Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) Q3 2019 Earnings Conference Call - Final Transcript

Dec 10, 2019 • 04:30 pm ET

Previous

Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) Q3 2019 Earnings Conference Call - Final Transcript

Share
Close

Loading Event

Loading Transcript

Presentation
Executive
John Swygert

board. Strong deal flow and ongoing success of our new stores drove a 15% top line increase. Comp sales were in line with our expectations, decreasing 1.4% compared to a 4.6% increase in the prior year. As we stated on our last call, the outsized cannibalization impact of the TRU sites and the record performance of our new stores entering the comp base are expected to remain headwinds for the remainder of this year. However, our long-term growth algorithm remains the same.

Merchandise margin rebounded and we regained efficiency levels at our distribution centers, improvement in these carry -- key areas along with tight expense control, contributed to a 28% increase in adjusted net income. As we outlined in our prior call, we had visibility into Q2 issues to be addressed and we did just that. As always, we remain bullish on the proven strength of our model of offering great deals growing our store base and leveraging and expanding Ollie's army. We have a deep bench of experienced and talented merchants who have done an outstanding job building long-standing relationships with our vendors. As a result, we continue to see exceptional deals.

As we said before, we linked into toys and our buys are even bigger than last year. We are very pleased with how these and other deals allow us to give customers more of the name brands and bargains they've come to expect from Ollie's. Our pipeline is very full and we're confident that we're in a great position to capitalize on our robust closeout environment. Our store growth in merchandising strategies continue to work very well together. The more we grow our store base, the greater the prospects for opportunistic buys for our customers to save even more money. At the same time, our strong deal flow can easily support our expansion plans for the foreseeable future.

As we've said many times in the past, our new stores are in fact the biggest driver of our growth. Their performance continues to exceed our expectations with stronger than ever new store payback. We had another busy quarter opening 13 stores and entering two new states, Oklahoma and Massachusetts. We opened a total of 42 stores this year and we are well on our way to having a full pipeline for the coming year with a normalized opening cadence.

We look to support the expansion of our geographic footprint with the opening of our third distribution center, which is located in the Dallas-Fort Worth area. This will enable us to enter both new markets and new states. Construction remains on budget and on schedule for operation in the first quarter of 2020. Ollie's Army continues to grow. Accounting for over 70% of our sales in the quarter. The Army is now 10 million strong. One of our biggest events of the year, Ollie's Army Night is this Sunday, December 15, and we are excited once again to welcome Ollie's Army members to an exclusive evening of shopping and