Ollie's Bargain Outlet Holdings, Inc.

Good morning and welcome to OLLIS Bargain Outlet's conference call to discuss financial results for the fourth quarter and 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 OLLIS. I would now like to introduce our host for today's call, John Rouleau, Managing Director of Corporate Communications and Business Development for OLLIS. John, please go ahead.

Good morning. Thank you, 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 questions. To ensure that everyone has the opportunity to participate, we ask that you limit yourself to one question. For additional questions, please re-enter 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. Those risks and uncertainties are described in the company's earnings 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 also 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 all of that said, it's now my pleasure to turn the call over to Eric.

Good morning, and thank you for joining us today. We had a strong fourth quarter to cap off an exceptional year. Both comparable store sales and earnings were ahead of our expectations, and we delivered on all of our strategic objectives in 2025. We entered last year with a number of ambitious goals, Most notable of these was to accelerate our growth and capitalize on opportunities in the market, including real estate, merchandise, customers, and talent. All of this required considerable planning and execution, and our team delivered. We opened a record 86 stores last year, which was significantly higher than our previous record of 50 stores. All stores were open in the first three quarters, another first for us. We moved to a soft opening strategy, which simplified the process and improved our execution. Our next goal was to enhance and drive growth in the OLLI's Army Loyalty Program. We added an OLLI's Army Night in June. We made our OLLI's Days event exclusive to members only. We gave members advance notice on special events. And we rolled out the OLLI's credit card. Our stores did an amazing job communicating the benefits and enrolling customers in the Loyalty Program. Great job, team. Your efforts paid off. The result was stronger customer acquisition growth the entire year. New memberships in our Ollie's Army Loyalty Program increased 23%, and our total customer file increased by more than 12%. On top of the accelerated membership growth, we are welcoming a wider breadth of customers. America loves a bargain, and as we grow from east to west, we are expanding our customer demographics. Our unprecedented deal simply cannot be beat, and we are clearly benefiting from consumers seeking value and trading down. It's not just trade down, however. We are also reaching a younger customer through digital marketing tactics. Finally, we are reinvesting in our stores and improving the customer shopping experience. All of this is driving an expanded customer base. Our next objective was to go after merchandise-related opportunities. Our mission is to sell good stuff cheap. We do this through a flexible, off-price buying model that leverages our growing buying power across suppliers and manufacturers around the world. Our growing size and scale and continued consolidation of the retail industry has resulted in better access to merchandise, and our deal flow is off the charts. This gives us more control and flexibility in how we build our merchandise assortment. A good example of this were changes we made to the seasonal category. Seasonal decor is an area that continues to grow in the marketplace, and there is a white space opportunity here. At the same time, toys is an area that continues to evolve away from traditional to more interactive products. With this in mind, we increased our investments in seasonal decor and changed our approach to toys. These changes resonated with our customers and were big wins in the fourth quarter. Our last initiative was to continue reinvesting in our business to support future growth. We have strengthened our bench in many critical areas, including planning and allocation, marketing, and new store development. We also increased our distribution center throughput through expansion and automation. And we continue to improve our store and customer experience. Looking ahead, we will build on our momentum and progress in pursuing these initiatives in 2026. Our flywheel for growth starts with the opening of new stores and the availability of real estate continues to be strong. We are planning to open 75 stores this year, and these will be a mix of new and existing markets as we continue to expand contiguously. We recently celebrated entering our 35th state with the opening of our store in Austin, Minnesota. We celebrated the grand opening last week with a long line of enthusiastic customers that stretched down the side of the building. It was great to meet and talk to so many good people. Austin loves deals, and we are proud to be part of your community. Thank you, Austin. And Minnesota, the birthplace of bargains has arrived with more stores coming soon. In addition to Minnesota, we will also be entering New Mexico later this year. With a total of 658 stores in 35 states, we are only at the halfway mark of our long-term goal of more than 1,300 stores. It's such an invigorating time to be with Ali's with so much growth ahead of us. While new stores remain the cornerstone of our growth, we are also focused on driving comparable store sales through better execution, leveraging our growing size and scale, and improving sales productivity. We touched on strengthening our product assortment, We are also seeing opportunities arise in areas such as real estate and talent. When you combine this with the fact that we reinvest in the business every year because of our strong sales, profitability, cash generation, and balance sheet, it feels like we have reached an inflection point. With these dynamics, we are confident in our ability to continue executing the business and driving consistent results. Our growth and the continued consolidation of the retail sector is leading to more buying power and expanding our access to products. This gives us the ability to balance our value proposition with our margin profile and strengthen both over time. Based on the structural changes to our business we feel a comp target of 2% and a gross margin target of 40.5% is sustainable and strikes the right balance between price and margin. We also believe that this stability and strong free cash flow now allows us to commit to returning higher levels of excess cash to shareholders through share repurchases. Combining 10% unit growth, 2% comp growth, and a commitment to stepping up share repurchases, we are confident in delivering consistent mid-teens EPS growth while reinvesting back into the business to support profitable long-term growth and reach our target of 1,300 stores. In 2026, our focus will be on improving the in-store customer shopping experience, sharpening our dynamic marketing media mix model, expanding our IT application development capabilities, and further integrating technology and data analysis across the enterprise, including leveraging proven AI with appropriate solutions for our business model, growing our planning and allocation bench and capabilities, and increasing our distribution capacity by expanding our Texas and Illinois facilities and laying out plans for our fifth DC. There is so much potential to continue to develop and grow our business, but we are doing this in a calculated fashion, staying true to our business model, strong culture, and our new long-term growth algorithm. We are super proud of our achievements in fiscal 2025. We delivered against virtually every single metric and goal we set out for ourselves at the beginning of the year. But now that's behind us. We are focused on building on our success, seizing new opportunities, delivering another year of good stuff cheap to our customers, and strong results for our shareholders. Let me wrap up by recognizing and thanking all of our dedicated associates and team members. Every one of you plays an important role in serving our loyal discount customers and fulfilling our mission. Serving our communities by selling good stuff cheap is not just a tagline. It's our purpose, our passion, and our reason for being. Thank you for everything you do. Now let me turn the call over to Rob.