OLLI
#With regards to the trend in May, we are not going to comment on the current quarter that we are in, other than to say that the trends in Q1 ended nicely and we are very comfortable with where we sit today.
With regard to the seasonal business, seasonal was a little choppy, just like the rest of the quarter was when we first started out.
Our largest seasonal business does occur in Q2, which we are in currently today.
So we were pretty comfortable where we came out in the quarter for the seasonal categories and we feel pretty good where we stand.
And we believe we'll be in pretty good shape by the end of the second quarter with the inventory we have and the offerings we have for our customers.
And also <UNK>, I will add that that choppiness in the first quarter ---+ there were three major things that happened and we're just pleased the way it all fell out.
And that's certainly the tax refunds and we bounced nicely; Winter Stella ---+ Winter Storm Stella.
And then the change in the Easter holiday changed our advertising cadence as well.
But overall, we are very, very ---+ we are pleased with our performance and we are quite happy.
Well, I think it's our overall ---+ the thing that drives our business is the deals, and I know you get that.
So obviously we have really, really good deals and we have what America wants, which is brand names at drastically reduced prices.
I'm really pleased with our locations that we are opening up.
I don't think that there is a remarkable difference between stores that we opened up this year, last year, three years ago, four years ago, other than Florida.
Florida has been doing very, very well and we are very pleased down there.
But so has Rhode Island and so has Pennsylvania with the new store here in Pennsylvania.
So overall, we are just ---+ we are pleased with the new store performance.
I think that the overall visibility of the Company.
And as we have opened up, in particular, perhaps, down in Georgia and Alabama and Mississippi and Florida, more people from the north were more familiar with us.
They see, they hear, they know a lot more about us.
And that's ---+ it's a good double-edge sword because we are getting the benefit from the consumer and we are also getting the benefit from the exposure to be able to get deals.
I think this is two plus two equals about six.
Yes, <UNK>, with regards to the overall guidance and cadence that we are looking at right now, we are obviously holding to the 1% to 2% comp on a full-year basis coming off the 1.7% for Q1.
We ---+ from a modeling perspective, I'd probably tell you Q2, I'd probably guide to the higher end of the 1% to 2%.
On Q3, probably in the midpoint and then Q4 on the lower end of the 1% to 2%.
I will start with that and Mark or John can chime in.
But obviously, the deal flow has been very strong, as Mark alluded to.
And really the increase in the inventory year over year is strictly timing.
We've got a lot of good deals coming in.
We think we are well positioned for the quarter ahead.
<UNK>, from our perspective, the freight rates and the way that they look like they are coming in for us from a contractual perspective, which is ---+ our contract starts May 1 of each year ---+ is pretty much right in line with what we budgeted and what our expectations were from a freight perspective.
So one could say we might have been a little aggressive with the rates coming down and we had expected them to come down, but they are right in line with what we were thinking.
And we don't think that there's going to be any benefit or a detriment on the freight rates as we look at them for the full-year basis.
Yes, well, it depends on the deal.
And we go after our leases just like we do our merchandise.
So we do have a couple of stores that we opened in the low 40,000s or high 30,000s down in Florida and that's because it was a more beneficial deal for us to get whatever we got on the lease.
But that being said, we have not changed our prototype of the belly size to be 30,000 to 33,000 square feet.
We've also opened up a store or 2 probably in the mid-20,000s.
But that's because perhaps we wanted ---+ we did like that site and that is one of the smaller stores.
But our belly size remains the same of 30,000 to 33,000 square feet.
Thank you.
With regards to the SG&A for Q1 especially, we were actually very pleased being able to lever it 70 bps better than last year on an apples-to-apples basis.
So we thought that was pretty strong leverage on a 1.7% comp for the quarter.
And with regards to on a full-year basis, we are probably looking at a slight leverage to LY on the SG&A perspective, assuming a 1% to 2% comp range.
So our model would tell you it would be pretty comparable to last year, maybe slightly lower on an SG&A perspective in Qs 2, 3, and 4.
We haven't struggled at all.
We just returned from the shopping center show in Las Vegas and we are already working diligently on 2018.
2017 stores are all virtually locked up, all but executed.
We are almost at the very, very finish line.
So there is no issue there.
And we saw a lot of great sites, a lot of towns that would be really, really good Ollie's Bargain Outlets.
There's just simply no shortage for us in those ---+ and I think a lot of it has to do with our flexibility.
Because we can go down to 25,000 square feet and we can go up to 40,000 or 45,000 square feet if we choose so.
And if we think ---+ so it doesn't have to be the 30,000 to 33,000.
We can go up, we can go down, and that flexibility allows us to have more availability and more choices on the real estate size.
With regards to our ability to retain and attract new employees, I believe we are very successful at doing so.
We are not seeing any real struggles in doing either one of the two of those.
So I think with the work environment we give, the pay that we offer for the associates, we are a pretty good preferred employer for folks to come work with.
So we are not seeing any major issues or any wage pressures as well, outside of what we are normally used to paying.
From our perspective, and we have levered SG&A pretty well since going public, but we've had some pretty robust comp years as well.
In 2014, we had a 4.4% comp and then a 6% comp and then 3.2% comp.
So we've come out with our long-term algorithm that we need about a 1% to a 1.5% comp store increase in order to maintain or slightly lever our SG&A expenses.
And we have outperformed that significantly since becoming public.
So the way we model our business and we grow it is to basically budget a 1% to 2% comp and then we are able to slightly lever our SG&A expenses.
If we're able to do better on the sales front, we'll actually lever heavier than that.
So that's kind of the algorithm we've built into the model and we believe we can continue that on a long-term basis and continue to slightly lever the SG&A with modest comp growth.
Well, I think you pretty much gave the answer.
I think that if in particular, Ed, that you come in and you see ---+ the difference is that if you come into our store and you see a name-brand shampoo, our customer knows that it's here today and it's gone tomorrow.
When it's gone, it's gone.
So you might not find that same shampoo in our store next week.
But you might find another shampoo that that major manufacturer makes or another competitive CPG company would make.
I think that we've become more meaningful to these companies.
I think that the product offerings have become and grown and become larger.
And while its product that people want every day, there's still that great consistency about Ollie's that you never know what you're going to find.
And you better buy it because it's here today, gone tomorrow.
I think that what it has done is ---+ and you will see because we have reaped some pretty good results ---+ is more of a consistency because we are concentrating more and more on those categories.
And we mean more to these major manufacturers.
So there will be a consistency I believe you'll see within the HBA and/or chemicals, consumables, that kind of thing within the stores.
There would most likely ---+ and to be honest with you, I kind of hope a great inconsistency on the product.
Because that part of the charm of Ollie's is it's here today and gone tomorrow.
Ed, we have not made any real final, final decisions.
As you know, we just paid down $65 million of incremental debt during the first quarter and used some excess cash we'd built up from last year.
The Board continues to review all of our options for excess cash that we have, which include paying down debt, buying back stock, or paying a dividend.
Right now, we've made the decision today to pay down additional debt and we are going to keep our options open.
From a stock buyback perspective, we are paying a dividend.
But right now, we've not made any additional or further determinations of where we are going to go with the cash we build up in the future years.
Yes, I will answer the second one first.
And then I might need help on the ---+ because that was a pretty long question on the ---+.
But the first answer is, <UNK>, nothing has changed at Ollie's.
We are consistent.
We would have taken the same store five years ago as we did this year as we did two years ago as we did three years ago.
We have not jumped the state.
We have contiguous geographic growth.
There is absolutely nothing that has changed with our philosophy, our negotiations.
Nothing has changed, except that I believe that we are more attractive to the landlord because we are a publicly traded company and people can see our financials.
And it means something to them for their financing and their leverage capabilities.
As far as ---+ I believe it was the merchandise, Jay.
Going into more footwear and apparel.
And opportunities of what's available.
Okay, yes.
Would we ---+ if that was the question, would we buy footwear, would we buy apparel.
Very selectively, but it's not our main business.
Our main business is hard goods.
As far as the flexibility of scaling down a department or two based on a smaller store, a bigger store, we do that all the time.
That's no different than what we've done.
I've had a 25,000-square-foot store for probably 20 or 25 years, and I've had a 50,000-square-foot store since August of 2003.
So we go up or we go down.
That's what's so cool about the model is that we are so flexible, we can shrink or grow and take advantage of these opportunities.
And that's probably one of the reasons why we're not struggling in getting the real estate.
So Pat, did I hit all your answers ---+ the questions.
With regards to the direct marketing, and as we said earlier, we are not planning to have any impact in our modeling from the overall efforts that we have on the digital marketing side of the business.
We continue to run small tests, as we had mentioned on our last call.
We continue to try to learn and understand the data a little bit better.
And that's what we are working on more diligently today in terms of the BI tool that we are implementing and trying to get our hands around that piece of the puzzle.
But we believe for 2017, no impact on the business.
And then long term, we are still trying to figure out how do we motivate that customer to come in the stores more frequently without making it a discount-driven communication.
We want to be able to drive them in the store more frequently with the deals and get them motivated that way.
So we are still doing a little bit of testing and figuring out there as we move forward.
We are real, real careful and sensitive to this, because we don't want anybody running Shanghai on us here.
Because this is ---+ we are talking to these people in a tip sense.
So we are not giving them a discount when we are attempting to do this.
What we are trying to do is let them know we got a deal.
So we are really, really guarded on this; we are really, really protective.
We don't want to ---+ we work really, really hard to not go into spam and not go into junk mail.
And we just want to make sure that we are letting the consumer know that we got a product.
And if we offer them the product or let them know we've got the product, we are not upset if they don't come in at that week as long as they come in.
If they don't come in, then I'm kind of upset.
But it's a tip sense; it's to let them know we got the deals.
So it's really, really important to us, our protective nature of Ollie's Army.
These are ---+ these people account for nearly I think 65% of our business now.
So we are really, really ultrasensitive to it.
Okay, thank you very much to everyone for listening to our first-quarter earnings call.
We are off to a strong start to the year, and we look forward to speaking to you again on our next earnings call in late August.
