Good afternoon, and welcome to Ollie's Bargain Outlet Conference Call to discuss financial results for the second quarter of fiscal 2021. 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 John Swygert, President and Chief Executive Officer; Jay Stasz, Senior Vice President and Chief Financial Officer; and Eric van der Valk, Executive Vice President and Chief Operating Officer. I will turn the call over to Jean Fontana, Investor Relations, to get started. Please go ahead, ma'am..

Thank you. Good afternoon. A press release covering the Company's 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 with respect to 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, as well as our earnings release issued earlier today.

For a more detailed description of these factors, we will be referring to certain non-GAAP financial measures on today's call that we believe may be important for investors to assess our operating performance.

Reconciliation of those most closely comparable GAAP financial measures to the non-GAAP financial measures are included in our earnings release. And with that I will turn the call over to John..

work as a team, stay focused on what we can control, and execute our business model. Looking ahead, our long-term growth algorithm remains intact and I am as bullish as ever about our business.

I want to personally thank our almost 10,000 team members for all they are doing to serve our customers and communities and support each other in this challenging environment. As we say, we are Ollie's. I'll now hand the call over to Jay to take you through our financial results..

the opening of 46 to 47 stores, including two relocations, with 30 stores under our belt, we feel confident that we can achieve our target, but we are dependent on local permitting and construction time; an effective tax rate of 25.4%, which excludes the tax benefits related to stock-based compensation; and diluted weighted average shares outstanding of approximately $65.8 million before any impacts from future share buybacks.

We will continue to evaluate our plans and respond to the marketplace as necessary. It's the effectiveness of our nimble operating model, our strong financial position and long-term growth opportunities that keep us excited for the future. I'll now turn the call back to the operator to start the Q&A session.

Operator?.

Our first question comes from Matthew Boss with JPMorgan. You may proceed with your question..

So, maybe to start on same-store sales, comps in the second quarter were up 4% relative to 2019, and then your guidance for the third quarter is up 3% to 5% versus 2019. So basically third quarter guidance unchanged relative to the second quarter at the midpoint.

So, John, maybe what did you see from comp trends as the second quarter progressed? And any color on August so far relative to that 3% to 5% comp guide for the third quarter relative to 2019?.

Yes, Matt, let me take August first. We're really not going to commit - comment on intra-quarter right now due to the fact that it's just a little - it's little bumpy throughout the quarter.

And we feel very, very comfortable where we're at and where we're going to land for the full-quarter basis, but talking intra-quarter right now is kind of where we were in Q2, it doesn't make a lot of sense, because there is definitely some choppiness in the months as we progress through the stimulus last year and where we're at this year as well.

So I think we would tell you we're comfortable where we're guiding to on a relative basis for the numbers. And very similar to Q2 numbers - obviously, during Q2, there was a lot of stimulus dollars out there, this year from March, April and May, and those dollars, we saw them really slow down in June and July.

So, we really saw a slowdown from where we were running in May, but we're still very excited to deliver a two-year stack of 15.3%, and we felt real good where we land. And so, I think the most important piece is the inventories are in real good position. The deal flow is strong and we're excited where we are right now positioned for Q3..

And then maybe just a follow-up on gross margin. So, you exceeded 2019 gross margin in both the first and the second quarter I think by about 10 basis points to 20 basis points.

Could you just walk through back half merchandise margin and freight assumptions? Just basically what's in there to now get to the 39.4% full year? And any change to 40% gross margin if we were thinking about next year and beyond?.

Yes, Matt, this is Jay, and I'll take that. And obviously, right, with these continued headwinds on the supply chain, especially in the transportation front right, we're seeing big increases there, and they're not really going to abate any time soon. So, we took the full year margin.

Last call, we had talked about being at 39.7% to 39.8% for the full year. We've taken that now to the 39.4% to 39.5% (ph) point. And we did do a great job in the quarter managing the merchandise margin, just like we talked about right.

We can, to a large extent, work hard on the buy side, work hard on price changes, especially in this inflationary environment, so that we can have a strong merchandise margin, which is what we did in Q2. We're going to control what we can on the cost side.

And really then looking at that for the back half, I mean that's - we're obviously going to have an impact on the margins in Q3 and Q4. We probably have a little bit more pressure in Q3 as that unwinds versus Q4, but getting at, spreading it back to the 39.4%, 39.5% for the full year.

And then to your point for next year, certainly, we do expect - just because a lot of these costs on the supply chain, they flow with the inventory. And so we do expect that in the first half of next year, we would have increased pressure on the gross margin.

But we're not - obviously, we're not giving guidance necessarily for the back half, so we're not in a position to give specific guidance there. But as we look at next year, we would expect some additional margin pressure certainly in Q1 and, to some extent, to Q2 as well..

Our next question comes from Kate McShane with Goldman Sachs. You may proceed with your question..

Thank you so much for taking our question. I guess with regard to inventory, you were very detailed in your prepared comments that you still are having a relatively decent time obtaining inventory despite some the supply chain challenges.

Could you maybe talk a little bit more about your strategy there to ensure that you're still getting inventory into your stores?.

Sure. I think one important thing is that I think there is a misconception potentially out there in the marketplace is there is no shortage of closeout deals in the marketplace today. Our merchants are doing a great job of getting product on the marketplace and we really are seeing a lot of flow in every category that we buy in each every day.

So, there is definitely not an issue with the merchandise side of the business. Supply chain has definitely been a challenge for all of us. We are, I think, fortunate that we are not a huge importer, which a lot of other folks are, that have created a lot more headaches for them.

But we have our fair share of headaches, but nothing that a lot of other folks are seeing. I think we're in pretty good shape to get the goods into the building and out to the stores.

We have a handful of stores that I would tell you today we're not overly pleased with where we're at, but we're working very diligently to take care of that, but the majority of our stores are in very, very good shape and we're dealing with those exceptions at this point in time..

Our next question comes from Simeon Gutman from Morgan Stanley. You may proceed with your question..

This is Michael Kessler on for Simeon. Thank you for taking our questions. Yes, first, I wanted to follow-up on Matt's question on the sales.

Looking at your two-year geometric stats, they're running in that 3% to 4% range in the last two years, basically kind of in line with your long-term outlook, the 1% to 2% comp, and this is occurring through, arguably, the most transformational or unexpectedly disruptive period that we may see in some time.

So, I guess, my question is, how are you viewing this outcome? And I think some may look at this and say, you had this incredible uplift last year, but it doesn't seem like you're necessarily holding on to all of that business you picked up. So, I guess, I'm curious how you respond to that.

Is there of any concern, especially given that the - actually you mentioned, the pipeline - the closeout pipeline, is that needs to be very strong?.

Yes, see, Michael, I think the main takeaway is last year was an unprecedented year. It's something that we can't duplicate. Included in our numbers from last year were about 700 basis points of PPE that's not selling this year.

So, we're doing much better when you peel out the PPE and the - I'll call it, the frenzy buying for people from a COVID perspective. So, it's not fair just to look at a 4% comp or 3% to 5% comp, that would not be the right way to look at.

I think we've done a phenomenal job holding onto the new customers that we have - that we were able to attract during the COVID period. All of our data tells us we're doing better at having them repeat as a customer than we had in the past.

So, I would venture to - if we peel off that a little bit more with backing out PPE, you'd probably be a little bit more impressed with our overall results from last year and this year. So I think we're excited where we're sitting and I think we're in great shape..

Okay. That is helpful. And my follow-up on SG&A. If we look at your SG&A rate relative to Q2 of 2019, it did delever by a little bit. And you've shown a great track record over the years of leveraging that SG&A line over time.

So I guess is the labor pieces that really the key kind of change relative to what we've seen over time? And is there any other callout that how we should be thinking about that line moving forward in maybe a more normalized comp environment? Thank you..

Yes, sure. That's a good question. Yes, you're right, I mean we did delever a little bit compared to '19, and I would say that is driven primarily on the labor side. Obviously, compared to last year with the wild swings in sales, we expect them to delever. But that SG&A rate for the quarter, it is right in line with what we were expecting.

And we really think of it on a full-year basis. We've talked about kind of on an annual basis in SG&A target of, say, in the 25% range, and I think that holds true for this year as well. Generally, of course, that's dependent on sales. But as we've said, the market is very competitive for store hiring.

And for us at the stores, we kind of adjust market-by-market, store-by-store, we're not going to do something where we're going to take minimum wage up across the board, that would be very impactful.

But we have addressed it so far this year market-by-market where we've needed to, that's put a little bit of pressure on our payroll and our wages there. But again on a full year basis, we're going to continue to manage that and I would estimate in kind of a normalized basis at 25% SG&A rate on an annual basis is a decent target..

Our next question comes from Randy Konik with Jefferies. You may proceed with your question..

Thanks a lot guys.

Just go back to the stimulus impact and things like that, have you been able to kind of think about parsing that out and thinking about how much of that impact the business and what's the normalized run rate going forward? And when you look at the second - when you look at the spending patterns of the Ollie's Army, how did they change their spending in terms of transactional velocity versus ticket in terms of impacting the comps in the quarter?.

Sure, Randy. Let me take the first one with regards to stimulus and the impacts on the sales. I got to tell you that that's probably one of the toughest items for us to peel off and figure out.

So there's been so much noise in the last 18 months with other retailers being closed, the reopening of other retailers, the time with stimulus payments one, two and three. So, we've not been successful trying to peel that off.

I think the main takeaway from our perspective would be our long-term algo on the comp of 1% to 2% is 100% intact and we feel very comfortable with it. And I think right now we're performing a little bit ahead of that, so we'll see where we go with it.

But that's how we try to look at the business on a - we're growth story side, always focus on the new store growth and then the comps will be secondary from our perspective. But I think that's how we look at the business from our perspective.

With regards to the Ollie's Army, the Ollie's Army, as we said in the script, they're still accounting for - they're now reached a record 80% of our overall sales penetration, which I feel is phenomenal. We've done a great job on our conversions to the Army from the new customers and retain our existing on Army base.

But in terms of their overall visits, the Army has remained very, very consistent. They're actually slightly up over last year in terms of their frequency. And their spend is a little bit down over last year just because the lack of PPE, but they are outpacing the non-Ollie's Army members a little bit more than they had in the past.

We've always said they outpace them about 40% more in sales on a per transaction basis, they're closer to 42%, 43% right now..

One last one if I may. You made a point about your competitor - other retailers that had a lot of import are seeing a lot of more of issues around added costs to their supply chain, etc.

So when you look at your supply chain, not just the cost, but the actual processing time, say, in the warehouses, let's say, those are down a little bit, when do you expect that's kind of normalize out in terms of forget - not - forget the cost, more about being able to process what you need to process on a normalized basis going forward, when does that kind of occur?.

Yes, I think right now, Randy, I would tell you we've made a lot of progress in the last eight weeks and we're on a pretty good pace to get things pretty much where we want them to be, but I would tell you we would think on a conservative basis, we should be right on track by the end of Q3..

Our next question comes from Brad Thomas with KeyBanc. You may proceed with your question..

Thanks for taking my question. I was curious if you could talk, John, a little bit about how you all are looking at pricing in this backdrop where you're getting inflationary pressures? Clearly, your competitors that you comp against are pushing through some higher prices.

Can you talk about what you all are doing and your flexibility to do that perhaps quicker in areas where you're seeing more inflation?.

Yes, Brad, we're - at this point, we're no different than any other retailer in terms of having cost pressures all around the board. So, what we're doing is we're doing our best to keep the value proposition intact, that's our entire model.

But our merchants are in a lot of the competitors stores each and every day to see where their pricing is going and where we can make the adjustments that they making, we're making the appropriate adjustments to keep the value there, but get a little more for our product than we were previously to offset some of these cost.

And they are working tirelessly to do this and we're actually expanding the merch margin to offset some of these supply chain cost.

And we - I don't think we'll be able to do it all this year, but we'll get much closer than most people can do, because we do have the ability to buy backwards and work into the margin and push a bit harder on the vendors in order to get the margin profile we're looking for with the price we're getting..

And, John, can you talk a bit more about the quality of that inventory you have here today? I mean, I think it was very well anticipated that the sales were going to slow against such record numbers last year, but how do you feel about the quality of the inventory you have and the need for markdowns going forward?.

I would tell you, Brad, I feel very, very comfortable with the quality of our merchandise. And our merchants were just in Las Vegas this past week in ASD and they had a very, very successful show, I think much more successful than we anticipated. So, the deal flow for us on the closeout world is very positive.

The quality of the merchandise is phenomenal. In terms of markdown risk or anything - to clear anything, we're in great shape. I would tell we have no fears with regards to what we're carrying that's not going to sell.

I think the merchants have bought the right product in the store and everything looks pretty fresh and looks good and is priced properly. So I think we're in real good shape on markdown front and the merch margin front..

And if I can squeeze a quick one on how to think about holiday, I know it's a long way out and you're not giving real explicit guidance, but is there anything that you're seeing right now from a trend standpoint in terms of what selling and what's not to give you any more confidence about how you all might be able to fair this holiday season?.

No, I don't think - obviously, we're not trend setters, we're trend followers, but there's not really anything out there that I think we're going to get our hands on that. That's a - the spinner deal or anything like that, that I can see today. But I would tell you, we think we're well positioned on the toy front.

Toy is a big part of our business in the fourth quarter. I think our seasonal holiday will be better than ever. I think we've made great strides in making changes there where our product was much more relevant for the consumer today. And I think overall the gift giving front, we are well positioned this year as well.

So I think from my perspective, we should have a pretty good successful holiday period, barring any unforeseen things like - COVID is starting to rear its head up again, and the virus is starting to impact people and how people are reacting, so we just got to watch that. But from our perspective, from a merchandise front, we're in real good shape..

Our next question comes from Peter Keith with Piper Sandler. You may proceed with your question..

Thanks everyone. I guess I have questions - I think you guys - the script said Eric, your new COO, is on the call. I guess regardless....

Yes, I'm here..

Okay. So, you've been at the Company three months, I guess it's usually pretty good time period to assess changes you can make or initiatives you can implement.

So, Eric, I guess, I'd be curious on anything you see as an opportunity coming in with a fresh set of eyes on Ollie's to make some positive change?.

Sure. I appreciate the question, Peter. I was trying to blend into the pain here, but thanks for calling me out. Yes, it's been a great experience onboarding with the Company. And as you said, I've been here a little over three months. I've enjoyed meeting some very smart and talented people at Ollie's who are just so committed to the mission.

I know coming in just a reflection I was super impressed with how Ollie's has been able to retain its strong entrepreneurial spirit. And it's really committed to making product the absolute hero of the store experience even while it continues to grow at this fast pace.

So, that's been super impressive and this team has certainly been incredibly resilient through an unprecedented times. So, I'm proud to be part of the story.

To answer your question, I've been very focused in the supply chain discipline since I started, and certainly had experience with this macro - this very challenging macro environment that we're in. In my prior life, came into a very similar environment here.

And what I'm seeing is that is - focusing the team on continuous improvement and process improvement and improvements in productivity, because labor is such a huge challenge both the supply of labor and the expense related to labor and wage rates, that we've been able to move very, very fast as a team. We have a great team here in supply chain.

We'll be able to move very fast as a team to make improvements in some process change in various ways to get more productivity and more throughput capacity without it having to be hiring more people to do it, if that makes sense, Peter..

Yes. So, I guess, maybe if you can provide some specific examples, I guess, that would help us even understand it better..

Sure. Yes, I'll give you a couple examples. We're making numerous improvements, probably some of the larger ones.

We've consolidated our deliveries to stores, which was probably the single biggest improvement we've made when I first - after I first started where most stores were getting two or even three deliveries a week, now most stores are getting one delivery a week.

So, it's a significant enhancement in productivity throughput and a reduction in transportation expense. Another is we're making some changes to our warehouse management system, some modifications to automate some process.

And probably the last highlight of significance is we're making investments in material handling equipment, specifically in our Georgia facility to enhance its productivity..

Our next question comes from Edward Kelly with Wells Fargo. You may proceed with your question..

Yes. Hi guys, good afternoon. I wanted to ask you about the sales line. Your sales this quarter were up 25% to 2019, which was below the Street, and I think because at least the way it looks in the model right anyway because new store productivity looked low. Just kind of curious as to what your thoughts are on that.

Is that where some of the throughput stuff is? And then, how do we think about that in Q3? I mean, it does look like you're geometric stack in Q3 is going to be similar. So, will the 25% be better in Q3 or do those challenges remain? I'm just kind of curious as to what's going on there..

Yes. This is Jay. And I think really - we saw that consensus estimate too, we're not sure how you guys built that model up. From our standpoint, maybe it was a new store productivity issue on the model side. I mean we are right in line with our expectations. Our new stores are actually running a little bit ahead of our expectations.

But that said, right, I mean, trying to carry a pair of 20 to this year. I mean obviously the new stores that we opened last year just like our comps were very productive because of the stimulus that was in the marketplace. And certainly that was the case during Q2.

So we - because of the big swing from '20 to '21, I mean our new store productivity, our plan on kind of a base model was very different than it would normally be, probably in the 55% to 60% range where it's normally low 90s call it, or 90%. So, we're not sure that you guys took that into account in the model.

The other impact that could have been coming out is we have had a little bit of shift in timing in opening our stores in the quarter, and that's going to continue in the back half. We're going to get the stores open, but we are, especially in the back half, experiencing a number of weeks of delays in those openings.

So I think the driver for Q2 was really - however you guys model it, the new store productivity, it was a disconnect, and maybe didn't take it back down to normalized levels..

I think, Ed, one big takeaway or one big thing for you to make sure you're clear on is the inventory or the throughput had absolutely nothing to do with any sales deficiency on the new stores. The new stores performed very well. And even like Jay said, they probably performed a little bit ahead of our plan.

The inventory in the stores was very high quality and very strong. So the inventory at new stores did have - did had zero negative impact on those - the performance of those guys..

Our next question comes from Paul Lejuez with Citi. You may proceed with your question..

This is Bran Cheatham for Paul. Thanks for taking our question. I think you mentioned there were a handful of stores that you were disappointed with or working on.

Just wondering if we can dig in, is there anything unique about that, like geographically or they, a similar vintage and any additional color on what you might be able to do to remedy that?.

Yes. I wouldn't say disappointed at all. I think what I said was we had a handful of stores that were a little lighter in inventory than we'd like to see them at this point in time. So, I would - the performance of the stores are all very strong. So I don't want anyone to read that the wrong way.

We have some opportunities to get a little more inventory in those boxes to make them look a little bit better, but it's, like I said, it's a handful. It's not that - it's - the 10% per se where we see the stores at. So, those stores are performing just fine.

I'd like to see them perform a little bit better by adding a little more inventory into them, but that's a very small part of our overall company, everything else is in real good shape. And those stores predominantly are located down in the south..

Okay.

And then on the markets where you have adjusted your wages, has there been any change since states have rolled off some incremental unemployment benefits? Just any additional information on that?.

Yes. They - with - some of the states have rolled off the unemployment early has made hiring easier for sure. We saw a big change in those states that did that. It made a lot easier to hire.

The states that have not done that yet still have definitely a larger challenge to hire people in there, but that's coming up, that's right on the corner, here in September..

Our next question comes from Rick Nelson with Stephens. You may proceed with your question..

Question about the Ollie's Army event, how that went in May? And your thoughts for the summer event? I know last year was multiple days.

What do you thinking for this year?.

Yes, Rick, with regards to - I'll talk about the holiday mailer, which we used to call the buzzer mailer, the - last year we had changed Ollie's Army Night to be a week-long event because of the issues with COVID and not knowing the landscape when we had to go out to print.

We still have time to make that final decision on how we're going to proceed this year for the holiday mailer. But my inclination today is that we're going to go back to one night - a one-night event only on that Sunday in December. So, that's what we're planning today.

But we're watching everything, and we're going to - we have till October to make this decision. So once we get more information, we'll make hopefully the best decision for our stores and for our customers. But I tend to have it leaning to go back to a one-day even on a Sunday. Our May event, which we had, was just fine. Everything worked great for that.

So, we're excited about it for that the boot camp mailer and we were very pleased with the results there..

Thanks for that.

Also curious about the imports, what they represent as a percent of the sales? And where you see that going over the longer term?.

Yes. Rick, this is Jay. And the good news for us is that we are not a big importer generally, especially compared to some other retailers. I mean for us, it's probably about 14% to 16% of our annual purchases. Now we can have some peaks and valleys in that related to seasonal product, but that's where it's at. It's not a huge percentage.

And Eric and the team are working hard to get - work through the bottlenecks in the supply chain and get those goods delivered..

Great. Thanks..

Yes. And I would say, Rick, from my perspective, we don't have plans. Ideally, we don't want to increase that number. Closeouts are our primary focus, but we will augment where needed as we continue to grow..

Our next question comes from Jeremy Hamblin with Craig-Hallum. You may proceed with your question..

So, it sounds like at a high level, you're returning to your long-term growth algorithm, both in terms of unit performance, but then, in terms of margins for the most part in line minus some supply chain costs and then maybe a little bit on labor, although that sounds like that should return to a normalized level.

I want to focus on the unit openings, 46 to 47, a little bit lower than you were thinking back in May.

And in terms of thinking about the color around that and why the total unit growth is going to be a little bit, three, four units shorter or fewer than what you had been thinking before, could you add a little color into that? And then thinking about that moving forward, you have talked about 50, maybe up to 55 units in a year.

Is there any change on that part of the Ollie's growth story?.

Sure. Jeremy, the first one is the easiest, the overall 50 to 55 is fully intact and that's our plan going forward. With regards to this year, the 46 to 47, really has become necessary, strictly due to the fact the permit delays and construction delays. We have 50 signed leases, they just can't be delivered in time.

So, there's nothing earth-shattering with it. We're going to roll those into next year. So, I would venture to say what we will do north of 50 next year and south of 55, but we won't be less than 50 is my expectation for next year.

So the site - the leases are all signed, ready to go, wish we could get the permits pulled in times with the construction delay is away. Well, the construction out there is getting tough as well with product availability. So, we feel good where we are landing though..

Understood.

As a quick follow-up to that, in terms of looking ahead to next year 50 to 55, would you - what percentage of those would you expect to be in infill markets versus new markets?.

My guess is, right now, we have the leases that we're working on today for 2022 were in about 19 states of our 28. So I don't - I think we might have one new state next year that we're looking to go into. Other than we'll be - continue to backfill on our existing markets.

And, obviously, some of our new markets we call Kansas, Missouri, Texas, those are all still new markets that we're going to work very hard to fill into. So, I would tell you, probably 60% new markets, 40% backfill..

Our next question comes from Anthony Chukumba with Loop Capital Markets. You may proceed with your question..

Good afternoon, and thanks for taking my question. Obviously, you had a very difficult comparison and that's why your comps were down, like you said, they were up 15% on two-year stack basis. And you talked a little bit about the 700 basis points headwind from PP&E sales last year.

I was just wondering if you had any commentary in terms of where your better performing categories, I guess, on a relative basis? And then just any anything you can say about traffic versus ticket? Thank you..

Yes, Anthony, I'll take the performance categorically in terms of the better performing versus the - it obviously was a tough quarter, going up against 43% comp. But in terms of our better categories, candy was probably our shining light that was out there, our seasonal category, very small luggage department that we have and clothing..

Yes. And bear in mind, I think last year with this economic stimulus we had broad strength across all the departments. So, even some of the departments that we're looking at for this quarter that are down still performed very well. But - yes, it's - you can't match the 43.3% comp from a year ago.

And in regards to transactions versus average basket, we don't have traffic counters, so we measure transactions. And for our comp of negative 28%, about 80% of that came from the transaction side and 20% of that was from a decrease in the average basket. And the average basket was really driven by a decrease in the average retail..

Our next question comes from Brian McNamara with Berenberg Capital Markets. You may proceed with your question..

Thanks for taking the question. So, inventories appear pretty lean across retail kind of record price realization.

I was wondering if you could give a bit more color on where exactly you're excess supply that you're acquiring is coming from?.

Yes, Brian, I would venture to tell you that our excess supply is coming from all of our vendors. We're not having any issues in any category. So, it's a very broad based. It's - we deal with over 200 vendors. So, I would tell you that I can't pinpoint any specific category that we're not getting product.

So, our existing relationships plus our new relationships, we're getting all of our product, but categorically our merchants are buying to their open to buys and they're full. They're doing a great job getting the products that they need to meet our sales. So, we're not seeing any shortfall of product out there in the market.

There is a lot of closeouts that are flowing in the marketplace and we're feeling good where we're sitting..

And then I guess as a follow-up to that, another closeout retail executive this morning basically stated that retail, in general, could see kind of negative comps next year, as you know, this year is kind of full of one-time benefits.

And as supply chain pressures ease, we could see an increase in the flow of merchandise into the country, at the same time, these comps are negative. I'm curious if, one, you would generally agree with that assessment? And two, it seems like that would really benefit Ollie's in terms of supply if that plays out? Thanks..

Yes. I wouldn't - Brian, I would not necessarily agree that next year would be a negative comp for retail, for Ollie's at least. I think the disruption in the marketplace as it plays out is going to benefit us from a product flow perspective.

So, I think a lot of the pain people may be feeling this year with canceled orders, challenges moving product in, there could be an abundance of closeout that may roll out next year. So I would tell you that this plays into our hand potentially as a benefit, not a detriment without any doubt in my mind..

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to John Swygert for any further remarks..

Thank you, operator. Thanks everyone for your participation and continued support. We look forward to sharing our third quarter results with you on our next earnings call..

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect..