and leverage our growth entered

of where $X.XXX for in is $X.XXX which of With sales tax to $XXX full stock-based $X.XX sales $XXX place, the to net to we store billion benefits that outstanding total completion X growth income of center million, million; for $XX XX%, the net our XX expenditures $XX an weeks of not we million; XX-week effective XX%; to comparable in approximately of shares related Princeton, in framework income $XX of X% diluted XX X%; stores approximately and share million new approximately opening chose compensation; of excludes left tax average and $XXX to the gross per income approximately weighted Illinois. distribution renew; of operating closures to of to adjusted million which of million; lastly, rate margin $XXX adjusted million a year $X.XX; of year, billion; capital XXXX, annual including compared expect net to the diluted

on numbers models. annual continued Now well let your to we're to color opening about the slightly above other end how cadence me and comps provide comps expect our of quarterly some as QX few deliver With momentum, as a with store we help our range. thinking guidance high

are to annual our of guidance we comps midpoint For the planning QX, range.

high QX week. to the as to a we And due a of QX, flat comp anticipate annual shift, would range. slightly the the expect sales be XXrd calendar change related to end above of guidance For from to result our be comps the shift we

stores, half and expect to the store associated openings of including openings preopening new million be half. approximately modeling program, expenses, the of we're XX% our our $XX second first for approximately remodel in year. to openings, the expenses XX% in For our Related we with

first the anticipate of margin, higher the partially expect expense depreciation second which in terms of half income year. We're impact in improvements of occur approximately lap we our goods approximately balance the amortization lastly, cost by the year we stronger results for the as planning our of most potential the interest interest the net back the $XX through cash million, of of And runs that million half In for gross rates year, sold. which in we considers year. of of $XX offset for includes lower $XX million, and half a the average of to

Now the let back me to John. turn call over

time are It a very of Thanks, business the want know about managed heart. I stuff past this season the this for business selling for closeout takes passionate they retail and results. and and associates delivered very dedicated busy faint of performance our our model. not for a We team cheap is congratulate to the lot team year, quarter of holiday Rob. am who proud a Operating our to good the I their members year. was way execute

your As and questions. Ollie's! we concludes remarks, are That our to say, Operator? we are we prepared happy now take

Markets. from from of the Brad Instructions] first Our comes [Operator question line Thomas KeyBanc Capital

business, wanted been strong started past asking back to a on Congrats to see have been on investors XXXX. a John, asking we've question I for bit that and through just circle really the of you've year, this can as you your and that confidence your momentum about comp comp line as little move strong you the XXXX? talk the sourcing more can here we on in a sight

a time The of large Yes, very regards Brad, that period are we've for period is Closeout this question -- over a very With -- market the this gotten is been a we've very, long doing XX for closeout years. we've time. strong. built relations market.

billion billion when started now is to first closer market. talking said $XX it's before, $XXX about As probably an market; about we I

So $X for this -- the year. billion and just surpassed sales number we

of So plenty marketplace. in inventory there's excess out the

not to the have So bother to continue very able or and source The company that been deal the or flows be their to does comp be and they'll comp are deals. find strong strong, strong. very, us

bother us from doesn't that that perspective. So

major the been question because closeouts. goods. sight We're of always has buying Line manufacturing not we're

every the too momentum I in what do have surplus to day, out there we're the far out. and live do marketplace. But in June feel So when and in the we you buy that's don't and sitting going is -- you you see when tell you July. can't this

that. we've these results, and size become scale, to to built and we're continued believe relations meaningful and the So more the with much much, of manufacturers, we're with not and positioned we our continue deliver afraid

That's the very supporting goes the more related follow-up, work talk long-term the it's encouraging store can see on and about helpful, merchandising base? that store John. target, into confidence increased as bit And the that you side your to side increased little a in sourcing a

Yes.

got at a about stores. the question As Brad, talked we XXX we've time, -- this long for

this as they relationships keeping bigger, more question direct We deals getting in with the in coverage bigger and and United bigger. The the of States, scale and we to the manufactures operate XXX have our at continue facilities get we natural And and stores. us. bigger a keep for be that fit

store years. is is This succeeded other buyers and every count industry, the we've and our for over is This always day. all gone So each on have We've knitting. away focus I XX done. people and closeout not about from think what been years. in all many get This the we've worried they've our done never folks

base committed But day. like And the we talked this It's up is definitely customer overall it to live that a bother every that, think don't to us said, scale scale do we're an past and doesn't close from our We've closeouts. slightly continue merchants So we deliver notices breathe smaller and of percentage closeouts. a in think push will the sure, this we I ever us purchase, as store does. to inconvenience our something business. and I perspective. become about the

closeout that be see our there us us there's below So for shopping just business. out that in enough I continuing abundance experience to a drive our to I think total for and drive customers. never XX% getting

others a a as grow on business. the Brad, differentiator, marketplace, that piece this comment very is a business, another that sheet, are a is is to continue Eric. balance very strong from our a which highlight we fragmented have closeout important a this and I'll stand differentiator that we this that also just in is size apart add and makes

Goldman question And Kate Sachs. of the comes line from our McShane from next

on what the sales and year be versus seeing. last impact the same-store in just any but is seem a if you what you bit might to slower might sounds pretty It refund kind as of guide wondered be having on solid, seeing be impact you? like QX impact here tax We coming little it's

Rob. To has we're certainly that tax is it haven't for their a of wallets good all we for reported, retailers. good been for tracking. business, in this customers have coming We really something piece off Kate, seen refund -- more widely the it's and impact year. is liquidity significant Obviously, date, last our

average into they're think going refunds I but are hands reported is behind week are about that the IRS a bigger. customers'

So far. impact much would not so I of say, an net-net,

was again second from then that you Okay. the lift Can the just on And look question cadence our remodels. you will in what remind get XXXX like? us remodels the and

Kate, it's Eric.

expect We mid-single-digit a forward. going program the bit We're remodels. repositioning lift from a

talk where the racetracks, store, the we'll full changing reorganizing about et So cetera. we're and remodels stores, adjacencies, selling potentially reflowing

wayfinding We expect adjustments. to also updating, ] XX selling that We're in and some stores. at XX touching includes stores -- remodel Qs, around degree [ with we front-end some least expect which of other

So experience forward. the sources and in it's as really customer from our experience the we more we're remodel improves in elements and learning move -- those most, program, going biggest the what the investing forward, in we're us return gets what

our question comes next Peter And Sandler. from the from Piper of Keith line

as me from Congrats year. great has a well,

longer-term annual forward. per target an curious has the year. how basis? at that the target of how on should model about store we growth store going to unit you're thinking was XX of I XX been new kind growth out still annual Is Looking I believe X,XXX,

year built well Yes, as executing to to remodel Eric. program. stores XX as open infrastructure on it's we Peter, the a our XX

we're 'XX, Just XX we and to stores. XX, to opened to XX 'XX. In committed opened XXXX, remind in XX in everyone, committing we

opening. that see cadence of can stores the you a to growing number So we're

approach growth. said, That a being to we disciplined have

the we growth. pipeline disruption We 'XX. would in not estate what the creating is There opportunities With new market, very future real out estate risk we're the hand, required a be side, on real into and is looking 'XX feel about execution. to this evaluating in accelerate years, which study of good will and lot

quarters get The DC leap big teams, chain store for leadership, pipeline, estate, and with in a you back Our years. to a few the course, scale. our like support out of opening the what warehouse that is we'll real ability Illinois to forward looks supply store of and

and helpful very Okay, interesting.

did Secondly, tariffs. ask I want to about

factories other you and about I I from are just it mentioned of China? Or You XX% imported. XX% implemented, diversifying think about and thinking do more closeout what's And sales maybe philosophy opportunities guess products hand, companies are of was do suppliers. get tariffs ahead therefore, if on about that, thinking away creates away the other maybe diversifying Chinese or the with

about a the how So curious just here? you're maybe China approach multiyear on sourcing basis to thinking

your Eric We derisking think around that elements think about China It's about We do direct. Peter. both again. that question. diversifying XX% of and Sure, is with

the be we about opportunities think that may period into move also as a it disruptive. creates We somewhat

tariffs categories but ensure business. is China impact will All about closeouts deliver business that out buying oriented price of tariffs. I We're the said past we're and percentage And comes we're accordingly margins. And potentially everything, it and that may, various of over an have increasing happened a across through not that what being the as time, we pricing impacted marketplace. said, of what's up our that in across closeout are primarily in on competitors a because a -- typically, and from can standpoint, pricing we multiple of concerned this increased is because couple been we've my everything be opening by remarks, not in prices times fluid very that we're

feel about good not sleep we So tariffs. about it. We're losing

to setter. But follower, different bit a not say Peter, a in that price little I'll add would that Yes. a price we we're way. a

as proposition. move that the same we moves, accordingly, we market and value So keep

market the or whether come doing. tariffs country, move in the just another to or China following out we're whether is business So people what from

also, bring be out if the are in -- for could a position. And closeouts, point, move stock your into So don't able be we to we're there us things them that and call of but very opportunities product China country. buy loss, good to in it to

any this. time say, normally at a we when that. we win there's do And believe well we're for disruption, as we always positioned So

could also that our something play is in hand. this So

of And from Edward line from question the comes our Fargo. Kelly Wells next

cadence and wanted about Like anything pretty -- was I you're thinking about I like or differently the maybe hard think there harder back. to you're any compare. Ollie's. I'm earlier that thinking a March if an promotional QX you shifted in noticed have not year QX, how there I for Obviously, there? flyer sure a change

Just promotional we how comp some should movement quarter. by the think around You cadence? about did mention

just maybe bit little So a there? color more

I'll Yes. same year. to will then and But Ed, answer regards calendar, or last it. promotional it add with into Eric Rob maybe the it's pretty as much

We cadence and are then the Thanksgiving year, experiencing this just and of comfortable a sitting XXrd QX to planned and comparable compressed because But occurring fall, period holiday naturally we to last shift the today. feel pretty very year. from now be to QX the week we're to the weeks how is Christmas selling right obviously, from

[ and gen very flow be right, And are think how that cold lap I to good. follow-up going was this about about that be sure think last you'll helpful. don't at versus the you consumable out, the you merge, around if you that. would like question anticipating just maybe know So year, a this of to product the you looking ] a you're comparison. you're buying? mix Maybe John, are which how thinking I'm

the one looks pretty question be upon store to And ask then, quick on opening might like the what's Eric, I QX It want website. light on cadence. you just based

openings? QX on color any So

are be overall, from a well there. comp last about going that we from comp are the feel much and too how I able had and deals year year prior Ed, the we say to to competition and perspective. we'll those positioned, won't we're like annualize deals we're special out to But regards With we

much feel flow good. deal well say is more feel we I but So strong positioned. enough we it, the that about can't

consumables of We're much category different. obviously, I out there. not not -- a retailers We're is for, lot a leading think,

positioned we're I food -- very, we're categories and performer, us. working put positioned us is and strong that without deal candy well have obviously for this very The for doubt. well very quarter the over the And think first, top, outsized here really we and the a Housewares deals consumable I is and in a there. HBA second which think obviously,

And occur with we in of perspective, opening is the first requirements X X X quarter. but that landlord. are that in to work push out the closures Ed, planning out the of cadence through could the we're closures, the a as from first the quarter, planned store turnover we

the just last And generally through is the in year. about we reflects to comment as very Yes. similar It that back-half cadence. loaded, move Ed, And pipeline momentum to really the based what where We loaded, year. last want half back not can stack we a to half get execute know in loaded we a the to point we're plan on happened 'XX.

So the we balance. we execute. we'll better in to hard And to confidence going out a as look that work we're get have 'XX,

And Craig-Hallum next of from comes our question line the Jeremy Hamblin from Capital Group.

on go-forward been commentary like margins, a And issues. that a it's of you've into XX% in was freight. product your I noted basis. shrink margins, or have certainly. stores, QX, maybe it shrink a your feel bit you a have impact think, record the the Congrats know of of lower that of that was thinking of now on related in to you part to little One, improved wanted less you for are do the QX the under strong of real some dive results. year-over-year, I lower may causing about get in XX% terms that gross past that in subset that control? your wanted I course, But I to noted

thinking in is much prevention margins what any we spot? kind of commentary bit And gross So as like in should that then QX past? than a about higher potentially the feel Eric, loss that just on other better do And you little a be would they've help? been

costs that Rob. think I chain QX the performance. it for year, for of primarily say fourth gross at, upon it supply be going quarter. the the to better. a the the you. maybe very was was That's range year pleased we full we'll pretty supply consistent fueled. be, From is for chain in in able And to We with range It X%. of Thank feel next chain perspective, planning with were was slightly in margin our where This improve we came X% supply that thought

perspective, contributor We QX to to second margin. was our half shrink shrink the in a year. From of gross see the a shrink started improvement nice in some

shrink of discussed count in our a each one annually. trailing is past, we've We indicator. As stores the

only progress. it's additional against we to is efforts of started some a to performing snapshot make those how And of we and after some So the that resources have shrink counts. put see it get nice

being a That in have landed QX we our very for given margin from we're year. said, where more our guide shrink But confident next past of -- still still to where were we in terms with to are we perspective, not gross margin, the we and gross work back XX% do.

Jeremy, add addition a We're ways. year, in Rob we we've little much we 'XX. issue. pertains on feel as heightened external on the over the confidence just a you did of various as pretty on disproportionate our to focus our amount our that's more it's more to totally we it shrink, to in shrink focused shrink XXX% of indicated, most would internal And to on bit past theft upgrade but team deployed theft. never of say that XX% And about control heading referred into creating kind the resource good with under

this John. is Jeremy,

one last margin. Just addition on

long-term working gets from no margin so have did a for one Just us back a get algo XX% very strong because to we a XXXX. QX, ahead to gross we're of

ask overall to So been trying had to a easy make still from XX% number. no I minimum. one not quarter always stick away changing on It's XXXX to environment and with hit that would to exactly with I sure the for we us the margin the we're costs that runs buying everyone where we've gross hit to in, the for just want

related The that Understood. to And financial in then I wanted just and the when year, on DC one update other. new in the get expansion any may Illinois. impact -- and this new an new on have of DC on of you the that Illinois timing understand drag to York progress opening just potential the

Jeremy, the the take it's part Eric. I'll first question. of

actually We full that receiving in began of begin QX, We QX is well. are year. going operations track, in in on on time to building this all

will that be confidence the have successful. start-up We

this in feeling very this about So moment. good

to From points DC, that closer say, drag of contemplated would I would basis size, XX on XX% margin. that's a in guidance now, perspective, margin gross arriving new the opening say, our but points to in our I impact used a the given financial basis we call XX call target. bigger at gross

an Princeton also The that depreciation our is in is of is which and contemplated is there the elevated distribution guidance. other York piece expansion the center, alongside it

I didn't comment, Jeremy.

completed so the in that throughputs me not it thinking successful now, all going to about me We we behind asked You middle XXXX far expansion where is it. really about York, of and I'm be. need well,

We the additional expanded space, have ability stores. to service the

Cohen from question Haskett. of the next Eric line [Operator our And Instructions] comes from Gordon

store stores Congrats do about new will want didn't ask it anticipate to stores, the existing on you think in incremental and the XXX enter that opportunity opportunity? base? I a And similar markets are raised existing these productivity you target. or store you as you could finding filling profitability a the have nice markets? quarter. previously then in that The great where so Is additional

of think that our the that it it's X/X The in part in the of I'll in future, came we versus way certainly today store we're the base into bit in about I markets. say in existing sit new the backfill where study X,XXX are From into about that opportunity markets and to Rob. open that of markets. X/X of remaining terms population target a perspective, question, of new a stores markets XXX our terms of is target going it in we our take a that demographics was there would new density.

model, question over found other and the profitable this that aspect of exceptionally terms years model is predictable your to we we've From market portable. XX open in and every the in that

we existing no some profitable be we as we are that in our of open So other as markets we'll as have doubts these in markets.

add, just color. Eric, Yes. to just little Eric, it's more add to a

and the affluent long-term that we our accelerated that sprawl it was is our the suburban looking store COVID affecting younger, it's be rural target. said XXX become the believe the growth more point and successful our move and forward we communities. As also through to in But customer certainly urban will that's as also in remarks, opening markets we base, at and growth, helping

or not this then is And customers prices you've couple discuss maybe sustainable? looks income And higher in ago? demographic -- then talked trade got you've down what today consumers help about versus the Great. whether customer Can incremental at And mix the like a you couldn't? of higher on trade benefiting does from previously price adding you recent just offer products quarters. years that

date income over We're strength $XXX,XXX especially does good. retention strength we're and again. over the some are what the Eric income it's $XXX,XXX. above trade-down seeing lower quarters, we've Lower -- strength under-indexed Eric, to stable. seeing We seen now consistently relatively income, years. several look from And above customers Sure.

-- staff versus we're we're remember, more assortment and you discretionary take some don't out others there. we If

dynamic, business is high a as for repeat consumables, Rob, a high and this add typically into that is mix other would us shopper. The deepened I our frequency, visit we've it's

and as consumable once So an loyal, we have visit longer more time. are we of for ongoing much often period a you shoppers that those feel are consumable much retained more shopper,

that we're for couple will years. be confident from we've last pretty So seen growth of the for it customer year next the benefiting

question line Matthew of next our the from JPMorgan. And Boss from comes

seen And you've back just on forward? you do the vendor elaborate in on to most cited? could post-holiday John, that categories expanded momentum moving scale, going and across opportunity box and then the the see trends the where relationships you you

results. come trends consistent everything gate we of of the very continue -- it post-holiday, to for to QX been couple and consistent. today, executing and delivering regards is said we quarter been the with out Matt, us, and was very times a have been just Yes. we've a we've and consistent we've

So in seeing we're in overall business. a momentum change not the our big

with doing So we're excited we're here. what

not to vendors existing expansion, well. regards increased as it's with and new an on vendor There's the relationships vendors. So expansion on expansion fully

is of variety to a hard of sell, basic goods, pretty getting existing wide a now. coming well. So a presented to that in building very with we're we of Obviously, as lot lot us right categories relationships through is are categories, and with come broad-based which more to seeing in the mix on categories whatever regards a we're seeing

but call every vendors So that something lot are day, We're a specifically us. the I drive big out. the ones vendors it's new adding who not for

seeing we're So we're out very what there. excited

to help to gross come relative SG&A this year. about If were That's picture, flow-through great. about plan, to guide just above X% thinking maybe opportunity then, opportunity. the And X% to in Rob, margin roughly bottom the to think relative us larger line XX% margin for comps operating

Sure.

continue opportunity over our operating margin. for So to certainly on time, I improve to think us there's

I the think year. XX a gross margin, We're on John hit next planning the nail head. for

stabilizes from how We and potentially. at for years pricing out haven't then perspective there several from years been to that XX and any movement a going now. evaluate We're see in customer

point perspective, XX basis comp as on From leverage a SG&A leverage points of you'd we above expect X%.

strong has as we're So environment we going closeout and because outsized we're off. over get leverage to which at, given where comps. X, planning we registers X the the shut benefited do us not to time We're

highs. and deliver to margin longer-term So back our get faster we'll certainly comp, to leverage higher should we a be operating able

Scot And Ciccarelli from question the our next line comes from of Truist.

what essentially seen And guys versus even SG&A you pretty always a If think what that year's to? minimal we've retailers. guys you're a contrast would at most up tight and look you you levels other about at how with attribute modestly -- look, on that XXXX from go-forward And SG&A from you only inflation we SG&A But store, a That's this have should stark increases. run per expense XXXX if you basis? ship. store, your really growth on at look per

boxes basis different We size. don't an on are necessarily look average store we at it opening are that because

leverage moves with of that or kind that So with the expense that. moves for expense dollars matter

work at hard on are We expense leverage.

have and And business, to come guidance coming in we're our aspects get to across what bear we the year terms results We the to improved our of make payroll and are all distribution center bear that the that's of investment stores. productivity. for year. to making efficiency and next is of goal the this necessary in in And for investments seeing our

anything aware 'XX, potentially is wage know now? in be what given should And 'XX, of even there terms for changes we of you

No changes time. at this

Stanley. from our Gutman Simeon next And of comes question Morgan the line from

practiced I there scenario comp noise. it lapping business closeouts. for did tough this talked background there for John there the see guide for asking I you about year good couldn't the the it's But or to last anything I the strong. comp, know X. -- stronger? out Is so I'm any different or way environment? know been being is Is why a any there Sorry has just you to any because not usually pretty closeout X than

John. comp right on where positioned good no structural we build off saying registers couldn't stronger. Simeon, number. tell X. this model we the is there's you our Yes, where that when We don't I would to a we reason funny hit we're very We always feel X We turn have now. the

So we're deal going drive flow to continue to remains to try strong.

merchants confident. are Our

some We're good numbers. holding up us So going nothing there's pretty back. against really

can think outsized But and investors. we'll opportunity, this get have we I think you see give flow-through the did So like it, the you to we comps don't year. it, and I we'll get

buying. And the about then thinking a quick follow-up,

grocers scale getting over time? buying categories step they've their for big higher if you seen we're we And clear and usual? any margins, happen not much of been in or the you keeps closeout that's the could given forward follow, markup. that One Have seeing better? that changes going Is the on

the can, haven't large not seen us consumers that there we give a business, customer through do. category. for our last step buy we have Simeon, and we specific changes categories, can or that nothing that we real big But loyalty what we call to what food still area at over we and great the seen have category So are or the candy be seen couple could the in repeat see, but an a expansion years, any all. in value value and categories or . deals And on grocery the been there. some outsized certain of do and pushing margin we've There's we

And the our from from of comes next question Mark line UBS. Carden

penetration Does inflation. So food building broadly, impact we've seen question. a earlier this more questions the landscape, few this in a last potential slowdown about think importance year of even is about across upon consumer the the and But dollars you category the spending discretionary. in between Just more how for for the freed-up ahead? this balance of think desired consumables the the with

I'll don't been package any around has of or really canned food. the the, our talking have goods, of in goods the we're can Mark, consumable the the stores. We're grocery We cold really call it, a lot -- category packaged or that. -- disinflation perishable

there too. But if So for come, they opportunities that us yet. a perspective haven't disinflation ton there'll it of from seen be does

bother very The XXXX. expect strong been candy to with doesn't loyalty and built that So that the continue us. in food we has on the and that category, we've consumer

disinflation good is us. for Mark, disruption, and that's Yes,

opportunities just Okay. the shuttered Just Fantastic. from estate retailers Bath line latest follow-up, there. anticipating? on your progressing then for thoughts environment, are Bed what real a And you're like in with

through. It that takes to way little a while, for work its Mark,

are that meet the to period short do certain and opportunities. a to yes, is, our on to model It a the create opportunities and vacant the does of time criteria, answer the So for landlord deal. is before to it second-generation sites us spaces question economics our with your creating focus sense make typically

potentially seeing chances. we're or that our on [indiscernible]. of disruption like that We by of being are of the out like We the there. some and sites out vacancies retailers created are are we the So that the some do what shedding like brink there

that good us. for So is

today's any back I'd Swygert to conclude program. remarks. further John like the of program the hand for does question-and-answer This session to

everyone for you to I We would great time our updating next you. call. to thank their on a forward Thank like progress Ollie's. in Have on day. interest and continued earnings look our

participation your does conclude program. for the today's gentlemen, and ladies conference. you, Thank in This

Good now You day. disconnect. may