Ollie's Bargain Outlet (OLLI) Q1 FY27 earnings call: guidance and Q&A

Could you elaborate on the cadence of comps in Q1, particularly by region and category, and your confidence in delivering the full-year 2% comp target, especially for Q2 given the softer start?

Q1 comps were positive across all three months, with February being the strongest. Performance varied by region due to weather, with East, Midwest, and Central outperforming plans, while the South underperformed due to heat impacting lawn and garden. Q2 trends are currently behind the full-quarter guide, but core categories remain strong, and management expects pent-up demand for seasonal products as weather normalizes, supported by planned events.

“The East, Midwest and Central all experienced more normalized conditions and [ they'd be planned ] by 100 to 200 basis points. The South where it was hot and we saw drought-like conditions, that region lagged between 100 to 300 basis points.”

asked by Matthew Boss · answered by Robert Helm

Please provide more granularity on the consumer environment, specifically regarding trip consolidation, trade-down/out trends, and any recent changes in weather-impacted Southern markets.

The consumer environment shifted meaningfully in March due to gas price spikes and economic uncertainty, leading to close-to-need shopping. Consumables were strong, while non-essentials were deferred. There was an acceleration of high-income customers trading down, but also an accelerated trade-out of lower-income consumers, netting out flat. Green shoots are observed in regions when weather improves, boosting confidence.

“We saw an acceleration of high-income customers, actually the most significant acceleration we've seen in quite some time. So the trade down was very strong in higher income. The pace of the trade out also accelerated, and it netted out about flat.”

asked by Randal Konik · answered by Eric van der Valk

How are consumers responding to current price investments, and what gives you confidence in moving the top line? Also, did higher tax refunds benefit Q1 sales, and if not, why?

Ollie's bias is to drive market share through compelling deals and price investment, leveraging stronger margins from better buying and execution. They are aggressively lighting up deals, widening price gaps, and enhancing loyalty events. Regarding tax refunds, while more money in consumers' wallets is generally good, no notable spikes or green shoots were observed from the tax refund season.

“Our bias is always to drive market share in investing in prices the way that we do it. We know how to motivate customers through compelling deals.”

asked by Steven Shemesh · answered by Eric van der Valk

Can you explain the philosophy behind shifting flyer events, particularly the Q3 to Q2 shift, and how you view the second-half outlook given easier compares?

Flyer decisions are made well in advance, typically in January, based on holiday timing, not intra-quarter sales dynamics. The Q3 to Q2 shift for July was to address a significant calendar gap between June and August events, aiming to capture back-to-school demand. For the full year, the comp target implies only slight variations around 2%, with the second half potentially slightly above, and plans are in place to drive sales.

“We make all our flyer event decisions in January in that period, and we don't shift. I can't remember in my time here ever shifting a flyer event after we set the calendar.”

asked by Ed Kelly · answered by Eric van der Valk

Could you provide an update on the closeout environment and what trends you are currently observing?

The closeout environment is highly disruptive, creating opportunities for Ollie's. The company benefits from retail consolidation and suppliers being more motivated to move product due to consumer pressure and inventory imbalances. This has led to an increase in both the quantity and quality of deals available, with Ollie's gaining momentum in securing larger deals.

“We're continuing to see an increase in both the quantity and the quality of the deals.”

asked by Mary Sport · answered by Eric van der Valk

What are the biggest opportunities for driving sales in the balance of the year, and how effective do you expect the second annual Ollie's Army Night in June to be?

Ollie's is proactively driving sales through compelling deals, newness, and managing in-store sales productivity. This includes bringing in highly relevant and trend products, enhancing the Ollie's Army program with exclusive events, and leveraging digital marketing. The Ollie's Army Night is viewed as an opportunity to stimulate and reward loyal customers, with adjustments planned to make it even more compelling.

“We are very aggressive about driving compelling deals, newness in managing the productivity -- the space productivity, sales productivity in our stores.”

asked by Bradley Thomas · answered by Eric van der Valk

What categories will replace the downsized Books and Flooring sections, and are there any updated thoughts on offering delivery for furniture, given its size?

Ollie's has a plan for replacing Books and Flooring but will not disclose it for competitive reasons, though they remain committed to both categories. For furniture delivery, initial tests showed customers were unwilling to pay for it, and offering free delivery would compress margins. Customers currently find ways to pick up large items, often reserving for later pickup, and the credit aspect for big-ticket items is still under consideration.

“On delivery, we tested it and the customer didn't respond well to it. So if we give away the delivery, meaning free delivery, then our values -- either values won't be as good or there's margin compression in the business.”

asked by Anthony Chukumba · answered by Eric van der Valk