Ollie's Bargain Outlet Holdings, Inc.

It's Bargain Outlet conference call to discuss financial results for the third quarter of fiscal 2020. At this time, all participants are on 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 OLLI. As a reminder, this call is being recorded. On the call today from management are John Schweigert, President and Chief Executive Officer, and John Stas, Senior Vice President and Chief Financial Officer. I will turn the call over to Jean Fontana, Investor Relations, to get started. Please go ahead, ma'am.

Thank you, and good afternoon, everyone. A press release covering the company's third quarter 2020 financial results was issued this afternoon, and a copy of that press release can be found in the Investor Relations section of the company's website. I want to remind everyone that that management's remarks on this call may contain forward-looking statements including but not limited to predictions, expectations, or estimates, and that actual results could differ materially from those mentioned on today's call. Any such items included with respect to our future performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these forward-looking statements which speak only as of today, and we undertake no obligation to update or revise them for any new information or future events. Factors that might affect future results may not be in our control and are discussed in our SEC filings. We encourage you to review these filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q, as well as our earnings release issued earlier today, for a more detailed description of these factors. We will be referring to certain non-GAAP financial measures on today's call, such as adjusted EBITDA adjusted net income, and adjusted net income per diluted share that we believe may be important to investors to assess our operating performance. Reconciliations of the most closely comparable GAAP financial measures to these non-GAAP financial measures are included in our earnings release. With that, I will turn the call over to John.

Thanks, Jean, and hello, everyone. Thanks for joining our call today. We hope that you and your families are staying healthy and safe. I want to express my gratitude to the entire Ollie's family for their tireless work to serve our customers while maintaining a healthy and safe shopping environment. That has been and remains our number one priority. The team's efforts and ability to rally together during these times has been nothing short of extraordinary. Our results were made possible by the steady execution and resilience of our entire organization, the merchants, our distribution center teams, the store support center, and our store associates. I sincerely thank each and every one of them. We delivered an outstanding third quarter. This strong performance reflects our ability to react to opportunities in the marketplace and changes in consumer demand even during these challenging, unprecedented times. Our overall performance was driven by robust sales growth. Great deal flow, productive new stores, and strong comparable store sales drove a 27% increase in our top line. Comparable store sales increased 15.3% in the quarter. This top line growth combined with gross margin expansion and tight expense control led to an adjusted net income growth of 61%. Our sales were once again broad based with almost three quarters of our departments comping positive. Our top performing categories were housewares, bed and bath, health and beauty aids, flooring and food. While we cannot predict the direction of the pandemic from here, we remain laser focused on the execution of our plans. As you know, it all begins with amazing deals. Deals that provide incredible values to our customers across all of our merchandise categories. The merchant team continued to leverage our strong, long-standing vendor relationships for product and sourcing from new vendors. For instance, we worked with a new major supplier of over-the-counter cold, cough, and flu medicines, a really good get. Our scale and our visibility makes deals like this happen. The merchants are continuing to identify and source great deals that deliver exceptional value to our customers. Deal flow remains as strong as ever. Close-out opportunities are generated in a variety of ways, ranging from excess inventory, overruns, and package changes to product innovation and bankruptcies. We are seeing large deals each and every day, and we are well-positioned to capture these opportunities. We have the long-term vendor relationships, the proven ability to handle large deals, and an exceptionally strong liquidity position to make it happen. In terms of on-hand inventory, we chased the business a little during the quarter due to our continued sales velocity. We are pleased with our ending inventory position, up 2.5% compared to last year. There's a ton of product flowing. We are increasing receipts and pushing product to our distribution centers and into our stores at record levels, even in the midst of the busy holiday selling period. Having said all that, my end goal is to run with less inventory per square foot than we have historically averaged. Well-managed, leaner inventories give us the flexibility from an open-to-buy standpoint to ramp up receipts for opportunistic purchases. Maintaining this dry powder allows us to more quickly respond to changing consumer demands as well, as demonstrated by our success over the past two quarters. I believe our customers also benefit from reduced store inventory levels with an improved shopping experience in a crisp, clean store. Fresh new deals are in front of the customer presenting a call to action. OLLI's Army continued to be a big driver of our sales in the third quarter and membership just keeps growing. This was the second biggest increase in new customer signups in OLLI's history. We ended the period with 11.4 million active members, a 13.9% increase over the prior year. New customers have contributed to the growth of the OLLI's Army numbers and have helped drive increases in sales and transactions. We are very excited to have these new customers enlisted in the Army. We will continue to utilize the tools we have for onboarding, including special benefits such as enlistment bonuses, and communicating our new and exciting deals to ensure these customers become long-term OLLI's Army members. As we have stated in the past, Army members shop our stores more often and drive a substantially larger basket. We are in the early stages of enhancing our marketing programs and redeploying dollars to optimize spend. Our focus continues to be on deepening engagement with existing customers as well as attracting lookalike customers. We have been pleased with early reads so far and will continue to test some new digital initiatives such as customized ads. We will continue to test, learn, and ramp up where tactics are most successful and dollars best deployed. We're also making a change to our event calendar this year due to the pandemic. Instead of Ollie's Army Night, normally one exclusive evening of shopping for Army members, we're going to have Ollie's Army Week with the same special rewards for the members as always. The event will run from Sunday, December 13th through Saturday, December 19th, giving customers an entire week to get great deals. Importantly, the week-long event will be safer for our associates and our customers. This year, the fun and savings will just be stretched out a little bit longer. Our new stores continue to be a significant driver of our growth. New store performance in the quarter and year-to-date exceeded our expectations. We achieved these outstanding results even with limited marketing events as we sought to comply with social distancing guidelines. We have opened a total of 46 new stores this year, including one relocation, and I am very proud of the team's ability to execute these projects despite the added complexities of opening and operating during the pandemic. We are a growth company in one of the most attractive sectors in retail, the closeout industry, and we believe we have the scale, the know-how, and the relationships to benefit from the continued disruption in the marketplace. We are laser focused on expanding our retail footprint, and we believe the extreme value proposition of our business model very much supports our growth plans. With tremendous runway for growth, we are excited about the availability of great real estate sites as we continue to build out our store pipeline. We see new stores as an important component of our long-term growth algorithm with a target of 50 to 55 stores per year. Our 2021 pipeline looks strong with a solid mix of both existing and new markets, with expectations of 50 store openings, including up to four relocations. Turning to the fourth quarter, our comp stores moderated in the latter part of the third quarter and continue to do so now, with quarter-to-date positive comps in low single digits. In the first few weeks of November, we saw some impact from the timing of our peer promotional calendars around Black Friday, as well as some impact in cold weather categories. We were pleased with Black Friday weekend sales as they were in line with our expectations. As Mark would say, we are locked and loaded for the remainder of the holiday season. We have a lot of big weeks ahead of us, including Ollie's Army Week beginning December 13th. There remains a great deal of uncertainty related to COVID, and we cannot predict the impact of the continuing health and financial crisis on consumer behavior. As always, we will tightly manage what is in our control, and we feel very good about our ability to provide great holiday deals to our customers. We will continue to do what we do best, stay focused and execute. Looking ahead, our long-term growth algorithm remains intact, and I am bullish as ever about the future prospects. It was one year ago that we unexpectedly lost our co-founder, CEO, and friend, Mark Butler. Mark was passionate, talented, and a highly regarded leader, loved and sorely missed by the entire OLLI family. I know Mark will be proud of how we have rallied together to carry his legacy forward so successfully. I could not be prouder of how our business and team has responded over the challenging years since Mark's passing. I want to thank our almost 11,000 team members for all they are doing to serve our customers and communities and support each other during these demanding times. As we say, we are Ollie's. I'll now hand it over to Jay to take you through the financial results.