Ollie's Bargain Outlet Q1 2026 Earnings Report

Ollie's Bargain Outlet EPS Results

• Actual EPS: $0.75
• Consensus EPS: $0.70
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: $0.73

Ollie's Bargain Outlet Revenue Results

• Actual Revenue: $576.77 million
• Expected Revenue: $565.04 million
• Beat/Miss: Beat by +$11.73 million
• YoY Revenue Growth: +13.40%

Ollie's Bargain Outlet Announcement Details

• Quarter: Q1 2026
• Date: 6/3/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, June 3, 2025
• Conference Call Time: 8:30AM ET

Ollie's Bargain Outlet (NASDAQ:OLLI) is a holding company, which engages in the retail of closeouts, excess inventory, and salvage merchandise. It offers overstocks, package changes, manufacturer refurbished goods, and irregulars. The company's products include housewares, food, books and stationery, bed and bath, floor coverings, electronics and toys. Ollie's Bargain Outlet Holdings was founded by Mark Butler, Mort Bernstein, Oliver Rosenberg and Harry Coverman on July 29, 1982, and is headquartered in Harrisburg, PA.

Ollie's Bargain Outlet Q1 2026 Earnings Call Transcript

Key Takeaways

• Opened a record 25 new stores in Q1—four ahead of plan—including former Big Lots locations, accelerating expansion and tapping into an existing discount-shopper base.
• Delivered 13% sales growth to $577 million, 2.6% comparable-store sales growth and adjusted EPS of $0.75, all ahead of expectations despite liquidation headwinds.
• Reaffirmed full-year guidance with plans for 75 new stores, net sales of $2.579 billion to $2.599 billion, comps of 1.4%–2.2% and adjusted EPS of $3.65–3.75.
• SG&A expenses rose 60 basis points to 28.6% of sales, driven by higher medical and casualty claims and elevated preopening costs for new stores.
• Expanded customer loyalty initiatives with a second Ollie’s Army Night in June, exclusive Ollie’s Army Days promotions and the rollout of a co-branded credit card.

Presentation

[Operator]

Morning, and welcome to Ollie's Bargain Outlets Conference Call to discuss Financial Results for the First Quarter of Fiscal Year twenty twenty five. 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 Ollie's. Joining today's call from Ollie's management are Eric Vander Vlok, President and Chief Executive Officer and Robert Helm, Executive Vice President and Chief Financial Officer. Certain comments made on today's call may constitute forward looking statements and 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.

[Operator]

Those risks and uncertainties are described in the company's earnings press release and filings with the SEC, including the annual report on Form 10 ks and 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 those most closely comparable GAAP financial measures to the non GAAP financial measures are included in the company's earnings press release. With that, I will now turn the call over to Mr. VanderVlok. Please go ahead, sir.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Good morning. Thank you for your interest in Ollie's. I want to start by thanking my fellow Ollie's team members, the dream team of discount retail. Your passion for serving our customers by delivering unprecedented value is at the heart of our culture and drives our business. Our team has done an amazing job yet again navigating a dynamic environment while delivering strong financial results.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Let me touch on some highlights. First and most importantly, we are delivering accelerated growth. We opened 25 new stores in the first quarter, a record for any period in our history and four stores ahead of plan. As will be the case for most of the year, the majority of these openings were former Big Lots locations. The team has done an excellent job prioritizing these openings in 2025, while advancing our pipeline for 2026 and beyond.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

These stores are off to a very strong start. We appear to be benefiting from the fact that these are warm boxes with a built in discount shopper customer base, which was our hypothesis going in. We delivered another quarter of strong financial results. Total sales, comparable store sales and adjusted earnings were all ahead of expectations. We were very encouraged to see strong mid single digit growth in transactions, despite being up against the final liquidation of the remaining Big Lots stores for much of the quarter.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Despite the Big Lots headwind and some SG and A pressure, we beat our expectations on both the top and bottom lines. Our deal flow and our access to product remains strong. There has never been a shortage of goods for us to purchase and our growing size and scale continues to benefit our buying power. The closeout market is very fluid, and there are many factors which influence deal flow in any given moment. Recently, it's been the significant number of retail store closures and supply chain disruptions that have created a tremendous amount of excess inventory.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Our flexible operating model allows our team to be very nimble and selective in what we purchase. We buy from thousands of vendors and work closely with our vendor partners to manage our category mix and assortment to deliver exceptional values while maintaining our margin targets. Our warehouses are set up to handle any type, shape, or size product. Our store presentation is fluid. We do not have planograms or strict guidance around shelf space, and our customers fully embrace the treasure hunt experience.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

This gives us ultimate flexibility when it comes to navigating a choppy environment and puts us in a very strong position versus most retailers. Given the challenging environment, we believe there could be significant product and market share opportunities. The significant number of retail store closures over the past year has already resulted in strong deal flow and abandoned customers. This is only likely to increase going forward. We are aggressively going after market share by accelerating our store growth, expanding our digital marketing capabilities and enhancing our Ollie's Army customer loyalty program.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We already have one of the strongest loyalty programs in the business. Our Ollie's Army members are our most dedicated customers who account for more than 80% of our sales and spend close to 40% more per visit and shop more frequently. These are value seeking bargain odds who take pride in saving money and being an Ollie's Army member. We understand this customer base because we are this customer. Ollie's was founded and built by Bargainauts, who are passionate about finding amazing deals and selling good stuff cheap.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We are constantly looking for ways to better serve our Ollie's RV members. In the first quarter, we completed the initial rollout of our co branded credit card. We paced the rollout, and we are building the program slowly. While it's still early, we are seeing strong spending and shopping frequency. In addition, we are starting to gain valuable insight into these customers.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Later this month, we are adding a new private shopping event for our Ollie's Army members. Just like our Ollie's Army Night in December, we are adding a similar event in June. This exclusive shopping night offers special discounts to our loyalty members and it's our way to show our appreciation for our best customers. Members will now have two special nights each year to shop and save. In addition, the Ollie's Days promotion that we typically run-in late June will be available exclusively to Ollie's Army members.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

This is different from previous years, where the late June promotions were available to anyone. You now have to be a member to take advantage of these. So if you're not a member yet, now is a great time to join. Before I turn the call over to Rob, let me just say that while the current environment has added some complexity around the execution of the business, we remain confident in our ability to deliver against our accelerated growth plan and are reaffirming our financial outlook for the fiscal year today. We know how to manage choppy waters and we thrive on disruption.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We are fiercely committed to delivering the best values in the market. Good stuff cheap has been our mission from day one, remains our guiding principle and what drives our passion in this environment. With that said, let me turn the call over to Rob.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thanks, Eric, and good morning, everyone. We are pleased with our results and continued momentum in the first quarter. We grew comparable store sales and adjusted earnings ahead of expectations despite some headwinds on both the top and bottom lines. Our value proposition is strong and continues to resonate with our customers. Consumers are looking for value and prioritizing their spending around their immediate needs.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

We saw continued evidence of this in the first quarter. Demand for consumer staples was consistently strong throughout the quarter, while demand for certain seasonal categories was impacted by the weather. Now let me run through our financial numbers. Net sales increased 13% to $577,000,000 driven by new store openings and an increase in comparable store sales growth. We opened 25 new stores in the first quarter and ended the period with a total of five eighty four stores, an increase of 13% year over year.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

The openings in the quarter were ahead of our plan. Our new stores are performing well, particularly the former Big Lots locations. Comparable store sales in the first quarter increased 2.6%, driven by an increase in transactions. Our best performing categories in the quarter were food, hardware, electronics, domestics and housewares. Ollie's Army members increased over 9% to 15,500,000 members in the quarter and sales to our members represented over 80% of total sales.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Gross margin was flat at 41.1 and this was slightly ahead of our plan. Lower supply chain costs were offset by lower merchandise margins, primarily driven by product mix. SG and A expenses as a percentage of sales increased 60 basis points to 28.6%, driven primarily by higher medical and casualty claims and new store growth. Preopening expenses were $6,700,000 in the quarter. Most of the $4,000,000 increase was from the higher number of new store openings this year.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

As mentioned, we opened 25 new stores in the quarter, which was four more than our plan. By comparison, we opened four stores in the first quarter last year. Dark rent associated with the bankruptcy acquired stores was $1,800,000 in the first quarter, which was also a factor in the year over year increase. Moving down to the bottom line, adjusted net income and adjusted earnings per share were $46,100,000 and $0.75 respectively. Lastly, adjusted EBITDA was $72,200,000 and adjusted EBITDA margin was 12.5% for the quarter.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Turning to the balance sheet. Our financial position remains very strong. Cash, cash equivalents and short term investments were $370,000,000 at the end of the quarter. We also had an additional $45,000,000 in long term investments, giving us a total cash and investment position of $415,000,000 and no meaningful long term debt. Inventories increased 16% year over year, primarily driven by our accelerating store growth.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

As Eric mentioned, the closeout pipeline remains very strong. We feel good about our inventory content and position. Capital expenditures totaled $27,000,000 for the quarter, with the majority of the spending going towards the opening of new stores and investments in our supply chain. The Big Lots locations were generally well maintained and have required limited build out expense to open thus far. Lastly, let me run through our outlook for fiscal year twenty twenty five.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

We are reaffirming our earnings outlook for the full fiscal year. This outlook flows through the upside in our first quarter sales results, maintains our gross margin target of 40% and assumes slightly higher SG and A levels from the higher than expected medical and casualty trends that we experienced in the first quarter. It also assumes that current tariffs in effect remain in place for the balance of this fiscal year. Our updated guidance figures are contained in the table in our earnings release posted this morning and include 75 new store openings, net sales of 2,579,000,000 to $2,599,000,000 comparable store sales growth of 1.4% to 2.2%, gross margin of 40%, operating income of $283,000,000 to $292,000,000 and adjusted net income and adjusted net income per share of $225,000,000 to $232,000,000 and $3.65 to $3.75 respectively. These estimates assume depreciation and amortization expenses of $54,000,000 inclusive of $14,000,000 within cost of goods sold pre opening expenses of $21,000,000 which includes dark rent of approximately $5,000,000 related to the acquired Big Lots locations an annual effective tax rate of 25%, which excludes the tax benefits related to stock based compensation diluted weighted average shares outstanding of approximately $62,000,000 and capital expenditures of approximately 83,000,000 to $88,000,000 which includes the build out of the Big Lots stores.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

As far as the quarterly comps are concerned, our thinking has not changed. We still think our second quarter comp could be at the lower end of our long term algo of 1% to two percent and third and fourth quarter comps could be at the higher end of that same 1% to 2% range. As Eric said, we feel very good about our results and positioning in the market. As consumers seek value and the current environment weighs on retailers and suppliers, we believe we are well positioned to benefit and continue driving profitable growth and market share. Now let me turn the call back to Eric.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Rob. This continues to be a very exciting time for Ollie's. We have a tremendous opportunity to grow the business and remain focused on our strategic priorities. We are investing in our people who are the lifeblood of our business. We are delivering extraordinary value to consumers at a time when they need it most.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We are doubling down on customer acquisition and retention and driving transaction and loyalty member growth. And we are delivering consistent financial results and profitable growth. Before we move to the Q and A, let me make one final comment. Last quarter, we did not do a very good job on the Ollie's chant. The chant is something our team takes a lot of pride in, and this has been a topic of conversation internally since the last earnings call.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We now have the opportunity to redeem ourselves and are excited to make this right. Are you ready, guys?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

We are. Ayes.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

That concludes our remarks. We are now happy to answer your questions.

[Operator]

Certainly. And our first question for today comes from the line of Matthew Boss from JPMorgan. Your question please.

[Matthew Boss, Equity Research Analyst at JP Morgan]

Great, thanks. So Eric, could you elaborate on the state of closeout availability, maybe where things stood before the impact of tariffs, any area or areas of concern today across categories, and just opportunities you see from this disruption, whether it's in the back half of this year or into next year?

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. Thanks, Matt. Good question. We've seen a very strong deal flow over the past several months. Our inventory was up 16% at the end of Q1, as Rob indicated, which is a strong indicator of a great deal flow.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

With all the retail bankruptcies and store closings out there, we're being offered a tremendous amount of Avanta products. And we're getting access to product pipelines that were available to us a year ago. It happens to coincide with accelerated growth, so it lines up very, very well for us. In terms of what might come in the future, the environment's creating even more pressure on retailers and suppliers who are having challenging moments in planning their business. And we think there'll be even more product available as we move into the back half of the year related to some of what I consider supply chain disruption related to tariff.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

In terms of categories, this business ebbs and flows with deals that are out there that are created from all kinds of various sources. And we haven't seen any particular pressure or windfall in any given category yet to date. It's about deals and big deals, and many of the biggest deals are tying back to bankruptcies.

[Operator]

Does that answer your questions?

[Matthew Boss, Equity Research Analyst at JP Morgan]

Yes. And then, Rob, maybe just as a follow-up, could you elaborate on just what you saw from traffic trends in terms of the progression throughout the first quarter, maybe what you've seen in May, just your visibility or confidence in comping the tougher compare in the second quarter?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thanks, Matt. Traffic has been strong, continues to be strong. It built throughout the quarter. Our seasonal categories were a little impacted at the tail end of the quarter due to weather, but the traffic has remained strong throughout and into the second quarter. In terms of second quarter comps and our ability to comp it, I would say that our core comp today for the second quarter is running in the low to mid single digit range.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

It's getting impacted by seasonal categories from week to week as the weather ebbs and flows, as it has been a tiny bit unseasonal thus far. But it gets warm every year, and we're confident it's going to get warm again this year and that we'll be good to deliver our guidance of the lower end of the 1% to 2% range for the second quarter.

[Matthew Boss, Equity Research Analyst at JP Morgan]

Wow, that's great color. Best of luck.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thanks, Matt.

[Operator]

Thank you. And our next question comes from the line of Brad Thomas from KeyBanc Capital Markets. Your question, please.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Thanks. Good morning and congrats on the strong start to the year. I wanted to first ask a couple of follow ups on tariffs if I could. And the first question is really around how, if at all, the tariff environment is affecting how you think about negotiations with suppliers and how you think about pricing given that many retailers are being a bit cagey about when and where they may be putting through price increases and so how that's affecting how you look at sourcing. And then if you could also just comment on the direct import side of things, it seems like you're in very good spot here for 2025, but anything we should think about for 2026 if the rates stay where they are? Thanks.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. Yeah. Thanks, Brad. So in terms of vendor relationships, we have longstanding deep relationships with our vendors. And we've been working collaboratively with our vendor partners.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

They're great partners and have been very supportive throughout this process. Suppliers and manufacturers are under pressure as a result of this dynamic environment. Vendors are seeking retailers who have strong to partner in moving inventory. And we're very well positioned for this moment. In terms of pricing, we're fiercely committed to maintaining our value prop and our price gaps, especially on brand name items.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

As you know, we've always been a fast follower in terms of price, whether the price of the market goes up or down. We simply don't buy a product if we can't offer a tremendous value to the customer. So in addition to working closely with our vendor partners, we're buying alternative products. We're buying more closeouts. We're reducing our reliance on Chinese imports.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We're expecting most retailers to be very deliberate, smart, strategic in their approach to pricing, taking a portfolio approach across their entire business. And we're watching that very closely. Retailers adjusting price up and down to hit margin targets. And as I said, we're fiercely committed to maintaining our value prop and our price gap.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

I appreciate it. Quickly, Eric, on the real estate front, clearly off to a great start here this year. Wondering what you're seeing in terms of maybe more the market that's still out there. There's been so many bankruptcies. How are you feeling about the pipeline for stores as we move through the year and look at incremental signing opportunities?

[Operator]

Ladies and gentlemen, please remain on your line. The program will resume momentarily. Once again, please remain on your line. The program will resume momentarily. Once again, ladies and gentlemen, please remain on your line.

[Operator]

Your program will resume momentarily. Once again, please remain on your line. Your program will resume momentarily. Thank you for your patience and please continue to hold. Once again, ladies and gentlemen, please stand by.

[Operator]

Your program will resume momentarily. And you, Mr. Thomas, would you mind repeating your last question? Our speaker line has reconnected.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Great. Yeah. Can you hear me now?

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We are. Yeah. Know what happened.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

No problem. I think we got a pretty full answer to my initial question. So I just wanted to follow-up around the real estate side of things. And it seems like you all are very happy with the signings that you've had from Big Lots. I was wondering what the market looks like for you today, particularly given that there were so many stores that you didn't take on.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

And there are so many opportunities out there for you to get high quality real estate, it would seem. What are you seeing out there? And how does that set up for 2026?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thanks, Brad. This is Rob. You're exactly right. The setup for 2026 is very strong. We're not ready to guide 2026 yet, but we were surmised at this point based on what we see in the environment that we're setting up for the potential of another above algo year in 2026 in terms of real estate.

[Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Great. Thanks so much.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Brad.

[Operator]

Thank you. And our next question comes from the line of Peter Keith from Piper Sandler.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Hi, thanks. Good morning, guys. Nice quarter and nice chant. On the Big Lots stores, so the closures, there's a lot of them in Q1. I was wondering if you would be able to quantify what, if any, headwind you saw from their liquidations during the quarter?

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

And then the reverse of that, do you have any increased visibility on comp lift from stores that perhaps overlap with a former Big Lots store?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Sure, Peter. This is Rob. It's still early on both sides, right? But we can give you in terms of the first quarter impact, for the 200 or so stores that were closing during the quarter, and it's the timeframe from January to say about the March, Those stores had about a 50 basis point impact on the comp for that set of stores. So when you boil it down to the impact on the total comp, it was a little bit less than 25 basis points of a headwind for the quarter for the first quarter.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

In terms of the Big Lots stores that closed prior to Christmas, and we'll call that in the range of say 200 stores as well. Those stores are seeing low to mid single digit lift versus the rest of the stores in the chain. They were similarly impacted by unseasonable weather and the factors that impacted the quarter in the comp store base. But we're very pleased with the trends in those stores. We're very pleased with the transaction trends, which are a sign of lifting market share.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

And we're very pleased with the polyArmy sign ups as well.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Okay, very good. And then maybe a follow on from that. I believe maybe last fall you were talking about stores that were within half hour of a former Big Lots stores were kind of considered same trade area. Have you reassessed how many Ollie stores would be in a trade area to pick up share from a Big Lots closure?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Not exactly reassessed. We started the ring as broad, but we have a certain algo in terms of how we think about drive times for our discount shoppers. So that's been pretty static in terms of how we thought about it.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Can you remind us about how many stores total do you think are that might see some type of low to mid single digit lift?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

I would call it in the range of 400 stores.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Okay. Very helpful, guys. Thanks so much.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Peter.

[Operator]

Thank you. Our next question comes from the line of Chuck Grom from Gordon Haskell. Your question, please.

[Chuck Grom, Managing Director at Gordon Haskett Research Advisors]

Hey, thanks. Can you guys talk about the cadence of the comp in the quarter a bit more, maybe just a little bit more granular on the exit rate in April? And then as a follow-up, can you talk about the decision to extend the second Ollie Army night this year and how it's going to be structured? And I guess bigger picture, how you're thinking about continuing to grow the Olli Army base? Believe it was up over 9% in the quarter, your best run rate and probably close to four years.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Sure. I'll take the first part and Eric will take the second part of the question. In terms of the cadence of the comp, we talked about on the year end call, February started out slow. It was a down month. We were weighed by the big lots liquidation sales that we were up against, severe weather in February and a delayed timing in tax refunds.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

In March, we saw a meaningful change in acceleration and we had a strong positive comp in the mid single digit range in the month of March. And then headed into April, we were pleased with the performance of our spring selling, seasonal selling and Easter holiday. And then we saw some unseasonable weather impact us at the very tail end of April.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Yeah, on the second part of your question, Chuck, we're very excited about enhancing the program, the Ollie's Army loyalty program. So I guess to take it up a level, moving into this year with the market share opportunity that we knew would exist primarily from the closure of Big Lots, we said no better time to really just double down on the loyalty program. And that's both in ensuring we drive new customers into the store through our enhanced digital marketing capabilities, and then converting or convincing them to join the army once we're in the store. So as part of that, we've introduced enhancements to the program to make it even more compelling for customers to join the program, even more compelling for our cashiers to convince customers to join the program. This Ollie's Army night we're going to run-in June is something we've actually been talking about for years.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Probably the most special aspect of the program that many, many customers have known us for a long, long time is the Ollie's Army Night we run-in December. So why not run a second one at a different point in time of the year? So we're very excited to do this. It's going to run-in late June, right before we run the Ollie's Days promotion that we're now calling the Ollie's Army Days promotion. It will give the customer special discounts on certain categories, primarily seasonal categories.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

The store has an overall discount of 15% and certain categories will be 25%. Really mirrors the event that we're running in December, only the categories are relevant to the season that we're in. And then also requiring a customer to be a member of the Army for the Ollie's Days promotion or what is now the Ollie's Army Day promotion was something we thought would be an enhancement to make it even more special to our loyalty customers to only have access to that discount versus anyone who happens to lock in the door. So that, along with the credit card, are we believe significant enhancements to the program this year, make it much more compelling. And we're very, very focused on driving loyalty members and long term value ultimately as a result of ensuring we retain all these new customers that we welcome into our stores.

[Chuck Grom, Managing Director at Gordon Haskett Research Advisors]

Thanks, Eric. And then just, Rob, just a follow-up on the gross margin line, flat performance against a tough compare last year. How should we think about the phasing of the gross margin line over the next three quarters? And any thoughts on maybe quantifying what you actually think the tariff impact has been on the business, which it appears like you found some offsets? Thank you.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thanks, Chuck. In terms of phasing, we'd expect that the year follows a seasonal flow typical of our pattern of seasonal gross margin. We're targeting the 40% gross margin target for the year with the tariff impact included. We'd anticipate that third quarter would be above that 40% gross margin target and that the second and fourth quarter consistent with how it has been in the past because of the Ollie's days and Ollie's Army Night events would be below that 40% target to come out to the 40% for the year. In terms of tariffs to date, we've incurred a few million dollars of tariff thus far to date.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

That's included in our numbers for the year. And we feel comfortable with delivering the 40,000,000 with that tariff impact included.

[Chuck Grom, Managing Director at Gordon Haskett Research Advisors]

Okay, great. Thank you.

[Operator]

Thank you. And our next question comes from the line of Steven Cicone from Citi. Your question please.

[Steven Zaccone, Director, Equity Research, Hardlines Retail at Citi]

Great. Good morning. Thanks very much for taking my question. First question I had was on pricing. Just given what's happening with the tariff environment, what are you seeing from competition?

[Steven Zaccone, Director, Equity Research, Hardlines Retail at Citi]

Maybe what's your strategy on pricing? How do you feel about your price gaps right now?

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. We, Steve, we feel very good about our price gaps. And as I said earlier, and hopefully I wasn't cut off when I answered Brad's question, we are fiercely committed to maintaining our value prop price gaps, especially on branded products. So we have seen some movement on price in the market. It's still a little bit early to fully understand the impact of pressure related to tariffs primarily on various retailers, but we're very, very close to it.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

And we're very good at looking at competitor prices, ensuring that we maintain price gaps, and making choices not to buy products where we don't think we can offer tremendous value. So a lot of our product is substitutable. It is a closed out business. We're opportunistic. It's a fluid and flexible model, as I said on the call, in terms of how we manage the business and how the operation's been built.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

So we're constantly sourcing and counter sourcing product on a daily basis. This is the nature of the business, and we feel very good about our ability to maintain price gaps.

[Steven Zaccone, Director, Equity Research, Hardlines Retail at Citi]

Okay, great. The follow ups I had, one was a one minor thing for the model. Can you quantify the SG and A item in the first quarter? And then will that carry into will you see any impact in the forward quarters at all? And then you may have mentioned about '26 being a year for real estate above algo. How do you think about potential earnings power into next year since you'll have real estate openings above algo? Could we expect similar trend?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Sure. This is Rob. In the first quarter, were two expense pressures that were weighed against our earnings growth. The first was preopening expense that's on a separate line outside of SG and A. That was a $4,000,000 headwind relative to last year.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

That was considered in our guidance and largely planned. We did a little bit better than we anticipated because honestly, the Big Lots openings have gone a little bit smoother than we've anticipated when we went into the year. The second was SG and A pressure relative to higher medical and casualty claims. This one was an unplanned pressure, and it was really more so on the medical side. We had an uptick in high severity claims, so a few specific claims that are driving a significant amount of expense.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

In my past experience and based on what we've seen, the uptick is going to be the highest that we'd expect for the year in the first quarter. We'd expect for it to trail off from here, but we felt that it was prudent to be conservative about our expense for the balance of the year. We are proactively seeking opportunities to offset the expense and working on those actions as we speak. In terms of real estate opportunities for next year, we'd anticipate the number of organic openings to increase for next year. That will reduce obviously the dark rent that we're incurring for this year.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

And to one of the earlier questions, the pipeline is strong for next year and there's a lot availability out there based on the recent bankruptcy events.

[Steven Zaccone, Director, Equity Research, Hardlines Retail at Citi]

Thanks for the detail.

[Operator]

Thank you. And our next question comes from the line of Jeremy Hamblin from Craig Hallum Capital Group. Your question, please.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks and congrats on the strong results. I wanted to come back to Ollie's Army sign up and just get a sense for you're clearly seeing kind of outsized performance here in these warm former Big Lots stores. Wanted to get a sense for this acceleration in the Ollie's Army growth, the best in four years. What is the performance that you're seeing in that new sign up generation at those former Big Lots stores versus your legacy stores. I was wondering if you might be able to provide any additional insight into that.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure, Jeremy. Not just in this moment, but in every moment over the past several years. We are much more focused on convincing customers to join the Army in newer stores. We have different standards for conversion of non Ollie's Army members at the point of sale in our newer stores. We are, in this moment, seeing an outsized performance in conversion to the Army in our New Year stores.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

It typically is significant. It's even a little more significant in this moment. And part of that is our focus. Part of that, we believe, is a customer who's familiar with loyalty programs, not just because they're common in the industry, but because Big Lots had one. And they don't want to miss out on whatever our program may have to offer.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

So that's certainly a piece of the performance improvement that we're seeing in having all these Army and converting to the Army. But our comparable store sales are also performing quite well. And I've been super proud of our team and how well they've executed in both welcoming new customers into stores and convincing them to join our family, our Ollie's Army family, and to be part of this.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Great color. And then kind of taking that point a step further, as you focus on the private shopping event here in Q2, I think historically Ollie's Army Night December is maybe your biggest day of the year. I wanted to get a sense for how you would expect a mid year private shopping event to perform. Is this in terms of what it could look like in terms of a driver in Q2? Can you put some context around how much the Q4 Ollie's Army night impacts Q4 results and how you are sizing up what you think this new event could do here in Q2.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. I don't think we've provided color around how meaningful Ollie's Army Night is in December. So I get real specific about this. But we don't believe it's going to perform at the same level as the December event, partly because of the time of year and how relevant the categories are that we take deeper discounts on. And it's the gift giving season and a customer that tends to shop multiple times over that condensed holiday shopping period. So we don't think it's necessarily going to live up to the volume that we do in December. But we've run various scenarios on it, and we're relatively optimistic that it's going to be a nice lift. We've never done it before, so we're taking educated guesses about it based on our experience with the December event.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We contemplated this, factored it into our previous guidance. And our most important focus on this event is the enhancements of the program and compelling people to be part of the loyalty program, the long term value that generates for the company and for the consumer as well. So it's marginally accretive to sales and earnings for the year, though, to answer the question.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Great. Thanks for all the color, best wishes.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Jeremy.

[Operator]

Thank you. And our next question comes from the line of Simeon Gutman from Morgan Stanley. Your question, please.

[Simeon Gutman, Managing Director at Morgan Stanley]

Hey, good morning. Thanks for the question. Hey, to clarify, the second quarter, you're expecting comp to be at the lower end. There's a tough compare. And then you mentioned that you started out pretty well, even though seasonal weather, I think you said that hasn't helped you yet.

[Simeon Gutman, Managing Director at Morgan Stanley]

So I was trying to reconcile the two. Is the run rate that you're at already quarter to date better than you expected? And then it sounds like that is enough to get you to at least that low end of that range, or are you expecting much weaker in the next two months? Thanks.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Sure, Simeon. So to clarify my comments, we're running in line with our guidance for the full quarter of the lower end of the 1% to 2% range. In terms of what we're seeing day to day, week to week, we're seeing a strong core comp in our non seasonal categories in the low to mid single digit range. The seasonal categories have still started off soft for the quarter, because as you know, the weather has been unseasonable in May to date across most of the country. In terms of compares, May and June were our strongest months of the quarter last year, and then July was a little bit softer.

[Simeon Gutman, Managing Director at Morgan Stanley]

Got it. Okay. That's helpful. And then a similar follow-up on gross margin. Recognizing Q2, Q4, there might be some pressure points.

[Simeon Gutman, Managing Director at Morgan Stanley]

But can you comment in Q1, did you basically hit where you expected to be or you also ran a little bit better than that?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

We were slightly better than our expected gross margin for the first quarter. '1 was really related to deal flow and some better pricing on deal flow. And then two was shrink was better than we had anticipated.

[Simeon Gutman, Managing Director at Morgan Stanley]

Got it. Okay. Helpful. Thanks guys.

[Operator]

Thank you. And our next question comes from the line of Scott Ciccarelli from Truist. Your question please.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

Good morning, guys. With Big Lots effectively being a competitor Jonathan, can you hear us?

[Operator]

Yes. I can hear you. Can you not hear us? Are you not hearing us? Hello?

[Operator]

Yeah. Yes, sir. I hear you, Scott. Okay. Oh, they disconnected again.

[Operator]

Ladies and gentlemen, please stand by as our speaker line is experiencing some technical difficulties, and they will rejoin us here in just a moment. All right, I believe our speaker line has now rejoined.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Go ahead. Third time's a start.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

Hey, guys. Scott Scott Ciccarelli.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

With with Big Lots effectively being a competitor for deal flow from vendors with Ollie's, but now being materially smaller. Do you guys have any examples of incremental deal flow or better terms that you received now that Big Lots can't compete at the same scale?

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Yeah. I don't think I'd get too specific on examples. But, yes, we're absolutely seeing, like, what I call banded pipelines of products, particularly in consumables or CPG related goods, where Big Lots was relatively strong in the closeout and excess inventory space. There's the question around short term abandoned product that was already manufactured and destined for product versus long term. We're starting to see both vendors who have product and product pipelines that would be directed to big lots that are now available to us.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

It's crossing many different categories. But I guess if I were going to be specific, would say consumables and CPG was the first advantage of that.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

Got it. Thank you. Then second question, guys did quantify the amount of dark rent that you incurred in the quarter and expect for the year, but young stores tend to be a profit drag as they mature. So is there any way to kind of size the impact of the profit margin drag from the acceleration in store growth this year?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

We haven't really quantified that. I would say that it's going to be meaningful. We're going to get the carry on impact of opening the 25 stores in the first quarter, which was four more than planned, and that'll start to accelerate. You know, when you look at the street numbers that they have out there for consensus, you know, we're relatively in line for that in terms of earnings growth as the year goes on.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

Got it. So it is a drag. And then, obviously, as the stores mature, they become more profitable and should give you give you a good exit rate out of '25 into '26.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Yes, sir.

[Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities]

Understood. Thanks, guys.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Thank you.

[Operator]

And our next question comes from the line of Anthony Chukumba from Loop Capital Markets. Your question, please.

[Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC]

Good morning. Thank you for taking my question. Congrats on the strong year start to the year, but more importantly on the sequential improvement in the Big Lots sorry, in the Ollie's chat. Very encouraging to see that. But so I guess first question, you talked about you're having the second Ollie's Army night.

[Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC]

And I guess my question was, how much of this or is any of this related to the fact that seasonal has moved a little bit slower than you were expecting? And or is it, you know, intended, particularly with you taking that one event and making it just exclusive now to Ollie's Army members, you know, to try to drive additional Ollie's Army members? Any sort of think about that?

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. Anthony, we actually contemplated introducing this event in 2021. So that's how long it's been considered here. Took us a while to to drive it to the finish line. We made a decision in January of this year to execute the event.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

So this has absolutely nothing to do with any seasonal drag or any perception of where we may end up in Q2 with the seasonal business. We purely made a decision to introduce this event because we value our Ollie's Army most loyal members and customers, and want to invest in them. The exclusivity around the Ollie's days is something that, I guess, when I came into the business, I had a hard time understanding why we would give a discount to somebody who may not actually know when they came in the store. We were discounting the whole store, and that's bothered me and others here for the years that we've done it. This event has been around forever here.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

But it bothered me that a customer who's not a member of our loyalty program that may have not received an ad driving them into the store still gets the benefit of the discount. And candidly, I just did not think that was fair. You are always Army members who stay very loyal to us and shop us frequently and outspend others. So making it exclusive makes it even more compelling to join the program and makes our current members feel even more special.

[Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC]

Got it. That's helpful. And then just one quick follow-up. And this is related to your answer to the last question about Big Lots. You know, one thing that I know you guys have been doing is building more kind of relationships, direct relationships with the manufacturers, particularly in the CPG space.

[Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC]

I was wondering if you just had any, you know, update on that, particularly in light of, you know, of Big Lots.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Our update is that continues to go very, very well for us. We continue to expand our relationships with CPG companies. We even have newer relationships that have formed over the last couple of years that are now rapidly expanding. We don't always know if it's a direct result of big lots. We don't necessarily ask the question.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

It's not to the communication about where the product comes from. But what we do know is that we are getting the benefit of extended product pipelines, and we do believe, in some cases, very tangible. It's a result of big lots exiting. And others, right? You've got Party City out there.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

You've got Joanne out there. People underestimate Essig Bargain Hunt. It's a relatively small company that you've often heard of, but they had a pretty meaningful pipeline of consumable goods as well. So we it's a moment where we're gaining advantage in a lot of different spaces, lot of different categories, a lot of different vendors.

[Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC]

That's very helpful. Thank you. Thank you.

[Operator]

Thank you. And our next question comes from the line of Lorraine Hutchinson from Bank of America. Your question please.

[Lorraine Hutchinson, Managing Director at Bank of America]

Thank you. Good morning. Wanted to just go back to tariffs for a minute. Is there a gross margin hit included in guidance for tariffs above the few million you've already incurred? And how quickly can you reduce your reliance on imports from China for the direct import part of your business?

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Yeah. This is Rob. We'll take we'll I'll take that one. You know, we've reiterated our full year earnings outlook, including tariffs at the 40%. That assumes the tariffs that are in place stay in place for the balance of the year.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Our imports are typically 20% of our overall mix, so we've been taking a number of actions across our business to mitigate the tariff expense. Our vendors have really worked with us and been great partners thus far, but our biggest advantage is our flexible buying model that Eric mentioned, meaning that we can pick and choose through the best deals in the marketplace. There's nothing that we're absolutely nothing that we're committed to buying. Through this, have reduced our exposure to China. In the past, it was closer to say 15%.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

For this year, we'd expect for it to be closer to the 10% range. So, that's a positive for our tariff mitigation. And then the last piece that I would say is, you know, just as a reminder, we are a fast follower on pricing. We intend to maintain our value proposition and our pricing gaps, and we'll continue to adjust those as the marketplace shifts over the next couple of months.

[Lorraine Hutchinson, Managing Director at Bank of America]

Thank you. Thank

[Operator]

you. And our next question comes from the line of Edward Kelly from Wells Fargo. Your question, please.

[Edward Kelly, Managing Director - Equity Research at Wells Fargo]

Hi, good morning everybody. A couple of questions. I guess first on the comp and Q2, I just want to follow-up to make sure I fully understand here. I mean, it sounds like May is maybe up about 1% or so. I guess, is that right?

[Edward Kelly, Managing Director - Equity Research at Wells Fargo]

And then as we think about the AC lap from last year, which I think was pretty big in June, how are you thinking about the comp against that lap, and does the Army night essentially kind of offset that? And then July is easier, but I think the multi year compare might be harder. I'm just curious as to how you're thinking about the mapping of Q2 against all of this.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Those are a lot of questions about the Q2 comp, so I'll try to unpack that. You're right in saying that we're running in that range of positive 1% quarter to date. That's in line with the guidance for the full quarter in terms of the lower end of the one to 2% range. In terms of comping against last year, the strong AC lap really started at the tail end of the first quarter. So, the last two weeks of April were strong from an AC perspective.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

May was in a strong AC month, which we just did positive comp, as I just mentioned. And June was a strong AC month as well. July was a little bit softer, as I mentioned, but it was still a strong month. We had a strong quarter from top to bottom last year. The Ollie Darmy night, we'd expect the change in the event to add that and then to make it a special event for the week for just the Ollie Darmie members.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

That would be a little bit of an offset to that addition of that Ollie Darmie night, but we'd expect that the week in total would be slightly accretive to our 1% guidance for the quarter.

[Edward Kelly, Managing Director - Equity Research at Wells Fargo]

Got it. Great. And then just a follow-up on the inventory outlook. I know there's been sort of debate around this. I'm curious, could you talk about the product assortment that you see in the pipeline, the quality of that assortment? I mean, there's been some talk about consumables. I'm curious how you're thinking about the consumable buying backdrop versus the Gen merch buying backdrop, and then how you think that plays out throughout the year, and then from a holiday positioning standpoint. I know visibility is always hard, but how you think about holiday assortment against all of that.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure. We feel very good about inventory content and the pipeline in this moment. We've actually had to hold our buyers back. There's so much out there to buy across just about every category. And consumables, as I mentioned earlier, CPG has been particularly strong.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Our relationships continue to expand. And there's plenty of consumable product out there as well to continue driving our business. I don't know necessarily what to expect through the back half of the year. Specific to your question around consumables, it really depends on how various retailers, manage, the kind of portfolio pricing approach to their businesses and whether there's any real pressure in consumables, which there is some real pressure related to tariffs, or if they'll try to take price in consumables, what that means ultimately to the product pipeline. I would just say generically that whenever there's disruption in supply chain or in projecting a business, it tends to benefit us in that we feel very good about our opportunities in navigating the back half of the year.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

In terms of specifically the holiday, so I figured somebody would go there. We could talk specifically about toys, because that's a business that's relatively important to us in Q4. And we like our positioning in toys. We like our positioning in the category. We've continued to buy closeouts in toys, even after the tariffs were announced.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

We've been very selective in what we've been buying. We've been buying only the product that we think would still motivate a consumer that is of a strong value. And we have a flexible and fluid buying model as well. So we could buy into and have been buying into other gift related categories where we can offer strong values and perhaps in at least limited ways, stronger values than some of the traditional toys we would otherwise buy. And we feel very confident in our ability to cover that business in the back half of the year despite the tariff headwind.

[Edward Kelly, Managing Director - Equity Research at Wells Fargo]

Great. Thanks, guys.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Ed.

[Operator]

Thank you. And our next question comes from the line of Matthew Rothway from UBS. Your question, please.

[Matthew Rothway, Analyst at UBS Group]

Hi. This is Matt on for Mark Carden. Just wanting to turn back to gross margin and your supply chain costs. What's driving that lower? And are tariffs having any impact there?

[Matthew Rothway, Analyst at UBS Group]

And then follow on to that, I think on your prior call, were expecting supply chain costs to be flat this year. Is that still what you're expecting? Thanks.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

Sure, I'll take that one. So from a supply chain cost perspective, the tariffs are included in there. That is a slight headwind for the year, but, you know, we're offsetting in other areas, including within our buying on the product side. In terms of the rest of supply chain costs, we just did our ocean contract in May. That negotiation is slightly favorable to our plan.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

In terms of domestic transportation, we're seeing positive rates there and good improvement there. And then on the DC side, our DCs are functioning at record levels in terms of throughput and cost, so pleased with the results there.

[Matthew Rothway, Analyst at UBS Group]

Great, thank you.

[Operator]

Thank you. And our final question for today comes from the line of Randy Konik from Jefferies. Your question please.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Yes. Thanks a lot guys. Just real quick, back on the seasonal categories, any kind of quantification on how much of a headwind that was or dragged on the first quarter comp seasonal was and just give us perspective or dimensionalize how big seasonal is as part of the mix? Thanks.

[Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet]

In terms of seasonal categories, I would say that if I'm thinking about the first quarter, I would kind of combine that with the severe weather we saw in February. Between the severe weather we saw in February and the tail end of the quarter that really impacted the seasonal in terms of lawn garden ACs, I would say that it's in the range of 150 basis points of a headwind for the first quarter. In terms of seasonal for the second quarter, it definitely starts to become more meaningful. APs were a meaningful component. We talked about that last year in terms of being a 200 basis point contribution to comp for the quarter of last year, but lawn and garden gets a little bit smaller in terms of an impact as we go on throughout the summer here.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Very helpful. And just final follow-up there. You noted in response to one of the questions you got better pricing on deals. Is there anything kind of structural there that you kind of think about long term where you just become bigger and bigger and more important to these different partners in the close-up business here and you just get better terms over time that can potentially take up your ability to get gross margin consistently above 40% even though you're guiding long term to 40%? Just would be really helpful to dimensionalize that. Thanks, guys.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Sure, Brady. Yes. To answer your question, yes. Absolutely. We've already seen that happen in a pretty meaningful way over the past several years.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

More and more of our relationships have become direct with various manufacturers. And I know we tick on CPG because it's an important business, but it's happened over many different categories over the last several years. The consolidation of discount retail is a piece of that. The growth of Ollie's a piece of it, a very strong balance sheet that we've managed all the way through over many, many years. The fact that we're a public company and there's transparency to our financial situation or status is also helpful in establishing more direct relationships, more meaningful relationships.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

So yes, it's been a meaningful tailwind to us as we continue to grow our business. At this point in time, we continue to invest in price and maintain the 40% margin target. I can't answer that question. Not ready to answer that question for 'twenty six and beyond. I like having the pricing power, Randy, to be candid in a market where we're continuing to gain market share, drive traffic, drive comps, and drive growth, unit growth, I like having the pricing power.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

So I'm not ready to say that we want the pricing power we're gaining from these direct relationships to drive P and L accretion.

[Randal Konik, Managing Director at Jefferies & Company Inc]

Super helpful. Thanks, guys.

[Eric van der Valk, President & CEO at Ollie's Bargain Outlet]

Thanks, Randy.

[Operator]

Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation. You may now disconnect. Good day.

Participants

Executives

• Eric van der Valk, President & CEO

Analysts

• Robert Helm, Executive VP & CFO at Ollie's Bargain Outlet
• Matthew Boss, Equity Research Analyst at JP Morgan
• Bradley Thomas, Managing Director & Equity Research Analyst at KeyBanc Capital Markets
• Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies
• Chuck Grom, Managing Director at Gordon Haskett Research Advisors
• Steven Zaccone, Director, Equity Research, Hardlines Retail at Citi
• Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Simeon Gutman, Managing Director at Morgan Stanley
• Scot Ciccarelli, MD & Senior Research Analyst at Truist Securities
• Anthony Chukumba, Managing Director & Senior Research Analyst at Loop Capital Markets LLC
• Lorraine Hutchinson, Managing Director at Bank of America
• Edward Kelly, Managing Director - Equity Research at Wells Fargo
• Matthew Rothway, Analyst at UBS Group
• Randal Konik, Managing Director at Jefferies & Company Inc