Ollie's Bargain Outlet Holdings, Inc.

Good morning. Welcome to OLLI's Bargain Outlet Conference Call to discuss financial results for the first quarter fiscal 2022. Currently, 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 OLLI. As a reminder, this call is being recorded. On today's call for management, we have John Swaggett, President and Chief Executive Officer, Jay Stas, Senior Vice President and Chief Financial Officer, and Eric Vandervolk, Executive Vice President and Chief Operating Officer. I would now like to hand the conference over to your host today, Jean Fontana, with ICR. Please go ahead.

Thank you. Good morning, and welcome to OLLI's first quarter fiscal 2022 earnings conference call. A press release covering the company's financial results was issued this morning. and a copy of the 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 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 information 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, 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 the call that we believe may be important for investors to assess our operating performance. Reconciliation of the most closely comparable GAAP financial measures to the non-GAAP financial measures are included in our earnings release. With that, I'll turn the call over to John.

Thanks, Jean, and hello, everyone. Thank you for joining our call today. We are pleased with our first quarter sales results given that we were up against strong stimulus-induced sales last year. During the quarter, sales of seasonal product were negatively impacted by cooler weather and consumers experienced pressure from significant inflation, particularly on gas and food. We have seen meaningful improvement in our second quarter results with increased demand for warm weather seasonal products combined with our incredible deals and strong inventory position. Currently, our inventories are in terrific shape, and we continue to see compelling deals on great brands across our merchandise categories, especially those that are key to our business, including HBA, housewares, lawn and garden, air conditioning, and pets. In addition, our DCs are running well, and goods are flowing into our stores on a timely basis. While we have not yet seen the full benefit of consumers trading down due to economic pressures, we are doubling down our efforts to offer great values as consumers continue to feel inflationary pressures. Looking back at the first quarter, our comparable store sales decreased 17.3% compared to 2021, slightly below our expectations. This was largely due to softer performance and weather-dependent categories such as lawn and garden, air conditioning, pool, and seasonal sports-related items. We saw strength in hardware, HBA, as well as pets where we have been building our assortments. We are even more enthusiastic with the quality and quantity of great closeout opportunities we are currently being presented with across many of our merchandise categories. These deals will enable us to deliver great brands and even better value to our customers. With the increasing inflationary pressure, we believe it is important for us to emphasize our extreme value proposition. We see an opportunity to generate excitement with even more aggressive pricing, so we are planning to reinvest some of our margin back into deals for our customers. Our store remodel program is well underway with six stores completed so far, and we are pleased with the initial results. We are delivering a more compelling shopping experience through relocated and re-spaced merchandise categories, improved sight lines, and more exciting impulse merchandising. We remain on track to remodel approximately 30 stores by the end of this year. Moving to real estate, during the first quarter, we opened nine new stores and closed one in connection with the relocation, ending the quarter with 439 stores in 29 states. We are pleased with our new store productivity levels, which are in line with our year one store sales targets. We are still expecting to open between 46 and 48 new stores in 2022, including two relocations. However, we are seeing continued delays related to permitting and construction of our new stores. We remain confident that our model can support at least 1,050 stores nationwide. Ollie's Army continued to grow, reaching over 12.9 million active members, growing 7.7% over the prior year and reaching 80% sales penetration in the quarter. As part of our efforts to expand our new customer acquisition strategies, in the first quarter we began building out what we call our civilian database, enabling us to capture customer information for non-Ollie's Army shoppers based on credit card information. We plan to leverage this information to better target our shoppers and lookalikes via digital advertising as well as direct mail in the future. During the quarter, we continue to leverage data analytics to create more targeted marketing by adding personalization to social media, which is generating improved engagement. In the second quarter, we will be testing other social media tools, including advertising on YouTube, TikTok, Yelp, and Pinterest. We are also testing an influencer strategy to broaden our reach to potential new customers. We are excited to share our 40th anniversary celebration with everyone. We have several special events planned, kicking off with America's Biggest Cheapskate Contest, which began on May 22nd and will run through July 3rd. During all these days this year, we are planning to highlight 40 great deals for our 40 years in business milestone. Turning to operations, we are pleased with the significant progress we have made on our distribution center network and overall supply chain. The work we have done to build talent across the supply chain and drive efficiencies is paying off. Distribution center throughput is meeting expectations and import containers are being received on a timely basis to support the needs of our business. Eric VanderWalk will continue to lead these efforts following the recent departure of our SVP of supply chain. In closing, We are encouraged by the sales trends we are seeing quarter to date and feel really good about our position heading into the summer season and the remainder of 2022. That said, we are operating in a highly uncertain and inflationary environment, and we remain focused on what we can control, offering great deals at exceptional value, which we believe will become increasingly important as inflation continues to pressure consumers and they begin to trade down. Our long-term outlook for this business remains unchanged. Before turning the call over to Jay, I want to take a moment to discuss his departure, which we announced in our earnings release this morning. I would like to personally thank him for his partnership, hard work, and dedication to Ollie's over the past six-plus years. He has been a key member of our management team and has helped Ollie's grow into the company it is today. We will miss him and wish him well in his new endeavor. We have begun a national search for a new CFO and look forward to updating you on our progress. In the meantime, I will take on the additional role of interim CFO, which is a position I held from 2004 until 2018. I would like to thank our OLLIES team members who work hard every day to make OLLIES great. Thank you. As we say, we are OLLIES. I will now hand the call over to Jay to take you through our financial results.