Ollie's Bargain Outlet Holdings, Inc.

Good morning and welcome to OLLI's Bargain Financial Results for the fourth quarter and fiscal year 2023. Currently all participants are in 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 express written authorization of OLLI's. Joining us on today's call from Ali's management are John Swigert, President and Chief Executive Officer, Eric Van Der Vlok, Executive Vice President and Chief Operating Officer, and Robert Helms, 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 Harbors 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 annual report on Form 10-K and quarterly reports on Form 10-Q on file with the SEC and 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 non-GAAP financial measures are included in our earnings press release. With that said, I'll turn the program over to Mr. Swagger. Please go ahead, sir.

Thank you, and good morning, everyone. We appreciate you joining our call today. We had a strong fourth quarter and fiscal year. For the fourth quarter, we delivered better than expected top and bottom line results. Comparables for sales increased 3.9%, our seventh consecutive quarter of positive comps. Our comps for sales growth was broad-based, with over 60% of our product categories comping positive in the quarter. In addition to the solid comps for sales growth, we also delivered very strong margin growth. Gross margin increased 290 basis points to 40.5%, which in turn helped us deliver a 46% increase in adjusted earnings per share. The fourth quarter capped off a great year for Ollie's. Fiscal 2023 marked a return to the strong financial performance and consistent execution that are hallmark at Ollie's. We are proud of our team's achievements this past year, which included a number of records and milestones. In fiscal 2023, we generated record debt sales and crossed the $2 billion mark for the first time in our 41-year history. We opened our 500th store and entered our 30th state. We returned to our long-term algo gross margin target of 40% in the second half of the year. We added a record 3.6 million new Ollie's Army members and grew to almost 14 million active members strong. We beat and raised our four-year sales and earnings estimates in all four quarters. And most importantly, we returned to a pattern of consistent execution and strong financial results. We feel very good about the underlying trends in our business and our focus on long-term growth. We recently completed our latest third-party real estate feasibility study, which utilizes demographic data and density across a changing U.S. landscape. The migration trend out of larger metropolitan markets into rural and suburban areas over the past few years is a positive trend for Ollie's, and our analysis supports a new long-term target of 1,300 stores, up from a previous 1,050. Everyone loves to bargain, and as consumers seek value, we are positioned to win. We sell good stuff cheap, high-quality, name-brand products at prices typically 20% to 70% below the fancy stores. Since our founding over 41 years ago, we have built our model around closeouts and bargains. In doing so, we have developed deep relationships throughout the vendor community, built an experienced team of talented buyers, and set up our distribution network to handle deals of all shapes and sizes in a cost-effective and agile manner, and developed a trusted and loyal customer following. Today, consumers are looking for bargains, and manufacturers are looking for trusted partners who can help them manage their inventory and supply chain. Larger retailers are being supplied by larger manufacturers, and this leads to larger orders and product flow. At the same time, manufacturers are constantly developing and introducing new products, new packaging, and working around endless changes and disruptions in the marketplace and supply chain. This is driving strong growth in the closeout market. We are the king of closeouts, and we are built for this environment. Nobody has our experience, size, scale, and credibility in the closeout market. With over a 41-year history and extensive relationships, manufacturers know we are a trusted and reliable partner for excess and closeout products. As a result, our purchasing power is growing and we are becoming more and more meaningful to the vendor community. We have made significant investments to enhance execution and drive productivity. We have invested in wages across the entire company, our distribution centers, our stores, field management teams and store support center. We have enhanced major operational teams such as the supply chain, loss prevention, real estate, and marketing, expanded our distribution capabilities, implemented new technology and systems, initiated a store remodel program, and retooled our marketing campaigns and expanded our digital capabilities. Clearly, these investments are paying off. Our customer base is expanding. Our productivity levels are increasing and our costs are well under control. In short, we're executing well and delivering strong and consistent financial results. Now let me turn the call over to Eric.

Thanks, John, and good morning, everyone. Our fourth quarter and fiscal year results reflect the strength of our deals, the hard work and commitment of our team, and our execution across the organization. Process improvements and investments we have made in our people, supply chain, stores, and marketing continue to drive better productivity and strong results. Our growth is focused on a number of core initiatives, offering amazing deals, expanding our reach through new store openings, digital marketing, and Ollie's Army, leveraging investments to drive operating efficiencies and execution. In the fourth quarter, we opened seven new stores and hit our target of 45 new store openings for the fiscal year. The 30 store openings in the back half of the year was a new record. We continue to pursue a contiguous growth real estate strategy that leverages brand awareness, marketing reach, and our supply chain. With the opening of our 500th store in Iowa City, we now operate in 30 states. In fiscal 2024, we are targeting to open approximately 50 new stores with a good portion of these in existing markets and the Midwest. In addition to opening new stores, we continue to upgrade our existing stores through our remodel program. Over 10% of our store base has now been remodeled, and we are applying our learnings to both existing stores and new store designs.