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 of fiscal year 2025. 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's. I would now like to introduce our host for today's call, John Rouleau, Managing Director of Corporate Communications and Business Development for OLLI's, John, please go ahead.

Thank you and good morning, everybody. We appreciate your time and participation. Joining me on today's call from OLLI's are Eric Vandervalk, President and Chief Executive Officer, and Robert Helm, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. We ask that you initially limit yourself to one question to ensure that everyone has the opportunity to participate. If you have additional questions, please reenter the queue. Finally, let me remind you that certain comments made on today's call may constitute forward-looking statements, and these 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. These risks and uncertainties are described in the company's earnings press release and filings with the SEC, including the annual report on Form 10-K and the quarterly reports on Form 10-Q. Forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update these statements. On today's call, the company will be referring to certain non-GAAP financial measures. Reconciliation of the most closely comparable GAAP financial measures to the non-GAAP financial measures are included in the company's earnings press release. With that all said, it's my pleasure to turn the call over to Eric.

Good morning. Thank you for joining us today. Our team delivered another strong performance in the third quarter. We opened a record number of new stores, continued to accelerate membership growth in our Ollie's Army loyalty program, widened our price gaps to the fancy stores, and delivered industry-leading sales growth, all while driving significant improvement on the bottom line. We are primed and ready for the final days of the holiday season. Our expanded assortment of seasonal gift items, along with our amazing deals of brand name household products, make us the holiday shopping destination. Our comp trends since early October have been strong, and we feel great about our momentum heading into the final weeks of the holiday season. With a better than expected third quarter results and a very good start to the fourth quarter, we are raising our full year sales and earnings outlook. Let me provide an update on our strategic growth initiatives and some of the things we are doing from a merchandising, marketing, and supply chain perspective to drive our business. Accelerated unit growth and customer acquisition remain our top priorities. We have a predictable, portable, and profitable store model but it's unlike anything else in the market. We have a huge opportunity ahead of us to continue growing. Our long-term target is 1,300 stores, and we are committed to a minimum 10% annual unit growth to get there. We have the talent and have built the infrastructure to exceed our long-term algo and are delivering accelerated unit growth. We opened 32 new stores in the third quarter and 86 for the year, which is 18% growth. This blew away previous Ollie's records and demonstrated our ability to exceed our algo opportunistically. The current environment has been challenging for many retailers and this coupled with long-term consolidation of retail presents a pivotal opportunity for Ollie's to secure attractive second generation real estate sites. Our entire team deserves a huge shout out for their achievements this year. Not only do we open a record number of new stores, All of our stores were open before the fourth quarter. We have not made this happen for years, and this allows us to be 100% focused on driving the business in the final months of the year and the critical holiday shopping period. Thank you again, Ali's dream team of discount retail for making this happen. Opening stores is the first component of our growth strategy. Next is winning the hearts and minds of new customers. We have some of the most dedicated and passionate customers in the business and are fiercely committed to this group. As we continue to open new stores, we are focused on acquiring new customers and turning them into loyal Ollie's Army bargain knots. Our members shop more frequently and spend over 40% more per visit than non-members. They are very important to our business and we have an opportunity to strengthen our connection and drive lifetime customer value. We are very pleased with customer growth in the third quarter. New memberships in our loyalty program increased 30% year over year, while our customer file increased 12%. We have seen new customer acquisition strengthen since the first half of the year, and engagement with our existing customers remains strong. Both the younger and higher income groups were the fastest growing cohorts in the quarter. which we think is in part driven by the continued reallocation of marketing dollars to digital, consumers seeking value, and customers trading down. We also continue to enhance the value proposition of our Ollie's Army Loyalty Program. Last quarter, we talked about the success of the additional Ollie's Army Night and some of the learnings there. The biggest takeaway was the adjustment to the start time of the event. We received positive feedback about the earlier start time and experienced increased foot traffic as a result. The upcoming OLLI's Army Night on Sunday, December 14th will run from 4 to 9 p.m. compared to 6 to 10 p.m. last year. If you're not already a member of OLLI's Army, what are you waiting for? We invite you to join, and we look forward to seeing all of you this Sunday. On the merchandising front, let me touch on how we're steering our product mix to drive sales productivity and enhance new customer acquisition. Our flexible buying model and treasure hunt shopping experience give us unlimited flexibility in how we assemble our product offering. Our buyers are continuously scouring the marketplace to find the best products at the best prices to put together an ever-changing assortment that combines quality, national brands, and price in a way that can only be found at Ollie's. At the same time, we know that customers are prioritizing their spending around their needs and are looking for value. By focusing on value-driven consumable deals, we achieved mid single digit increase in comparable store transactions, attracting new customers and increasing engagement. Our deal flow continues to be very strong and driven in part by the challenging retail environment. On top of this, our growing size and scale is starting to give us opportunity to steer our category mix. A good example of this is the increased investment we made in the seasonal category. As you may have seen in our stores, we dramatically increased the assortment of seasonal decor over the past year, with the most meaningful changes taking place in our fall harvest, Halloween, and Christmas categories. We also grew our holiday gift programs that we initially successfully tested last year. The changes have been well received by our consumers, with seasonal being one of our top performing categories in the quarter and throughout the year. Marketing continues to be a critical lever in fueling the growth of our business. And over the past year, we've been accelerating a major evolution in how we connect with our customers. As consumer attention shifts, continues to shift towards digital platforms, our strategy is shifting as well. By moving from traditional linear and print-heavy approaches to a more dynamic digital-first strategy, we could deliver the right message to the right person in the right place at exactly the right time. A recent comprehensive review of our media mix model indicated a significant opportunity to further reallocate print spend to digital media. Acting on this data, we put a test in place, and our strategic reallocation is already proving out. October was our strongest month of the quarter at a time when we meaningfully reduced our print campaign. This allowed us to leverage our media spend while driving sales above plan in the quarter. More importantly, this is in pursuit of a smarter, more targeted, more modern marketing ecosystem. To support the growth of our business, we continue to invest in our supply chain. Over the next year, we plan to expand our Texas distribution center by 150,000 square feet and increase our service capacity by approximately 50 stores to 800. Next on the list is the expansion of our Illinois distribution center, which will start late next year. Our supply chain investments have driven throughput, leveraged costs, and expanded our capacity to buy any deal, anytime, anywhere, as we continue on our path of continuous growth. I would like to thank all of our dedicated and hardworking associates. Deep discount retail is not an easy business and it requires continuous coordination and relentless execution. We came into this year with a very unique opportunity to accelerate our growth and capture abandoned market share from the store closures and distressed retailers. Our team was ready for the challenge and stepped up all year long. I want to wish everyone happy holidays and hope that all of our team members are able to enjoy time with friends and family. Now let me turn the call over to Rob.