Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) Q4 2022 Earnings Call Transcript

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Jeremy Hamblin: Got it. Understood. And then I wanted to ask a question just in terms of the store openings, right? So we know that there is — there is still some longer lead times here both on permitting construction and materials so forth. In terms of sitting here in March of 2023, how are you thinking about the potential to get back to a — that targeted range of 50 to 55 in 2024?

Eric van der Valk: We are — it’s Eric, Jeremy. We’re feeling very confident about 2024. We think that the setup in the commercial real estate market is very, very good for 2024. There is some disruption going on in retail, as we’re all aware, some other retailers that are struggling the stress and even some bankruptcy filings, that usually very good for us. It takes typically one to two years for sites to become available, call them second generation sites become available and make sense for our financial model which if you projected out one or two years makes 2024 very good setup for 2024 from a real estate standpoint. Your guess is as good as mine as to what extent construction and permitting settles in. We’d like to think given the slowdown in building and kind of more macro level easing in that space that it will make it easier for us to deliver from a construction standpoint, but time will tell on that front.

John Swygert: Yes. One thing to add, Jeremy, the one thing that does help us get a little more comfort level as well with the opening of the fourth DC gives us additional states for our real estate folks to go and visit potential opportunities. So with that plus the backfills, it makes a little bit stronger opportunity there.

Jeremy Hamblin: Okay, great. Thanks for the color, guys.

John Swygert: Thank you.

Eric van der Valk: Thanks, Jeremy.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Bradley Thomas from KeyBanc. Your question, please.

Bradley Thomas: Hi, good morning. Thanks for taking my question and a nice end to the year. I wanted to first just ask about the outlook for gross margin. Obviously, a backdrop for many retailers dealing with some mixed headwinds and a more promotional environment. And so, I was hoping you could just talk a little more about the kind of the building blocks of the gross margin expansion for this year? And then, as we think about the timing through the year, it looks like maybe you need to be above the full-year guidance range in the first half given the way you’ve kind of talked about the shape of the year. So just any more color on how to think about the timing of this improvement because it’s such a big increase you’re looking for here this year? Thanks.

Eric van der Valk: Yeah, Brad, I’ll take the merchandise margin piece and I’ll hand the rest over to Rob to take you through. But the overall merchandise margin, obviously, the deal flow was strong. Our merchants are being very selective and there’s opportunities out there that we see that will help us on the merch margins side to offset the supply chain costs and the 39.1% to 39.3% that we’re projecting for the full year, we believe that’s very achievable with what we’re projecting on the supply chain front and it’s just — we don’t feel that’s a real big stretch this year coming off of where we were at last year. So I’ll let Rob kick in on the supply chain piece and the overall margin.

Rob Helm: From a supply chain perspective, we are planning for pretty considerable improvement. When we lap the impact of the first half, which was roughly, say, 750 basis points for Q2 last year and roughly 400 basis points for Q1. That impact for the year totals, say, 300 basis points in gross margin improvement and that’s pretty much is how we get to our guidance of 39.1% to 39.3%.

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