Ollie's Bargain Outlet Holdings, Inc.

Good morning and welcome to OLLI's Bargain Outlets conference call to discuss financial results for the third quarter fiscal 2023. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session and interactive instructions will follow at that time. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without the express written authorization of OLLI. Joining us today, call from OLLI's management are John Swigert, President and Chief Executive Officer, Eric VanderValk, Executive Vice President and Chief Operating Officer, and Rob Helm, Senior Vice President and Chief Financial Officer. Certain comments made today may constitute forward-looking statements and are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our Fiscal 2022 Form 10-K, dated March 24, 2023, and Fiscal 2023 periodic reports on file with the SEC and the earnings press release. Forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non-GAAP financial measures. Reconciliation of those most closely comparable GAAP financial measures to the non-GAAP financial measures are included in our earnings press release. With that said, I will now turn the call over to Mr. Swigert. Please go ahead, sir.

Thank you, and good morning, everyone. We appreciate you joining our call today. We had another strong quarter and are pleased with the positive trends in our business. Our third quarter sales and margins came in ahead of our expectations, driven by strong deal flow, lower supply chain costs, and continued execution throughout the organization. In the quarter, comparable store sales increased 7%, net sales increased 14.8% to $480 million, and adjusted EBITDA increased 29.5% to $51 million. We also opened a record 23 new stores in the quarter and saw very healthy new store productivity in the period. Based on the strength of our third quarter results and current business trends, we are raising our sales and earnings guidance for the full year. The third quarter represents our sixth consecutive quarter of positive comparable store sales growth, and we continue to see broad-based strength across numerous categories. In the quarter, over 60% of our product categories comp positive, with our top performers being candy, sporting goods, housewares, food, and toys. Our summer seasonal categories such as room air and summer furniture also contributed to our strong performance. The closeout deal flow is very strong. Consumers remain under pressure and are looking for ways to save money on branded merchandise they need and want in their homes. Manufacturers are creating new and innovative products, changing packaging and sizes, and competing for retail shelf space. which is all creating more close-out opportunities. We're built for this environment. For over 41 years, Ollie's has been selling brand-name products at drastically reduced prices, which are 20% to 70% below traditional retailers. We are a trusted source with both our customers and vendor partners. Customers know they can find real brands and real bargains on products they need and use in their lives every day. Our vendors know we are a one-stop shop for managing excess inventory and closeouts. With over 500 stores and growing, our size and scale is becoming a real competitive advantage and we are seeing better access to deals across a growing number of categories and vendors. Our deal pipeline remains very strong. Deals drive our business and execution drives our success. The pandemic disrupted our execution in many ways, and we have spent the last couple of years investing in our people, supply chain, distribution centers, stores, and marketing. We are executing better across the business, and this is driving productivity gains throughout the organization. Eric will speak to some of these in a moment. Ollie's Army continues to be another bright spot, with membership up almost 5% year-over-year and accounting for over 80% of our sales in the quarter. Our busiest and most exciting night of the year, Ollie's Army Night, is this Sunday, December 10th. This is our way of saying thank you to our best and most loyal customers and giving them something special. Our stores are loaded with great deals, and our teams are ready to welcome our loyal bargainauts. If you are an Ollie's Army member, we hope to see you there. If not, there is still time to enlist and share in the fun and special savings. To wrap it up, we are pleased with our third quarter results and the continued momentum in our business. We are executing across the board, buying great deals, managing our supply chain, opening new stores, and controlling our cost. We are well positioned to continue growing and scaling the business and remain confident with our ability to deliver against our long-term growth targets of double-digit sales growth, 40% gross margin, and double-digit EBITDA growth. Now, let me pass the call over to Eric to discuss our store growth and operating initiatives.

Thanks, John, and good morning, everyone. Our results this quarter reflect the strength of our deals, the hard work and commitment of our incredibly talented team, and our efforts to improve execution across the organization. Process improvements and investments we have made in our people, supply chain, and stores are driving better productivity and execution. The most important pillar of our long-term strategy is store growth. In the third quarter, we opened 23 stores. This is a record number of openings in a quarter for Ollie's. We are also excited to report we surpassed the 500-store milestone and expanded into another state, ending the quarter with 505 stores in 30 states. We have already opened another five stores in the fourth quarter, including our first store in Long Island, New York. This puts us at 43 new stores this fiscal year, with two additional stores planned to open later this quarter. Turning to remodels, our customers deserve an updated shopping experience that better showcases the amazing deals we offer in an organized and easy to navigate store format. We completed 12 stores during the quarter, bringing us to 26 stores through the first three quarters. We are on track to complete approximately 35 remodels this year. Moving to marketing, we continue to look for innovative ways to enhance and expand our marketing efforts. We are pleased with the performance of our streamlined flyer, which we believe better showcases our most compelling deals. During the quarter, we shifted one flyer out of the third quarter and into the fourth as planned. We continue to broaden our reach and build our brand awareness through other forms of marketing. We executed a campaign around National Bargain Hunting Week, which included a survey as well as a media tour with lifestyle expert and influencer Lamor Suss. This campaign generated over 500 million impressions. We're continuing to build on our success and have expanded the program to include over 50 influencers. The growth of our social media marketing program helps keep OLLI's message of savings top of mind with existing customers and attracts new customers as well. This is helping fuel our growth, especially with the younger customer demographic, which is our fastest growing segment. Our collective marketing efforts led to a nice improvement in OLLI's Army growth this quarter. The customer file increased 4.8% year over year, and sales from the Army representing over 80% of our sales. We are encouraged to see that our compelling deals and enhanced marketing programs are attracting younger customers to the Army. We also implemented a military appreciation discount day for all Always Army members who are veterans or active duty military. Turning to supply chain, we continue to expand our distribution network to support our growth and are on track to open our fourth distribution center in Illinois in fiscal 2024. This will provide us the capacity to service an additional 150 to 175 stores as we expand into the Midwest. The expansion of our Pennsylvania distribution center was completed in August, and we are seeing immediate benefits in throughput and operating efficiency. These combined investments give us the ability to service between 700 and 750 stores in support of our long-term target of 1,050 stores or more. Before I turn the call over to Robert, I would like to take a moment to thank our amazing associates who are value obsessed and committed to the successful growth of our company. I am super proud of the excellent teamwork we continue to demonstrate each and every day in the execution of our business. Rob?