Ollie Bargain Outlet: BARGAIN OUTLET HOLDINGS, INC. Management’s Discussion and Analysis of Financial Position and Operating Results (Form 10-Q)

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The following discussion and analysis of the financial condition and results of
our operations should be read together with the financial statements and related
notes of Ollie's Bargain Outlet Holdings, Inc. included in Item 1 of this
Quarterly Report on Form 10-Q and with our audited financial statements and the
related notes included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, or SEC, on March 24, 2021 ("Annual Report").
As used in this Quarterly Report on Form 10-Q, except where the context
otherwise requires or where otherwise indicated, the terms "Ollie's," the
"Company," "we," "our" and "us" refer to Ollie's Bargain Outlet Holdings, Inc.
and subsidiaries.

We operate on a fiscal calendar widely used by the retail industry that results
in a fiscal year consisting of a 52- or 53-week period ending on the Saturday
nearer to January 31 of the following year. References to "2021" refer to the
52-week period of January 31, 2021 to January 29, 2022.  References to "2020"
refer to the 52-week period of February 2, 2020 to January 30, 2021.  References
to the "second quarter of fiscal 2021" and the "second quarter of fiscal 2020"
refer to the thirteen weeks of May 2, 2021 to July 31, 2021 and May 3, 2020 to
August 1, 2020, respectively.  Year-to-date periods ended July 31, 2021 and
August 1, 2020 refer to the twenty-six weeks of January 31, 2021 to July 31,
2021 and February 2, 2020 to August 1, 2020, respectively.  Historical results
are not necessarily indicative of the results to be expected for any future
period and results for any interim period may not necessarily be indicative of
the results that may be expected for a full year.

Caution Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as "could," "may,"
"might," "will," "likely," "anticipates," "intends," "plans," "seeks,"
"believes," "estimates," "expects," "continues," "projects" and similar
references to future periods, prospects, financial performance and industry
outlook. Forward-looking statements are based on our current expectations and
assumptions regarding our business, the economy and other future conditions.
Because forward-looking statements relate to the future, by their nature, they
are subject to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. As a result, our actual results may differ materially
from those contemplated by the forward-looking statements. Important factors
that could cause actual results to differ materially from those in the
forward-looking statements include regional, national or global political,
economic, business, competitive, market and regulatory conditions, including,
but not limited to, legislation, national trade policy, and the following: our
failure to adequately procure and manage our inventory or anticipate consumer
demand; changes in consumer confidence and spending; risks associated with our
status as a "brick and mortar" only retailer; risks associated with intense
competition; our failure to open new profitable stores, or successfully enter
new markets, on a timely basis or at all; the risks associated with doing
business with international manufacturers and suppliers including, but not
limited to, transportation and shipping challenges, and potential increases in
tariffs on imported goods; outbreak of viruses or widespread illness, including
the continued impact of COVID-19 and continuing or renewed regulatory responses
thereto; our inability to operate our stores due to civil unrest and related
protests or disturbances; our failure to properly hire and to retain key
personnel and other qualified personnel; our inability to obtain favorable lease
terms for our properties; the failure to timely acquire, develop and open, the
loss of, or disruption or interruption in the operations of, our centralized
distribution centers; fluctuations in comparable store sales and results of
operations, including on a quarterly basis; risks associated with our lack of
operations in the growing online retail marketplace; risks associated with
litigation, the expense of defense, and potential for adverse outcomes; our
inability to successfully develop or implement our marketing, advertising and
promotional efforts; the seasonal nature of our business; risks associated with
the timely and effective deployment, protection, and defense of computer
networks and other electronic systems, including e-mail; changes in government
regulations, procedures and requirements; risks associated with natural
disasters, whether or not caused by climate change; and our ability to service
indebtedness and to comply with our financial covenants together with each of
the other factors set forth under "Item 1A - Risk Factors" contained herein and
in our filings with the SEC, including our Annual Report. Any forward-looking
statement made by us in this Quarterly Report on Form 10-Q speaks only as of the
date on which such statement is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is not possible
for us to predict all of them. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by law.  You are
advised, however, to consult any further disclosures we make on related subjects
in our public announcements and SEC filings.

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Overview

Ollie's is a highly differentiated and fast-growing, extreme value retailer of
brand name merchandise at drastically reduced prices.  Known for our assortment
of products offered as "Good Stuff Cheap," we offer customers a broad selection
of brand name products, including housewares, food, books and stationery, bed
and bath, flooring, toys and hardware.  Our differentiated go-to market strategy
is characterized by a unique, fun and engaging treasure hunt shopping
experience, compelling customer value proposition and witty, humorous in-store
signage and advertising campaigns.

COVID-19 Update

The COVID-19 pandemic has significantly impacted the U.S. and global economies,
resulting in business slowdowns or shutdowns, reduced economic activity, changes
in consumer behavior, and changes in the mindset and availability of the labor
force.  We continue to monitor the impact of the pandemic on our business,
including on our associates, customers, business partners and supply chain.

We continue to take measures to protect the health and safety of our associates
and customers, a primary concern of our management team.  We have also taken
measures to support the communities that we serve to address the challenges
posed by the pandemic.

After the onset of the pandemic, our net sales benefited from increased consumer spending associated with federal stimulus funds for said pandemic.

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this time, there is uncertainty with regard to the continuation of these
stimulus measures and, as a result, there may be potential changes in consumer
spending behavior or demand.  In addition, we are experiencing labor pressures
at both our stores and distribution centers, and we are experiencing supply
chain disruptions due to COVID-19 and related measures.  We are increasing our
hiring efforts in certain impacted markets and working closely with our
suppliers and transportation partners to mitigate the impact of the supply chain
challenges.  The potential significance and duration of these elevated costs is
uncertain, and we will continue to assess and respond to current and evolving
conditions.

As we continue to monitor the COVID-19 pandemic and potentially take actions
based on the requirements and recommendations of federal, state and local
authorities, we intend to focus on managing the business for future, long-term
growth.  In certain circumstances, there may be developments outside our
control, including resurgences of COVID-19 and, in particular, new and more
contagious or vaccine resistant variants, requiring us to refine our
operations.  As such, given the evolving nature of the pandemic, we cannot
reasonably estimate its impact on our financial condition, results of operations
or cash flows in the future.  Refer to Part I, Item 1A. Risk Factors of our 2020
Form 10-K for a full discussion of the risks associated with the COVID-19
pandemic.

Our growth strategy

Since Ollie’s founding in 1982, we have grown organically by filling existing markets and leveraging our brand awareness, marketing and infrastructure to expand into new markets in the contiguous states. We expanded to 409 stores located in 28 states from July 31, 2021.

Our stores are supported by three distribution centers, one each in York, PA,
Commerce, GA and Lancaster, TX. We believe our distribution capabilities can
support a range of 500 to 600 stores over the next several years.

We have invested in our associates, infrastructure, distribution network and
information systems to allow us to continue to rapidly grow our store footprint,
including:

• develop our merchant purchasing team to increase our access to the brand name / closing

   merchandise;



• add members to our management team;

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• extend the capacity of our distribution centers to their current level of 2.2 million

   square feet; and



• invest in information technology, accounting and warehouse management

   systems.



Our business model has produced consistent and predictable store growth over the
past several years, during both strong and weaker economic cycles.  We plan to
continue to enhance our competitive positioning and drive growth in sales and
profitability by executing on the following strategies:

• increase our store base;

• increase our bargain offers; and

• Leverage and develop Ollie’s Army, our customer loyalty program.



We have a proven portable, flexible and highly profitable store model that has
produced consistent financial results and returns.  Our new store model targets
a store size between 25,000 to 35,000 square feet and an average initial cash
investment of approximately $1.0 million, which includes store fixtures and
equipment, store-level and distribution center inventory (net of payables) and
pre-opening expenses.  We target new store sales of approximately $4 million in
their first full year of operations.

While we are focused on driving comparable store sales and managing our
expenses, our revenue and profitability growth will primarily come from opening
new stores.  The core elements of our business model are procuring great deals,
offering extreme values to our customers and creating consistent, predictable
store growth and margins.  In addition, our new stores generally open strong,
immediately contributing to the growth in net sales and profitability of our
business.  We plan to achieve continued net sales growth, including comparable
stores sales, by adding stores to our store base and by continuing to provide
quality merchandise at a value for our customers as we scale and gain more
access to purchase directly from major manufacturers.  We also plan to leverage
and expand our Ollie's Army database marketing strategies.  In addition, we plan
to continue to manage our selling, general and administrative expenses ("SG&A")
by continuing to make process improvements and by maintaining our standard
policy of reviewing our operating costs.

Our ability to grow and our results of operations may be impacted by additional
factors and uncertainties, such as consumer spending habits, which are subject
to macroeconomic conditions and changes in discretionary income.  Our customers'
discretionary income is primarily impacted by gas prices, wages and consumer
trends and preferences, which fluctuate depending on the environment. The
potential consolidation of our competitors or other changes in our competitive
landscape could also impact our results of operations or our ability to grow,
even though we compete with a broad range of retailers.

Our key competitive advantage is our direct buying relationships with many major
manufacturers, wholesalers, distributors, brokers and retailers for our brand
name and closeout products and unbranded goods.  We also augment our product mix
with private label brands.  As we continue to grow, we believe our increased
scale will provide us with even greater access to brand name and closeout
products as major manufacturers seek a single buyer to acquire an entire deal.

How we evaluate the performance of our activities and our main articles

We take into account various financial and operational measures to assess the performance of our business. The main metrics we use are number of new stores, net sales, comparable store sales, gross margin and gross margin, selling and administrative expenses, pre-opening costs, operating profit. operating, EBITDA and Adjusted EBITDA.

Number of new stores

The number of new stores reflects the number of stores opened during a
particular reporting period.  Before we open new stores, we incur pre-opening
expenses described below under "Pre-Opening Expenses" and we make an initial
investment in inventory.  We also make initial capital investments in fixtures
and equipment, which we amortize over time.

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We expect new store growth to be the primary driver of our sales growth.  Our
initial lease terms are approximately seven years with options to renew for
three to five successive five-year periods.  Our portable and predictable real
estate model focuses on backfilling existing markets and entering new markets in
contiguous states.  Our new stores often open with higher sales levels as a
result of greater advertising and promotional spend in connection with grand
opening events, but decline shortly thereafter to our new store model levels.

Net sales

Ollie's recognizes retail sales in its stores when merchandise is sold and the
customer takes possession of the merchandise.  Also included in net sales is
revenue allocated to certain redeemed discounts earned via the Ollie's Army
loyalty program and gift card breakage.  Net sales are presented net of returns
and sales tax.  Net sales consist of sales from comparable stores and
non-comparable stores, described below under "Comparable Store Sales."  Growth
of our net sales is primarily driven by expansion of our store base in existing
and new markets.  As we continue to grow, we believe we will have greater access
to brand name and closeout merchandise and an increased deal selection,
resulting in more potential offerings for our customers.  Net sales are impacted
by product mix, merchandise mix and availability, as well as promotional
activities and the spending habits of our customers. Our broad selection of
offerings across diverse product categories supports growth in net sales by
attracting new customers, which results in higher spending levels and frequency
of shopping visits from our customers, including Ollie's Army members.

The spending habits of our customers are subject to macroeconomic conditions and
changes in discretionary income.  Our customers' discretionary income is
primarily impacted by gas prices, wages, and consumer trends and preferences,
which fluctuate depending on the environment.  However, because we offer a broad
selection of merchandise at extreme values, we believe we are less impacted than
other retailers by economic cycles that correspond with declines in general
consumer spending habits.  We believe we also benefit from periods of increased
consumer spending.

Comparable Store Sales

Comparable store sales measure performance of a store during the current
reporting period against the performance of the same store in the corresponding
period of the previous year.  Comparable store sales consist of net sales from
our stores beginning on the first day of the sixteenth full fiscal month
following the store's opening, which is when we believe comparability is
achieved.  Comparable store sales are impacted by the same factors that impact
net sales.

We define comparable stores as stores that:

• have been redeveloped while remaining open;

• are closed for five days or less in a fiscal month;

• are temporarily closed and relocated to their respective catchment areas; and

• have increased, but are not significantly different in size, within their

   current locations.



Non-comparable store sales consist of new store sales and sales for stores not
open for a full 15 months.  Stores which are closed temporarily, but for more
than five days in any fiscal month, are included in non-comparable store sales
beginning in the fiscal month in which the temporary closure begins until the
first full month of operation once the store re-opens, at which time they are
included in comparable store sales.

Opening new stores is the primary component of our growth strategy and as we
continue to execute on our growth strategy, we expect a significant portion of
our sales growth will be attributable to non-comparable store sales.
Accordingly, comparable store sales are only one measure we use to assess the
success of our growth strategy.

Gross profit and gross margin

Gross profit is equal to our net sales less our cost of sales.  Cost of sales
includes merchandise costs, inventory markdowns, shrinkage and transportation,
distribution and warehousing costs, including depreciation. Gross margin is
gross profit as a percentage of our net sales. Gross margin is a measure used by
management to indicate whether we are selling merchandise at an appropriate
gross profit.

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In addition, our gross margin is affected by product line, as some products generally offer higher gross margins, by our product line and availability, and by the cost of our merchandise, which may vary.

Our gross profit is variable in nature and generally follows changes in net
sales.  We regularly analyze the components of gross profit, as well as gross
margin.  Specifically, our product margin and merchandise mix is reviewed by our
merchant team and senior management, ensuring strict adherence to internal
margin goals.  Our disciplined buying approach has produced consistent gross
margins and we believe helps to mitigate adverse impacts on gross profit and
results of operation.

The components of our cost of sales may not be comparable to the components of
cost of sales or similar measures of our competitors and other retailers.  As a
result, our gross profit and gross margin may not be comparable to similar data
made available by our competitors and other retailers.

Selling, general and administrative expenses

SG&A are comprised of payroll and benefits for store, field support and support
center associates.  SG&A also include marketing and advertising expense,
occupancy costs for stores and the store support center, insurance, corporate
infrastructure and other general expenses. The components of our SG&A remain
relatively consistent per store and for each new store opening. The components
of our SG&A may not be comparable to the components of similar measures of other
retailers.  Consolidated SG&A generally increase as we grow our store base and
as our net sales increase. A significant portion of our expenses is primarily
fixed in nature, and we expect to continue to maintain strict discipline while
carefully monitoring SG&A as a percentage of net sales.  We expect that our SG&A
will continue to increase in future periods with future growth.

Depreciation charges

Property and equipment are stated at original cost less accumulated depreciation
and amortization. Depreciation and amortization expenses are calculated over the
estimated useful lives of the related assets, or in the case of leasehold
improvements, the lesser of the useful lives or the remaining term of the lease.
Expenditures for additions, renewals, and betterments are capitalized;
expenditures for maintenance and repairs are charged to expense as incurred.
Depreciation and amortization are computed on the straight-line method for
financial reporting purposes. Depreciation as it relates to our distribution
centers is included within cost of sales on the condensed consolidated
statements of income.

Pre-opening fees

Pre-opening expenses consist of expenses of opening new stores and distribution
centers, as well as store closing costs.  For opening new stores, pre-opening
expenses include grand opening advertising costs, payroll expenses, travel
expenses, employee training costs, rent expenses and store setup costs.
Pre-opening expenses for new stores are expensed as they are incurred, which is
typically within 30 to 45 days of opening a new store. For opening distribution
centers, pre-opening expenses primarily include inventory transportation costs,
employee travel expenses and occupancy costs.  Store closing costs primarily
consist of insurance deductibles, rent and store payroll.

Operating result

Operating income is gross profit less SG&A, depreciation and amortization and
pre-opening expenses.  Operating income excludes net interest income or expense
and income tax expense or benefit.  We use operating income as an indicator of
the productivity of our business and our ability to manage expenses.

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EBITDA and adjusted EBITDA

EBITDA and Adjusted EBITDA are key metrics used by management and our Board to
assess our financial performance.  EBITDA and Adjusted EBITDA are also
frequently used by analysts, investors and other interested parties to evaluate
companies in our industry.  We use Adjusted EBITDA to supplement U.S. generally
accepted accounting principles ("GAAP") measures of performance to evaluate the
effectiveness of our business strategies, to make budgeting decisions, to
evaluate our performance in connection with compensation decisions and to
compare our performance against that of other peer companies using similar
measures.  Management believes it is useful to investors and analysts to
evaluate these non-GAAP measures on the same basis as management uses to
evaluate the Company's operating results.  We believe that excluding items from
operating income, net income and net income per diluted share that may not be
indicative of, or are unrelated to, our core operating results, and that may
vary in frequency or magnitude, enhances the comparability of our results and
provides a better baseline for analyzing trends in our business.

We define EBITDA as net income before net interest income or expense,
depreciation and amortization expenses and income taxes.  Adjusted EBITDA
represents EBITDA as further adjusted for non-cash stock-based compensation
expense.  EBITDA and Adjusted EBITDA are non-GAAP measures and may not be
comparable to similar measures reported by other companies.  EBITDA and Adjusted
EBITDA have limitations as analytical tools, and you should not consider them in
isolation or as a substitute for analysis of our results as reported under GAAP.
In the future we may incur expenses or charges such as those added back to
calculate Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be
construed as an inference that our future results will be unaffected by these
items. For further discussion of EBITDA and Adjusted EBITDA and for
reconciliations of net income, the most directly comparable GAAP measure, to
EBITDA and Adjusted EBITDA, see "Results of Operations."

Factors affecting the comparability of our operating results

Our results over the past two years have been affected by the following factors, which must be understood in order to assess the comparability of our performance and financial condition from period to period.

Historical results

Historical results are not necessarily representative of expected results for a future period.

Store Openings and Closings

We opened 12 and six new stores in the second quarters of fiscal 2021 and fiscal
2020, respectively. In connection with these store openings, we incurred
expenses of $2.5 million and $1.5 million for the second quarters of fiscal 2021
and fiscal 2020, respectively. We opened 23 new stores, including two relocated
stores, in the twenty-six weeks ended July 31, 2021. We opened 23 new stores and
closed two stores, one as planned and one closed temporarily due to smoke damage
from a fire at an adjacent tenant, in the twenty-six weeks ended August 1, 2020.
In connection with these store openings and closings, we incurred expenses of
$5.1 million and $5.3 million for the twenty-six weeks ended July 31, 2021 and
August 1, 2020, respectively.

Seasonality

Our business is seasonal in nature and demand is generally the highest in our
fourth fiscal quarter due to the holiday sales season.  To prepare for the
holiday sales season, we must order and keep in stock more merchandise than we
carry during other times of the year and generally engage in additional
marketing efforts.  We expect inventory levels, along with accounts payable and
accrued expenses, to reach their highest levels in our third and fourth fiscal
quarters in anticipation of increased net sales during the holiday sales
season.  As a result of this seasonality, and generally because of variation in
consumer spending habits, we experience fluctuations in net sales and working
capital requirements during the year.  Because we offer a broad selection of
merchandise at extreme values, we believe we are less impacted than other
retailers by economic cycles which correspond with declines in general consumer
spending habits and we believe we still benefit from periods of increased
consumer spending.

Results of operations

The following tables summarize the key elements of our operating results for the periods indicated, both in dollars and as a percentage of our net sales.

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We derived the condensed consolidated statements of income for the thirteen and
twenty-six weeks ended July 31, 2021 and August 1, 2020 from our unaudited
condensed consolidated financial statements and related notes.  Our historical
results are not necessarily indicative of the results that may be expected in
the future.

                                              Thirteen weeks ended           Twenty-six weeks ended
                                            July 31,       August 1,        July 31,        August 1,
                                              2021            2020            2021             2020
                                                             ( dollars in thousands)
Condensed consolidated statements of
income data:
Net sales                                  $  415,881      $  529,313     $    868,373      $  878,676
Cost of sales                                 252,846         322,471          522,728         531,468
Gross profit                                  163,035         206,842          345,645         347,208
Selling, general and administrative
expenses                                      110,119         109,149          214,489         198,869
Depreciation and amortization expenses          4,669           4,122            9,153           8,066
Pre-opening expenses                            2,541           1,545            5,076           5,267
Operating income                               45,706          92,026          116,927         135,006
Interest expense (income), net                     66             (26 )             41            (109 )
Income before income taxes                     45,640          92,052          116,886         135,115
Income tax expense (benefit)                   11,317          (7,331 )         27,343           2,276
Net income                                 $   34,323      $   99,383     $     89,543      $  132,839
Percentage of net sales (1):
Net sales                                       100.0 %         100.0 %          100.0 %         100.0 %
Cost of sales                                    60.8            60.9             60.2            60.5
Gross profit                                     39.2            39.1             39.8            39.5
Selling, general and administrative
expenses                                         26.5            20.6             24.7            22.6
Depreciation and amortization expenses            1.1             0.8              1.1             0.9
Pre-opening expenses                              0.6             0.3              0.6             0.6
Operating income                                 11.0            17.4             13.5            15.4
Interest expense (income), net                      -               -                -               -
Income before income taxes                       11.0            17.4             13.5            15.4
Income tax expense (benefit)                      2.7            (1.4 )            3.1             0.3
Net income                                        8.3 %          18.8 %           10.3 %          15.1 %
Select operating data:
New store openings                                 12               6               23              23
Number of closed stores                             -               -               (2 )            (2 )
Number of stores open at end of period            409             366              409             366
Average net sales per store (2)            $    1,024      $    1,454     $      2,173      $    2,441
Comparable stores sales change                  (28.0 )%         43.3 %     

(9.3)% 20.2%

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(1) Items may not add to totals due to rounding.

(2) Average net sales per store represent the weighted average of total net sales

weekly sales divided by the number of stores open at the end of each week for

     the respective periods presented.



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The following table provides a reconciliation of our net income to Adjusted EBITDA for the periods presented:

                                                 Thirteen weeks ended            Twenty-six weeks ended
                                              July 31,         August 1,        July 31,        August 1,
                                                2021             2020             2021             2020
                                                                ( dollars in thousands)
Net income                                   $    34,323      $    99,383     $     89,543      $  132,839
Interest expense (income), net                        66              (26 )             41            (109 )
Depreciation and amortization expenses (1)         6,094            5,653           12,012          11,063
Income tax expense (benefit)                      11,317           (7,331 )         27,343           2,276
EBITDA                                            51,800           97,679          128,939         146,069
Non-cash stock-based compensation expense          2,312            1,727            4,332           3,046
Adjusted EBITDA                              $    54,112      $    99,406     $    133,271      $  149,115


(1) Includes depreciation and amortization relating to our distribution centers,

     which is included within cost of sales on our condensed consolidated
     statements of income.


Second quarter of fiscal 2021 vs. second quarter of fiscal 2020

Net sales

Net sales decreased to $415.9 million in the second quarter of fiscal 2021 from
$529.3 million in the second quarter of fiscal 2020, a decrease of $113.4
million, or 21.4%.  The decrease was the result of a comparable store sales
decrease of $139.4 million offset by an increase in non-comparable store sales
of $26.0 million.  The increase in non-comparable store sales was driven by new
store unit growth.

Comparable store sales decreased 28.0% in the second quarter of fiscal 2021
compared with a 43.3% increase in the second quarter of fiscal 2020.  In the
second quarter of fiscal 2020, we benefited from increased consumer spending
associated with federal economic stimulus funds for the COVID-19 pandemic and
having our stores open during the quarter while other retailers were closed for
a portion of the period.

The decrease in comparable store sales in the quarter consisted of a decrease in
both the number of transactions and average transaction size.  Sales in our
health and beauty aids and housewares departments significantly decreased during
the quarter due to a surge of COVID-related personal protective equipment and
cleaning supplies sales in the prior year.

Gross profit and gross margin

Gross profit decreased to $163.0 million in the second quarter of fiscal 2021
from $206.8 million in the second quarter of fiscal 2020, a decrease of $43.8
million, or 21.2%. Gross margin increased 10 basis points to 39.2% in the second
quarter of fiscal 2021 from 39.1% in the second quarter of fiscal 2020.  The
increase in gross margin in the second quarter of fiscal 2021 is due to
improvement in the merchandise margin, partially offset by deleveraging of
supply chain costs, primarily the result of higher transportation expenses.

Selling, general and administrative expenses

SG&A increased to $110.1 million in the second quarter of fiscal 2021 from
$109.1 million in the second quarter of fiscal 2020, an increase of $1.0
million, or 0.9%, primarily driven by an increased number of stores and
partially offset by tight expense controls throughout the organization.  As a
percentage of net sales, SG&A increased 590 basis points to 26.5% in the second
quarter of fiscal 2021 from 20.6% in the second quarter of fiscal 2020.  The
increase was primarily due to significant deleveraging as a result of the
decrease in sales.

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Pre-opening fees

Pre-opening expenses for new stores increased to $2.5 million in the second
quarter of fiscal 2021 from $1.5 million in the second quarter of fiscal 2020
due to the comparative number and timing of new stores.  We opened 12 and six
new stores in the second quarters of fiscal 2021 and fiscal 2020, respectively.
As a percentage of net sales, pre-opening expenses increased 30 basis points to
0.6% in the second quarter of fiscal 2021 from 0.3% in the second quarter of
fiscal 2020.

Income tax expense (Advantage)

Income tax expense in the second quarter of fiscal 2021 was $11.3 million
compared to income tax benefit of $7.3 million in the second quarter of fiscal
2020.  The effective tax rates for the second quarters of fiscal 2021 and fiscal
2020 were 24.8% and (8.0)%, respectively.  The variance in the effective tax
rates in the quarters was primarily due to a significant decrease in excess tax
benefits related to stock-based compensation.  The prior year effective tax rate
was impacted by tax benefits due to the exercise of stock options by the estate
of the Company's former chief executive officer.  Discrete tax benefits totaled
$0.4 million and $30.5 million in the second quarter of fiscal 2021 and the
second quarter of fiscal 2020, respectively.

Net revenue

As a result of the above, net profit decreased to $ 34.3 million in the second quarter of fiscal year 2021 of $ 99.4 million in the second quarter of fiscal 2020, a decrease of $ 65.1 million or 65.5%.

Adjusted EBITDA

Adjusted EBITDA decreased to $54.1 million in the second quarter of fiscal 2021
from $99.4 million in the second quarter of fiscal 2020, a decrease of $45.3
million, or 45.6%.

Twenty-six weeks 2021 versus twenty-six weeks 2020

Net sales

Net sales decreased to $868.4 million in the twenty-six weeks ended July 31,
2021 from $878.7 million in the twenty-six weeks ended August 1, 2020, a
decrease of $10.3 million, or 1.2%.  The decrease was the result of a comparable
store sales decrease of $77.0 million and a non-comparable store sales increase
of $66.7 million.  The increase in non-comparable store sales was driven by new
store unit growth and strong new store performance.

Comparable store sales decreased 9.3% in the twenty-six weeks ended July 31,
2021 compared with a 20.2% increase in the twenty-six weeks ended August 1,
2020.  In fiscal 2020, we benefited from increased consumer spending associated
with federal economic stimulus funds for the COVID-19 pandemic and having our
stores open while other retailers were closed for a portion of the period.

The decrease in comparable store sales in the twenty-six weeks ended July 31,
2021 consisted of a decrease in both the number of transactions and average
transaction size.  Sales in our health and beauty aids and housewares
departments significantly decreased in the twenty-six weeks ended July 31, 2021
due to a surge of COVID-related personal protective equipment and cleaning
supplies sales in the prior year.

Gross profit and gross margin

Gross profit decreased to $345.6 million in the twenty-six weeks ended July 31,
2021 from $347.2 million in the twenty-six weeks ended August 1, 2020, a
decrease of $1.6 million, or 0.5%. Gross margin increased 30 basis points to
39.8% in the twenty-six weeks ended July 31, 2021 from 39.5% in the twenty-six
weeks ended August 1, 2020.  The increase in gross margin in the twenty-six
weeks ended July 31, 2021 is due to improvement in the merchandise margin,
partially offset by increases in and deleveraging of supply chain costs,
primarily the result of higher transportation expenses.

Selling, general and administrative expenses

SG&A increased to $214.5 million in the twenty-six weeks ended July 31, 2021
from $198.9 million in the twenty-six weeks ended August 1, 2020, an increase of
$15.6 million, or 7.9%, primarily driven by an increased number of stores and
partially offset by tight expense controls throughout the organization.  As a
percentage of net sales, SG&A increased 210 basis points to 24.7% in the
twenty-six weeks ended July 31, 2021 from 22.6% in the twenty-six weeks ended
August 1, 2020.  The increase was primarily due to a significant deleveraging as
a result of the decrease in sales.

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Pre-opening fees

Pre-opening expenses for new stores decreased to $5.1 million in the twenty-six
weeks ended July 31, 2021 from $5.3 million in the twenty-six weeks ended August
1, 2020 due to the comparative number and timing of new stores.  During the
twenty-six weeks ended July 31, 2021, we opened 23 stores, including two
relocated stores. During the twenty-six weeks ended August 1, 2020, we opened 23
stores and closed two stores, one as planned and one closed temporarily due to
smoke damage from a fire at an adjacent tenant.  As a percentage of net sales,
pre-opening expenses were 0.6% in both the twenty-six weeks ended July 31, 2021
and August 1, 2020.

Income Tax Expense

Income tax expense in the twenty-six weeks ended July 31, 2021 was $27.3 million
compared to income tax expense of $2.3 million in the twenty-six weeks ended
August 1, 2020.  The effective tax rates for the twenty-six weeks ended July 31,
2021 and August 1, 2020 were 23.4% and 1.7%, respectively. The variance in the
effective tax rates in the twenty-six week periods was primarily due to a
significant decrease in excess tax benefits related to stock-based
compensation.  The prior year effective tax rate was impacted by tax benefits
due to the exercise of stock options by the estate of the Company's former chief
executive officer.  Discrete tax benefits totaled $2.5 million and $31.7 million
in the twenty-six weeks ended July 31, 2021 and the twenty-six weeks ended
August 1, 2020, respectively.

Net revenue

As a result of the above, net profit decreased to $ 89.5 million within the twenty-six weeks completed July 31, 2021 of $ 132.8 million within the twenty-six weeks completed August 1, 2020, a decrease in $ 43.3 million or 32.6%.

Adjusted EBITDA

Adjusted EBITDA decreased to $133.3 million in the twenty-six weeks ended July
31, 2021 from $149.1 million in the twenty-six weeks ended August 1, 2020, a
decrease of $15.8 million, or 10.6%.

Liquidity and capital resources

Overview

Our primary sources of liquidity are net cash flows provided by operating
activities and available borrowings under our revolving credit facility
("Revolving Credit Facility").  Our primary cash needs are for capital
expenditures and working capital.  As of July 31, 2021, we had $88.6 million
available to borrow under our Revolving Credit Facility and $444.3 million of
cash and cash equivalents on hand. For further information regarding our
Revolving Credit Facility, see Note 6 under "Notes to Unaudited Condensed
Consolidated Financial Statements."

Our capital expenditures are primarily related to new store openings, store
resets, which consist of improvements to stores as they are needed, expenditures
related to our distribution centers, and infrastructure-related investments,
including investments related to upgrading and maintaining our information
technology systems.  We spent $8.2 million and $5.7 million for capital
expenditures during the second quarters of fiscal 2021 and fiscal 2020,
respectively. For the twenty-six weeks ended July 31, 2021, we spent $17.7
million for capital expenditures compared to $18.1 million for the twenty-six
weeks ended August 1, 2020. We expect to fund capital expenditures from net cash
provided by operating activities. We opened 23 new stores including two
relocated stores during the twenty-six weeks ended July 31, 2021 and expect to
open approximately 46 to 47 stores during 2021. However, we may experience
delays in construction and permitting of new stores due to COVID-19.

Historically, we have funded our capital expenditures and working capital requirements during the year with cash flow from operations.

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Our primary working capital requirements are for the purchase of inventory,
payroll, rent, other store operating costs, distribution costs and general and
administrative costs.  Our working capital requirements fluctuate during the
year, rising in our third fiscal quarter as we increase quantities of inventory
in anticipation of our peak holiday sales season in our fourth fiscal quarter.
Fluctuations in working capital are also driven by the timing of new store
openings.

Based on our new store growth plans, we believe our cash and cash equivalents
position, net cash provided by operating activities and availability under our
Revolving Credit Facility will be adequate to finance our planned capital
expenditures, working capital requirements, debt service and other financing
activities over the next 12 months.  If cash provided by operating activities
and borrowings under our Revolving Credit Facility are not sufficient or
available to meet our capital requirements, we will then be required to obtain
additional equity or debt financing in the future.  There can be no assurance
equity or debt financing will be available to us when needed or, if available,
the terms will be satisfactory to us and not dilutive to our then-current
stockholders.

We are not currently receiving, and do not currently intend to apply for, loans
under any federal or state programs implemented as a result of the COVID-19
pandemic, including the Coronavirus Aid, Relief, and Economic Security (CARES)
Act.

Share Repurchase Program

On March 26, 2019, the Board of Directors of the Company authorized the
repurchase of up to $100.0 million of shares of our common stock.  This initial
tranche expired on March 26, 2021.  The Board authorized the repurchase of
another $100.0 million of our common stock on December 15, 2020 and a $100.0
million increase on March 16, 2021, resulting in $200.0 million approved for
share repurchases through January 13, 2023.  The shares to be repurchased may be
purchased from time to time in open market conditions (including blocks),
privately negotiated transactions, accelerated share repurchase programs or
other derivative transactions, issuer self-tender offers or any combination of
the foregoing.  The timing of repurchases and the actual amount purchased will
depend on a variety of factors, including the market price of our shares,
general market, economic and business conditions, and other corporate
considerations.  Repurchases may be made pursuant to plans intended to comply
with Rule 10b5-1 under the Securities Exchange Act of 1934, which could allow us
to purchase our shares during periods when we otherwise might be prevented from
doing so under insider trading laws or because of self-imposed trading blackout
periods.  Repurchases are expected to be funded from cash on hand or through the
utilization of our Revolving Credit Facility.  The repurchase authorization does
not require the purchase of a specific number of shares and is subject to
suspension or termination by our Board of Directors at any time.

During the twenty-six weeks ended July 31, 2021, we repurchased 430,178 shares
of our common stock for $35.3 million, inclusive of transaction costs, pursuant
to our share repurchase program. We made no share repurchases during the
twenty-six weeks ended August 1, 2020.  These expenditures were funded by cash
generated from operations.  As of July 31, 2021, we had $164.7 million remaining
under our share repurchase authorization.

Subsequent to July 31, 2021 through August 30, 2021, we invested $36.4 million,
inclusive of transaction costs, to repurchase an additional 464,857 shares of
our common stock, resulting in $128.3 million remaining under our share
repurchase authorization. There can be no assurances that any additional
repurchases will be completed, or as to the timing or amount of any repurchases.

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