Good afternoon and welcome to the Ollie's Bargain Outlet Conference Call to discuss the Financial Results for the Third Quarter of Fiscal 2017. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from Ollie's. And as a reminder, this call is being recorded.

On the call today from management are Mark Butler, Chairman, President, and Chief Executive Officer; John Swygert, Executive Vice President and Chief Financial Officer; and Jay Stasz, Senior Vice President of Finance and Chief Accounting Officer. I will now turn the call over to Mr. Stasz to get started. Please go ahead, sir..

Thank you and hello everyone. A press release covering the Company's third quarter fiscal 2017 financial results was issued this afternoon, and a copy of that press release can be found in the Investor Relations section on the company's website.

I want to remind everyone that management’s remarks on this call may contain forward-looking statements including but not limited to predictions, expectations, or estimates and that actual results could differ materially from those mentioned on today's call.

Any such items including our outlook for fiscal year 2017 and our future performance should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

You should not place undue reliance on these forward-looking statements, which speak only as of today, and we undertake no obligation to update or revise them for any new information or future events. Factors that might affect future results may not be in our control and are discussed in our SEC filings.

We encourage you to review these filings, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q, for a more detailed description of these factors.

We will be referring to certain non-GAAP financial measures on today's call such as adjusted operating income, EBITDA, adjusted EBITDA, adjusted net income, and adjusted net income per diluted share that we believe may be important to investors to assess our operating performance.

Reconciliations of these non-GAAP financial measures to the most closely comparable GAAP financial measures are included in our earnings release. I will now turn the call over to Mark..

Thanks, Jay and hello to everyone and thanks for being with us on the call today. We had another strong quarter and we are very excited about our results and the continued momentum in your business. Strong deal flow, great new store performance and tight expense control drove our record results for the third quarter.

Consistency and execution are two of our hallmarks that are critical to our success and after 35 years are things that we will not change. For the quarter, we delivered record top and bottom line results with an 18% increase in sales, a 31% increase in adjusted net income.

Comparable store sales increased 2.1% against a 1.8% increase in the third quarter of last year and a 5% increase on a two-year stack basis. Our sales strength was once again broad based with nearly half of our departments comping positive.

Some of our best performing categories were health and beauty aids, housewares, toys, furniture and bed and bath. We continue to grow our vender relationships with our increased size and scale and we believe we're well positioned to capitalize on the many buying opportunities in the marketplace.

As we build these stronger direct relationships with major manufacturers, we're able to offer our customers what they want, brand name merchandize at drastically reduced prices. The best news is that we continue to see very strong deal flow. Our new stores performed above our expectations during the quarter.

We opened 15 locations during the third quarter and since quarter end we've opened another three for a total of 34 new stores in fiscal 2017. We continue to see a strong pipeline of leasing opportunities. Ollie's Army is stronger than ever. Growth of the Army continues to outpace sales, with member spending significantly more than non-members.

Next year we plan to launch some exciting enhancements to the program that we've been working on for some time. We're introducing ranks for the Army members which will enable us to reward our most active customers. Members will receive different rewards and surprise offers based on their level of spending.

We're also working on a mobile app that will allow us to communicate the latest and the greatest deals to our best customers. Our busiest night of the year Ollie's Army Night is just around the corner and we're excited to once again open our doors exclusively to Ollie's Army members.

Our stores are packed with great deals and our team is eager to welcome our Most Loyal Bargainauts. The event is this Sunday, December 10th. If you remember, we hope to see you if not there is still time enlist in the Army now and join us for a great, great night, the stores will be packed.

As we've said before, we're celebrating our 35th birthday this year. We’re proud of our long history of offering great deals to our customers and the successful expansion of Good Stuff Cheap to an ever growing number of new markets and we've and we have no intention and slowing down.

I want to acknowledge our more than 7,000 team members for their hard work and their dedication that has taken us to where we are today. We know the holiday season places extra demands on our associates and I sincerely thank them for all they do, not only at this time of year but each and every day.

It's their passion and commitment that are truly the drivers of our success. Let me wrap up by saying how proud we are of our third quarter results and the overall trends we're seeing in the business.

As I’d like to say, we're hitting all of our marks, the consistency and the strength of our model proves itself each quarter with stores across every vintage, state and co-tenancy performing well. Our store openings are complete for the year and we're building a full pipeline for the coming year.

And our new stores continue to perform above our expectations across all geographies. We are laser focused on the close out industry developing strong vendor relationships and ensuring we're well positioned in today's retail environment. Our third quarter results were strong and early fourth quarter trends are encouraging.

As a result we're raising our full year guidance which John will give you more detail in a moment. In our business, it begins and it ends with deals. Bargain is our middle name and we are living up to expectations by offering customers great deals on brand name merchandize.

We're well positioned to continue to deliver those bargains to our customers and in turn deliver against our long-term objectives for our shareholders. Thank you once again for your support of Ollie's. And I'll now turn the call over to John, to take you through our financial results and outlook in more detail..

Thanks, Mark, and good afternoon everyone. We are pleased to have delivered another solid quarter on top-line sales increases, operating income leverage, strong adjusted net income and EPS growth all above our long-term expectations.

Net sales increased 17.9% to $238.1 million; comparable store sales increased 2.1% against a 1.8% increase in the third quarter of last year and a 5% increase on the two year stack basis. The increase in comparable store sales was driven by an increase in both average basket size and transactions.

We opened 15 stores during the quarter ending the period with 265 stores in 20 states, an increase in our store base of 14.2% year-over-year. Subsequent to the quarter-end, we opened three additional stores for a total of 34 new stores in fiscal 2017. This brings our store count to 268 and completes our new store openings for the fiscal year.

Our new stores continued to perform above our expectations across our new and existing markets and we remain excited with the productivity of our overall store base. Gross profit increased 16.4% to $98 million and gross margin decreased 50 basis points to 41.2% of net sales.

The decrease in gross margin was primarily due to a decrease in merchandise margin, partially offset by favourable supply chain costs. SG&A expenses increased 12.6% to $68.1 million.

The increase was primarily related to higher selling expenses from our new stores open over the past year, increased sales volumes in our remaining store base and investments in personnel to support our continued growth. As a percentage of net sales, we leveraged SG&A expense by 140 basis points to 28.6%.

Excluding $600,000 of transaction related expenses from prior year, we leveraged SG&A expenses by 110 basis points in the quarter. Operating income increased 29.8% to $24.2 million and operating margin increased 100 basis points to 10.2%.

Excluding the $600,000 of transactional related expenses from last year, adjusted operating income increased 25.9% and adjusted operating margin increased 70 basis points. Net income increased 80.3% to $18.9 million and net income per diluted share increased 70.6% to $0.29.

Excluding the income tax benefits due to the accounting change for stock-based compensation this year, and transaction related expenses net of taxes in the prior year, adjusted net income increased 31.3% to $14.2 million and adjusted net income per diluted share increased 29.4% to $0.22.

EBITDA increased 28.2% to $27.3 million and adjusted EBITDA increased 23.8% to $29.2 million in the third quarter. At the end of the quarter we have $42.2 million in cash and no outstanding borrowings under our $100 million revolving credit facility. We ended the quarter with total debt of $126.7 million compared to $196.5 million last year.

Subsequent to the quarter end, we paid down an additional $30 million of our term loan debt resulting in a balance of $96.3 million. Capital expenditures totalled $6.5 million in the third quarter of fiscal 2017 compared to $4.3 million in the third quarter of fiscal 2016.

The increase was largely due to the timing of new store openings and expenditures associated with our new data centre. Turning to the outlook for fiscal 2017, as Mark discussed, we are raising our full year guidance as such.

We are raising our total net sales expectations to a range of $1.062 billion to $1.065 billion, we expect comparable store sales to increase between 2% to 2.5%, we are raising our operating income expectations to a range of $131 million to $132 million, we are raising our expectations for net income per diluted share to a range of $1.36 to $1.37, and our adjusted net income per diluted share to $1.21 to $1.22.

Excluding the impact of the accounting for stock-based compensation, our outlook assumes an effective tax rate of approximately 38% and a diluted share count of 65 million.

Our interest expense is estimated to be in the range of $5 million to $5.5 million, capital expenditures are expected to be $18.5 million to $20 million for the year, and total depreciation and amortization expense including the component that runs through costs of goods sold is still projected at $12 million to $12.5 million for the year.

As a reminder, fiscal 2017 is a 53 week year, and the extra week occurring in late January. We continue to estimate the extra week will add approximately $18 million in sales and less than half a penny to diluted earnings per share. I will now turn the call back over to the operator to start Q&A session.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Matthew Boss with JPMorgan. Your line is open..

Thanks and nice quarter guys..

Thank you..

So when we think about your model, if you exclude the fidget spinners last quarter, you have been pretty consistent, two comp story now for really the last five quarter straight and actually consistent at that level really for the last 10 years plus.

So, I guess my question at a two comp, are you still comfortable with the model generating mid-teens top line and mid-teens EBITDA dollar growth going forward.

Is that the best way to think about things?.

Matt this is John. Absolutely 100%; based on the 1% to 2% top-line -- comp store sales growth we expect to be able to generate the mid-teens revenue and the approximately 20% net income growth year-after-year, yes..

Great. And then just a follow-up, John, the new store productivity just continues to accelerate, I think the returns this year are the best historically that we have seen in the model.

I guess what do you see driving the performance for these most recent openings? And how do you see the store pipeline is shaping up as we think about next year?.

Sure, Matt the new stores are performing well and actually in fact above our expectations and they have been performing well for several years now. But we are seeing a pretty good class of stores here in 2016 and 2017 that definitely are above what we would have expected based on our new store model.

But, the deals are driving what’s in the box and we are continue to see that revenue increase in our stores based on the deal flows that the merchants are able to get. And as you know, we have delivered a very consistent model year-after-year. So we are very excited about it.

Next year we believe we have a nice full pipeline for the new store growth, shaping up pretty nicely and we expect to see mid-teens growth in new store account next year as well..

Great, best of luck guys..

Thanks, Matt..

Thank you. Our next question comes from Brad Thomas with KeyBanc Capital Markets. Your line is open..

Yes, hey, good afternoon guys. And let me add my congratulations as well. I guess first a question on the start here to the fourth quarter.

Any more color on where you guys are running and maybe more explicitly what your comp expectations maybe for this fourth quarter?.

Yes, I’ll go first Brad. Thank you for your comments. Typically we don’t give the monthly guidance or inter quarter trends. I can tell you, Thanks Giving weekend was very consistent with our expectations, we are pleased with our results, we are off to a good start in Q4.

But as we are in everything, there are a lot of big days between now and the holiday of Christmas inclusive of one coming Sunday night, a lot of it is predicated on weather. But all that being said, feel really good about where we are.

As far as guidance, Jay?.

Yes, I can speak to that. Brad, this is Jay Stasz, and just to add on to what Mark said the other thing we talk about is this coming up against our own good numbers. We are facing a two year stack of 7% and the three year stack of 16% in the fourth quarter.

But with that said, the last quarter we talked about Q4 being in the low end of the 1% to 2% comp range, really and not a major shift, but what we are thinking of is of a comp range for the quarter now is probably in the mid to the high, 1% to 2% range..

Great. And then just to follow-up on the earlier question about the long-term financial outlook. I guess just explicitly as we think about 2018, obviously we need to adjust for the extra week you have this year.

But any other early thoughts John for us as we start to fine tune our model on an annual and quarterly basis for 2018?.

Yes Brad, we are not going to give a whole lot of color on 2018, but I would tell you as we have said for a long period of time now that we have been public.

Really go back to the long-term consistent algorithm that we have given to you guys of top-line, mid-teens top line growth, 1% to 2% comps gross, margins right at about 40% and net income growth close to 20%. So if you model that out it’s going to be pretty consistent.

As you know we've lever pretty well once we get above the 1% to 1.5% comp store sales. But we don't build it our infrastructure to do that and we don't actually have -- we don't build our model as well and so don't get ourselves behind the eight ball if sales do slow down a little bit.

So same model per parameter that we've given to you in the past we would stick to on a long-term basis..

Great, thank you so much..

Thanks, Brad..

Thank you. Our next question comes from Peter Keith with Piper Jaffray. Your line is open..

Hi guys, it's actually Bobby Friedner on for Peter today. Thanks for taking my question. I just wanted to ask about the close out opportunities you're seeing specifically pertaining to consumables and branded CPG companies.

It seems that as pricing in the area remains hyper competitive a lot of retailers are moving more to private label and you’re seeing these branded CPGs look for new points of distribution. So is this a dynamic you're benefiting from? If you could just discuss the trends you're seeing in branded CPGs that will be great. Thank you..

Yes, I don't know if anybody else’s switch to private label is driving any CPG availability to be honest with you. I would tell you that our focus we are laser focused on getting named brands at drastically reduced prices and some of the greatest names in America are in our stores of which I will tell you none of them.

But it's certainly exciting the consumer they're responding we're offering them bargains, we're developing these relationships, we're strengthening these relationships.

And the entire environment consistent with what I think I've said two or three quarters is this is the best close out buying environment that I've seen and I've been doing this for 35 years. So obviously that's in a relation here to Ollie.

So it's the strongest that I've ever seen and our pipeline is full, our brands are big, bright and beautiful and they're bargains. So I feel really good about where we're at..

Alright, great.

And just a quick follow-up with consumables at 20% of sales I believe, any thought to where this figure could go over the next couple of years?.

Yes, Bobby, this is John. With regards to the consumables we're obviously not making a concerted effort to increase our consumable penetration in our model. As you know we go with where the deals come from, from the overall vendor base. So where does consumables go potentially could go up 200 or 300 more basis points.

But I would say we would not want it to increase much more than where it’s at today. As you know that puts additional margin pressure on the mix that we sell through the stores. If we can drive additional volume and additional traffic in the store from consumables we would take that any day..

Alright, thanks a lot. Good luck this quarter..

Thank you..

Thank you. Our next question comes from Scott Ciccarelli will RBC Capital Markets. Your line is open..

Hey guys, it's actually Rob Iannarone on for Scott today. Congrats on a good quarter..

Thanks, Rob..

Very welcome. Just wanted to touch on quickly the inventory growth, it's been a little bit higher and actually it's first time I think it's just a touch higher than sales this quarter. It had to do with the timing of store openings, gearing up for the holidays or just deal flows.

Is there anything there that you guys can speak to?.

Yes, Rob, this is Jay. And I can speak to that. I mean you're right it is just a tick higher than our sales trends. But we're happy with our inventory position. It's really a by-product and a reflection of the strong deal flow, as well as to your point there is a little bit of timing of store openings in there.

But really it's a by-product of the strong deal flow that we're seeing and we're happy with the inventory position as we head into the remainder of the holiday season..

Great. Glad to hear it. And just one follow-up unrelated, but more towards the Ollie's Army.

Can you give us any updated metrics around your member count, kind of what percent of sales maybe those guys are doing now?.

Sure, the current member count is 8.1 million versus 6.7 million a year ago at the third quarter, which is about a 22% increase. And the metrics continue to be very consistent they're making up over 65% of our sales, which is consistent with what we had in the past..

Thanks a lot guys, congrats again and happy holidays..

Thanks, Rob..

Thank you. Our next question comes from Rick Nelson with Stephens. Your line is open..

Thanks. Congrats on the quarter. Also I'd like to follow-up on merchandise margin pressure that you discussed.

Is that mix shift driven towards consumables or other factors laying into that margin?.

Yes, Rick, this is John. It’s predominantly mix shift that we are seen in the consumable category that’s driving the margin down and we have talked about this for several quarters now. So not a big surprise to us and it was expected as we guided last year from a much higher gross margins down to the number we are at this year.

So, not a big surprise there, we also had a slight improvement in the supply chain costs for the quarter as well, which is a little bit less than we had expected and that facet of the business we’re seeing a little bit of pressure on the inbound and outbound freight costs post hurricanes with the not a lot of availability in the trucking side of the business.

So, we are -- we will be able to navigate through it and we still are confident with north to 40% gross margins for the full year basis. We had previously guided to about a 40.3%, right now we are closer to about a 40.2% on a full year basis from a gross margins perspective..

Thanks for that color.

Also I like to follow-up on hurricanes, if you think that in fact was a headwind to the comp in the period?.

I’ll take a part of this and Mark might kick-in a little bit here. Rick with regards to the hurricane, we did not see a big impact on our business, we don’t -- a lot of our stores down in the Florida markets are non-comparable stores yet.

So we did have some disruption in the Florida market and nothing significant, we are very lucky and fortunate not to have any stores damage any material way, we have some close store days. But the comps in the hurricane areas it was not impactful enough for us to really call out for the quarter.

We probably had a little bit tiny impact, but we don’t believe that that was something to speak to on a material basis..

Got you. Finally, if I could ask on HBA, you have called that out scenario strength for five consecutive quarters so you are lapping some big numbers a year ago.

How much more opportunity do you see in that category?.

Well we think that because of our relationships and the growing scale and our ability to take more product from these major CPG companies, that we think that we have a -- I am very bullish on the outlook on a go forward basis, obviously we wouldn’t come up with numbers for you, but when you come into our stores you see an incredible name brands in America at bargain prices.

And we are very, very excited about the prospect. So we think that it’s helping us, we think that it’s breaking the basket, getting people started and we are excited about it..

Sounds good, thanks guys. Good luck..

Thanks, Rick..

Thank you. [Operator Instructions] Our next question comes from Edward Kelly with Wells Fargo. Your line is open..

Hi guys, good afternoon. I just wanted to touch on SG&A, you have seen a tremendous amount of leverage in this line item over the last year plus I guess. Total cost growing at a rate of less than square footage growth for these quarters.

I guess what I am trying to get is, how we have been able to keep costs down with the store expansion that you have seen particularly even with going into new markets?.

I’ll take part of this and Jay and Mark might wrap it up here for me. But with regards to the overall SG&A cost, we are pretty much as we have said before, if we can do greater than a 1% to 1.5% comp, we’re going to be able to lever pretty heavily. So we have a pretty light load on the SG&A front and the way we obviously we run the business.

So that’s a positive piece that we are able to drive with incremental sales volume. We run a tight control of expenses in our business and as we continue to grow the top-line sales our G&A our goal is to continue to lever that G&A number as we continue to grow the sales base.

And I think we have been able to do that pretty successful as we continue to expand and there is some one-time costs that we’re not lapping related to become to our box compliant that were invested there..

So just looking forward the leverage point doesn’t change very much you think?.

Right now with where we’re at, we think we can lever at 1% to 1.5% we have said in the past there are certain times when we have a little bit heavier investment that we have to make on the people side of the business. So this year was a little bit lighter than normal on the people side and next year maybe little bit heavier.

So I would not expect anywhere near the same leverage you have seen this year, while we are outpaced with 1% to 1.5% comp, we got a leverage fall through there.

But when we built the model next year at the 1% to 2% comp I would expect our SG&A ratios to stay pretty consistent to where they’d be this year or maybe at 10 to 20 basis points leverage point when you model out for 2018..

Okay. And then you'd mention just some changes around Ollie's Army next year, I was just hoping maybe you could provide a bit more color as to what you are looking to do and potentially any impact that you would expect on sales and I don't know if there is a margin impact associate with all this.

Just any other color that would be helpful?.

Yes, I'll go first and as I mentioned in the prepared comments I've been wanting to do ranks for ages and ages and ages and just did not have the capabilities, the internal capabilities of doing it and of course we've telling everybody about Phase I and Phase II and the system so that we can get our fingers around a lot more of the data that we've been gathering throughout the year.

So we're going to be able to do the ranks and we're going to have a one star, two star and a three star. And obviously a one star is going to somebody who spends a certain amount of money in the year.

A two star might it will be more in the three star and perhaps we'll offer them additional discounts or incentives or perhaps we'll offer them deals that might be exclusive to them only. But everybody had to stay with me on this -- on the Ollie's Army.

You got -- I'm not going to kill these people, these are my -- these are our customers, we're protected of them, we're going to talk to them in the fashion that we know that they want to hear from us and we're not embedding any underlying huge numbers to it.

We know what they want to hear, we know how they want to hear it, we know how to motivate them, we think we're going to have additional opportunities, but I'm asking everybody to stay with us, stay with me on the planning and I wouldn't go planning or modeling any great advantages to it..

Okay, excellent. Thanks and best of luck in Q4..

Thank you..

Thank you. Our next question comes from Patrick McKeever with MKM Partners. Your line is open..

Thanks. Hi, guys.

Just on the new store performance, which came in certainly ahead of my number and I think the street number as well even though comps were relatively inline, and I know you've talked about it little bit already, but any significant changes in terms of the selection process or the locations that you are getting as other retailer close stores.

Are you doing anything different just with the preopening routine or the marketing or anything like that that would play into the strong new store performance?.

Yes, Patrick, this is John. With regards to the overall site selection process, we have not changed our site selection process whatsoever we have the same team, the same individuals has head up the real estate department for many, many years. So, we are going to market the same way we have for a long period of time.

Our preopening process or cadence is very, very consistent we're doing the same thing we've done for a long period of time. So that there has been no -- nothing no big changes to speak of that we've gone that would be driving the incremental business that we're seeing.

Are we getting slightly better sites in certain situations where we've had other retailers go out that we've been able to secure the site that we may not we have got in the past, possible. But that would not to say that's the majority of what we're able to do.

We're pretty much getting the same or similar sites that we've had in the past and we'd always say that the deal is going to drive the performance of the stores and the excitement in the stores when we get the customers in they see what we have and they are going to buy and spend more money.

So that's what we're seeing from our perspective and we're excited to see it. And one thing we’d say it's been broad based and it's been across all of our stores, it is not just in one geographic area, we're seeing it consistently in all of the stores we have open this year and last year as well..

And then I know you don't want to talk too much about the fourth quarter to-date or the fourth quarter guidance -- sales guidance, but looking at Thanks Giving, I know you weren’t open on Thanks Giving but Black Friday early in the morning and then through the Thanks Giving weekend and on Cyber Monday, did you see any even let’s say subtle change in store traffic patterns on those days that would give you any indication that your core customer might be spending a little bit more online? Or was it relatively consistent with last year in terms of the basic pattern?.

Yes, Patrick, we didn't see any of that at all and what we saw was a consistent response and my biggest -- there are biggest and greatest deal flue first, that's no difference than any other year when we opened our stores we had people waiting to get into the stores.

But we absolutely saw no adverse effect whatsoever very consistent with previous years and we were very pleased with the weekend and very pleased with the early trends so far to Q4..

Got it, okay. Thanks, Mark..

Thank you..

Thank you. [Operator Instructions] Our next question comes from Vincent Sinisi with Morgan Stanley. Your line is open..

Hey, terrific. Thanks guys very much for taking my questions and nice quarter there. wanted to go back to one of Ed's question, just on SG&A opportunity, I know that you mentioned a couple of times kind of above that 1 and 1.5 comp is where you really do see that nice leverage start to kick in.

But can you just remind us a little bit with some of the kind of within that line where some of your bigger levers and bigger future opportunities maybe going forward?.

Yes, Vince, this is John. With regards to the biggest opportunity, the biggest lever we’d be able to pull in the SG&A side is 1% to 1.5% you would expect pretty much now very, very little to zero leverage. And most all leverage coming out above that's going to be focused more on the G&A front.

Store piece, we do get a small component of it, but the way we run our stores there is a big fix component in the store side that we're not going to be able to lever until we get above that 1.5%. But the G&A is where we're going to be able to pull the levers and see the biggest opportunity there as we go forward in the long-term basis.

But like we said we don't expect to see a lot of leverage coming out of the model when we model out 2018 you'd -- we're going to be modelling out consistent 1% to 2% comp. and you're going to see very little leverage probably 10 to 20 bps in the SG&A side compared to this year..

Okay, perfect, that is very helpful. Thank you. And then just a very quick follow up on the enhancements to the Ollie's Army program.

Should we think -- how should we think of the progression there? Is that going to be kind of on day one with both the ranks and the mobile app that it's going to be launched store wide are you going to do different geographies kind of step at a time how should we think of that timing?.

Vincent our personality is walk before we run. There is no way we would do both programs at the exact same time, but we do expect to have them rolled out this year. We think that the ranks are going to be perceived as pretty cool by the Army, they're going to like it. But we wouldn't do them both at the same time.

Now that you say would we do it geographically that is perhaps that would fit our personality. So you are probably spot on..

But one thing to add to that Vince, probably what we'd expect is we’d probably have both of those rolled out sometime by the first half of 2018. Obviously would not come together, but they'd be lined up back-to-back, but hopefully both would be out by the first half of next year..

Okay, perfect. Thanks very much good luck guys..

Thanks, Vince..

Thank you. Our next question comes from Alvin Concepcion with Citi. Your line is open..

Thank you. Thanks for taking my questions. Comps in the quarter seem to be pretty much as you expected maybe a little bit better, so great job on that. But investors have become accustom to even larger upside surprises.

Do you think we've reached an area where people should change their view and look at your guidance as something that should be relied upon more and not something that's conservative?.

Yes, Alvin anybody who has been involved with us since we started talking about the IPO process has heard us me say 1% to 2%. The way I've always announced it is that that's our comp, that's where we think we're going to be, we’re a growth story. We've been nothing but consistent as I think on the first call or the first question from what Matt said.

You go deeper I think we're only allowed to go back 10 years or whatever and we averaged about a 10% comp....

1% to 2%..

1% to 2%, but we could go back 10 years. 1% to 2% I'm sorry 2% comp. So I think it's the consistency in the model. We went Q1 at a 1.7% Q2 at a 4.5% the spinners were in there and Q3 we’re at a 2.1%.

That's what I'm asking, we're asking everybody to stick with everybody to understand how we run the business, how we budget the business, how we model the business. And then as I've said, as we've said we just don't turn the registers off when we hit 2%.

If we can get more we're going to get more, but this is the way we run the business and we think that's the right way and the most prudent and appropriate way to run the business..

Thanks. And just to follow-up on your guidance, I think I heard you say they are expecting a mid to high 1% to 2% comp in the fourth quarter, if we use the midpoint of that that seems to be a slowdown on a one year and possibly two year basis relative to what you saw in the third quarter.

So is that view reflecting what you are seeing today, or is it conservatism or are there some unfavorable items that we should be considering in the fourth quarter?.

Yes, Alvin, this is John. I would say that it’s not anything that we are afraid of, it’s the way we run the business and I would say it’s our conservative nature we have. But like Jay had alluded to, I think earlier we are up against a 16% three year stack, we’re not going up against easy numbers here.

So we have had three to four years on a row where we have had positive comparable store sales. So we don’t look at that as slowing down, we look at more from a maintenance perspective and keeping customers and continue to drive positive comparable store sales.

So we are excited, where we are at, what we are seeing right now, business is very strong and like we said we are up against some very big numbers now and to be able to beat them makes us very, very excited..

Great. And last one for me, just wanted to get your views on taxes reform that surpasses. What do you expect to do with that benefit or would you think it would be competed away.

And I guess related to that if your customers get a higher personal income tax return do you see that spending come through your stores in a bigger way? I mean, is that something you have seen in the past?.

Hi Alvin, this is Jay Stasz and I am going to start with that. On regards to the tax reform, it’s early to figure out exactly what’s going to happen or if the reform will become effective, I mean, we are a full tax payer. So any reduction in the corporate rate will benefit us.

And generally speaking from the consumer standpoint if they have got more discretionary income in their pocket, we don’t view that as a bad thing certainly..

Thank you very much..

Thank you..

Thank you. I'm not showing any further questions in queue, so I would like to turn the call back over to Mr. Butler for closing remarks..

Okay, thank you, operator. Our stores are stocked with incredible deals and we encourage all of you to get out there and shop at Ollie’s. We believe we are well positioned for the remainder of the holiday season. Thanks everybody for participating in the third quarter earnings call and thanks again to all of our Ollie’s associates.

We wish everyone a happy and a safe holiday season and look forward to speaking to you again on our fourth quarter call in late March. Thank you very much and have a good day..

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may all disconnect. Have a wonderful day..