Jeremy Hamblin: Thanks. I wanted to come back to the gross margins for Q4. And just to understand, so it looks like you’re guiding to about 75 basis points to 100 basis points below expectation. And some of that would be explained by the downside, I think, of roughly $17 million of lower sales forecasted for Q4. But I needed understand, you know, are some of the categories underperforming toys in particular, you’re running a 15% off promotion ahead of Ollie’s Army Night. I don’t think that’s consistent with what you’ve done historically. Historically toy promotions have always come after Ollie’s Army Night? So I wanted to just understand whether or not there’s certain categories, toys maybe being one of them where you talked about in the prior, kind of, buyout deal that toys are I think like 40% of that deal, but just wanted to understand if some of this is was more products that you brought in that maybe aren’t moving as well as you had hoped as opposed to just pressure on your consumer?
John Swygert: Yes. Jeremy, with regards to the Q4 margin, I would tell you, it’s 100% attributable to the deleveraging of sales. The merch margin, we expect that to actually be up year-over-year, so there’s not a compression in the merch margin from Q4 of ’22 to €˜21. So it’s the implied margin guide that we’re given is really related to the $17 million, $18 million of lower sales volume for the quarter. With regards to our promotional event for toys, as you know, we’re operating the highly promotional environment. Everybody is being very aggressive what the seasonal in toy items right now. We don’t have a toy issue, we’re trying to take advantage of the holiday period where people are shopping very heavily. And what I think all that’s going to do for us is we’ll have less markdowns on the post holiday period than we normally do and we’re getting some nice impact from the overall promotional environment we’re running today for a five day period.
So I’m not too worried about that. I think we’re just changing dollars. And I think we’ll be changing less dollars in markdowns where it — once all set all done. So I think we’re very comfortable with where we’re sitting in our inventory position.
Jeremy Hamblin: Okay. And then just a follow-up question on the York D.C. expansion. Can you give us a sense for what the potential impact on margins might be and the first half of the year or if it would carry on into the second half of the year?
John Swygert: Jeremy, the expansion of the D.C. in York will not have any impact on the margins. In ’23 at all.
Jeremy Hamblin: Okay. Got you. Okay, thanks. Best wishes.
John Swygert: Thank you.
Operator: Our next question comes from Eric Cohen with Gordon Haskett. Your line is open.
Eric Cohen: Good morning. Thanks for taking the question. Understanding it’s been a very dynamic environment. Just kind of looking back the last couple of quarters, comps relative to guidance have underperformed and recognizing you were at the low-end in most of the quarter until the late Q3 — late October softness. Just curious of the underperformance, sort of, how much would you attribute to kind of execution versus more external dynamics? And how you incorporated those learnings in setting the Q4 guidance?
John Swygert: Yes. I think, Eric, with regards to execution, I don’t think any of it was execution. I think it’s just the external factors we’re all dealing with. It’s not just Ollie’s, it’s everyone who’s out there. So there’s challenges with the consumer. The consumer is under significant pressure with inflation. So we’re just dealing in a very uncertain environment and I think we’re navigating pretty well. I’m not ashamed of a 1.9% comp and two quarters of real positive comps. So we’re just going to build off of that and continue to move forward. So I think we’re in good position to execute Q4. Obviously, we’re taking the guide down a little bit from where we were before. And I think it’s just a prudent thing to do with all the uncertainty in the highly promotional environment we’re running in.
But I think we’re navigating very well. I think we’re locked and loaded for the remaining 17-days here at the holiday and I think we’re going to come around at the holiday and ready to go. So I think we’re in good shape.
Eric Cohen: And then just — this year — last year obviously around this time, Omicron was becoming a headwind and certainly impacted store traffic and was lack of visibility on the timing of inventory receipts, sort of, how are you going to market different this holiday season versus last year? And can you just remind us, sort of, what the comp cadence was in Q4 last year?
John Swygert: Yes, Eric, with regards to the — you’re correct with the resurgence of Omicron for last year, and I do think that does provide some upside for us on other retailers later in the holiday season. So it’s something that I think is a positive. We’ve not really baked that into our numbers. We’ve kind of just let that be at this point in time. So I think the inventory position we’re in today versus last year from a seasonal perspective is much stronger and I think we have an opportunity to finish pretty strong as we round up the holiday season. So I think the lessons we’ve learned is to just be conservative and move forward with what we’re seeing and guiding with where we’re at so far quarter-to-date.
Operator: Thank you. Our next question comes from Mark Carden with UBS. Your line is open.
Mark Carden: Good morning. Thanks so much for taking my questions. So to start when you see deals of the magnitude of the one that you heavily advertised this quarter? How long does it typically take for you to sell through them? We expect to see much in the way of further tailwinds in 4Q? Or is the bulk of the lift from that one already taken place?
John Swygert: No. The sell-through of that item and those deals that are that large, they take a while to sell through. But obviously, the tapering of the velocity does start to taper down. But we have — we’re still in pretty good inventory shape going into Q4 with that deal and we’ll benefit from that deal pretty well. But I got to remind everyone that, that deal is — while it was exciting, what we promote it, we make it bigger than life. It’s not that large relative to our total inventory and our total sales velocity for Q2 and Q3 combined, but it’s very meaningful, but it’s not the end all be all there.
Mark Carden: Got it. That’s helpful. Thanks. And then we’ve seen some states start to put out their own stimulus.
John Swygert: Excuse me, I missed that.
Mark Carden: Sorry Okay. So back to my follow-up, so we’ve seen some states put out their own stimulus programs recently. Are you expecting for that to have much of an impact on your comps? Or is it too small to really make the needle much?
John Swygert: My guess is it’s probably too little to move the needle a whole lot for us. It’s not that meaningful from what we’ve seen so far and what we’re thinking.
Mark Carden: Okay, great. Thanks so much and best of luck.
John Swygert: Thank you.
Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Your line is open.
Michael Kessler: Hey, guys. This is Michael Kessler on for Simeon. Thanks for taking our questions.
John Swygert: Hey, Michael.
Michael Kessler: First, I wanted to ask about sales per foot, sales per store in Q3. They were a little bit below 2019 levels. I know there’s been, I guess, some volatility throughout this year. But I’m just curious how you view that in the broader context of your customer counts, your loyalty membership base. I guess I don’t know if you would expect it to be higher or just because of the macro or in a period of depression relative in €˜19 despite some of the uplift you’ve had in the prior two years. I don’t know of any framing around that would be great?
John Swygert: Yes, Michael, I think you’re spot on with that, the way we’re looking at it. I think there’s obviously macro headwinds that we’re all dealing with, with regards to €˜19. We were, call it, 99.2%, 99.3% of 2019 from a comparable basis. So just barely off if we would have maintained the velocity of our sales through the quarter without the last two weeks, we’ve been somewhere in the neighborhood of, call it, 101 or something of that nature that we had planned to be. So there’s, I think, just macro pressures going on that we’re all rebuilding to and a lot of consumer is under pressure. So we’re navigating through that. But I don’t I’m not — we’re not coming out with a negative 5%, negative 10%, negative 15%. We’re in pretty good shape.
I think we’re going to continue to see some momentum in our business as we move forward and go into €˜23. So we’re looking forward more so that the deal flow is strong and we have the right item, the right deal to motivate the consumer.
