Ollie's Bargain Outlet Holdings, Inc.

Good afternoon and welcome to OLLI's Bargain Outlook Conference call to discuss financial results for the fourth quarter and full year fiscal 2021. Currently, all participants are in 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. And as a reminder, this call is being recorded. On today's call from management, we have John Swaggart, President and Chief Executive Officer, Jay Stas, Senior Vice President and Chief Financial Officer, and Eric Van Der Vliet, Executive Vice President and Chief Operating Officer.

Thank you, Jonathan. Good afternoon and welcome to OLLI's fourth quarter and full year fiscal 2021 earnings conference call. A press release covering the company's financial results was issued this afternoon and a copy of their press release can be found on the investor relations section of the company's website. I want to remind everyone 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, including 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 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, 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 that we believe may be important for investors to assess our operating performance. Reconciliation is the most closely comparable GAAP financial measures to the non-GAAP financial measures that are included in our earnings relief. With that, I will turn the call over to John.

Thanks, Jean, and hello, everyone. Thank you for joining our call today. Looking back at 2021, we navigated through numerous headwinds, including unprecedented inflation in merchandise and transportation costs, shipping delays of imported product, and backlogs at our distribution centers. We worked aggressively to control what we could control by leveraging our vast network of vendor partners, improving efficiencies in our distribution centers, and initiating negotiations of import container contracts earlier than normal, all while continuing to execute our retail expansion strategy and delivering great deals to our customers. Importantly, the changes we have made to our supply chain will enable us to navigate even better going forward. During the fourth quarter, we delivered exceptional deals to our customers and made great progress getting our distribution centers back to desired throughput levels. We were able to secure additional import container capacity, which enabled us to deliver our spring merchandise on a timely basis to our stores. We believe we're well positioned for the spring selling season. Turning to the fourth quarter results, compared to 2019, our comparable store sales decreased 2%, in line with our expectations. We've remained focused on offering the most compelling values to our customers and are excited about the close-up opportunities we're seeing in the market today due to package changes created by inflation, supply chain challenges, canceled orders, excess inventory, overruns, and product innovation. We expect to see more deals come our way due to late-arriving canceled merchandise, and we'll remain nimble to ensure we capitalize on these deals. We're seeing strong deal flow in health and beauty aids, housewares, hardware, holiday seasonal, bed and bath, automotive, and pets. This type of environment plays into our strengths. Our merchant teams are nimble and able to react quickly to secure great deals that we know our customers want. The value we provide is more critical than ever as we recognize that our customer is being impacted by the rapid rise in inflation as prices for everything from gas to groceries has risen dramatically. While this leaves our customers with less discretionary income, we expect value to become increasingly important to all consumers. In addition, there are several other dynamics impacting our customers, including a shift in spending from goods to services and experiences, a lack of stimulus, and timing of tax refunds. In the long run, we know that our unique offering of compelling value will ultimately win. Turning to real estate, during the fourth quarter, we opened five new stores in and in the year with 431 stores in 29 states. We are pleased with our new store productivity levels. We are currently experiencing delays related to permitting and construction of our new stores. As a result, we plan to open between 44 to 46 net new stores in 2022. We remain confident that our model can support at least 1,050 stores in total and plan to resume a normal store opening cadence between 50 to 55 stores annually in 2023. We are excited to announce that for the first time in our company's history, we are launching a store remodel program. We plan to remodel 30 stores to our newest merchandising format in 2022. The enhancements we are making to the stores are expected to prove our customer shopping experience and to drive higher store sales overall. Ollie's Army remains an important driver of our sales, reaching over 78% sales penetration in the quarter. The Army grew 8.5% over the prior year, ending the period with over 12.6 million active members. We were pleased with Ollie's Army Night, where we once again opened our doors exclusively to Ollie's Army members for an evening of shopping and special discounts. This year marks our 40th anniversary, and we have several special events planned to celebrate this milestone. For the first time since our 25th anniversary, we are holding a contest to crown America's biggest cheapskate by asking our customers to tell us why they deserve this distinguished honor. In addition, during our week-long Ollie's Days event, we will be including 40 terrific deals for our 40-year anniversary celebration. We have a lineup of other great events to create excitement, and we welcome you to join in. Operationally, we have made refinements and enhancements to our supply chain due to the tighter labor market and the ongoing impact of COVID. We continue to find ways to improve efficiencies in our distribution centers, and they are running well now. Our Pennsylvania and Georgia distribution centers have been operating at full throughput levels since the end of third quarter of 2021, and our Texas DC reached its desired level in late February of this year. The 200,000 square foot expansion of our York Distribution Center is awaiting final permit approvals. We plan to start construction once permits are issued and at this point in time expect to have it completed by the end of this year. This expansion will provide us the ability to service an additional 50 stores for a total of 200 to 210 stores from this location. This brings the total number of stores that we can service from our distribution centers to over 550. As we continue to expand our footprint, we plan to open our fourth distribution center in the second quarter of 2024. In summary, we are excited about our 40th anniversary, our store remodel program, and the incredible deals we are seeing in the market. We feel good about our inventory position and have a strong offering of spring seasonal product for our customers. That said, we recognize that we are navigating an uncertain, highly inflationary environment. While we are confident that we will return to our long-term algorithm, we anticipate continued pressure in the first half of 2022. We expect to see trends improve as we move through the second half of the year, position us to return to our long-term algorithm. We are focused on what we can control and believe that our business will benefit from an increased need for value driving consumers to trade down. We are well positioned to capture this customer as a close-out retailer that delivers extreme value and a treasure hunt experience. The long-term potential of our business remains firmly intact. We have a long runway to at least 1,050 stores. We have a highly loyal customer base that generates almost 80% of our sales, and our stores generate a ton of free cash flow. We remain committed to returning value to our shareholders as reflected in our increased share buyback program that we announced in December. In closing, I would like to thank the entire OLLIES team for their hard work and dedication during what has been one of the most dynamic and challenging environments in our company history. We appreciate all that you have done to serve our communities and offer the best possible experience to our customers. As we say, we are OLLIES. Alan, I'll hand the call over to Jay to take you through our financial results.