管理層發言
Good morning, and welcome to Ollie's Bargain Outlet's conference call to discuss financial results for the second quarter of fiscal year 2025. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without the expressed written authorization of Ollie's. Joining today's call from Ollie's management are Eric van der Valk, President and Chief Executive Officer; and Robert Helm, Executive Vice President and Chief Financial Officer. Certain comments made on today's call may constitute forward-looking statements, and these are made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in the company's earnings press release and filings with the SEC, including the annual report on Form 10-K and quarterly reports on Form 10-Q. Forward-looking statements made today are as of the date of this call, and the company does not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non-GAAP financial measures. Reconciliation of those most closely comparable GAAP financial measures to the non-GAAP financial measures are included in the company's earnings press release. With that, I will now turn the call over to Mr. van der Valk. Please go ahead, sir.
Good morning. Thank you for joining us today. We had a very strong second quarter, and we are operating with the wind in our sails. New store openings, total sales, comparable store sales, and adjusted earnings were all ahead of our expectations, and we are raising our full year outlook across the board. Our performance in the quarter is the result of the hard work and commitment of our entire team. We are driving the business to new heights through improved planning, coordination and execution across the organization. We are delivering against our strategic priorities, laying the groundwork for future growth and driving strong consistent results. With so many retailers closing stores or going bankrupt in the past year, there is an opportunity to gain market share through expanding our footprint, acquiring new customers and turning these customers into loyal Ollie's Army members. This is our flywheel, our formula for growth, and we are all over it. Everyone loves a bargain, and it is our mandate to bring great deals to consumers from coast to coast. We have a tremendous opportunity ahead to continue opening new stores and gain market share. This is not growth at any cost, however. We are committed to profitable growth, and we are able to do this through a flexible store model that can be adapted to generate strong returns across different geographies, demographics, and store spaces. In the first 6 months of the year, we opened 54 new stores. This is over 4 times the number of stores we opened in the same period last year. And in just 6 months, we have exceeded our previous full year unit growth high watermark. During the second quarter, we celebrated the opening of our 600th store in New Hampshire and entered our 33rd and 34th states. Our new stores continue to perform ahead of our expectations and are benefiting from a number of factors, including improved planning and execution, a soft opening schedule, and what we call the warm box dynamic. We are committed to delivering double-digit annual unit growth moving forward and have invested in the necessary people and processes to deliver this. The bankruptcy filing and subsequent store closures of a number of retailers over the past year have provided a unique opportunity to pick up additional stores that are well suited for our business model. The team has done an excellent job prioritizing the opening of these locations while advancing our pipeline of organic store openings, and we are ahead of plan for the first half. As a result, we are raising our new store target and now expect to open an additional 10 stores for a total of 85 this year. We are equally focused on new customer acquisition and demonstrating our deep appreciation for our most loyal customers. We have some of the most dedicated and passionate customers in this business, and there is an opportunity to strengthen this connection and grow lifetime value. Ollie's Army members shop more frequently and spend over 40% more per visit than nonmembers. They account for more than 80% of our sales and are now more than 16 million strong. This is a devoted group of deal-seeking bargain hunters who take pride in saving money. We are fiercely committed to serving this group and enhancing the value proposition of the Ollie's Army program. We made a deliberate and strategic change in the second quarter that did just that. We revamped our annual Ollie's Days event to include an exclusive member-only shopping night, and we limited the promotions for the week to Ollie's Army members. By all accounts, the reimagined event was a huge success and exceeded all expectations. First and most importantly, we rewarded our Ollie's Army members and acquired an abundance of new members. Second, the event was accretive to sales and earnings. Before I turn the call over to Rob, let me quickly call out 2 other company milestones. Ollie's celebrated its 43rd year in business last month. The company opened its first store in Mechanicsburg, Pennsylvania in July of 1982. We also celebrated our 10-year anniversary as a public company and learned that Ollie's is one of the best-performing retail IPOs over a 10-year period since NASDAQ began tracking this in 2014. We appreciate our shareholders for putting their trust in us for the past 10 years. We also value our partners who make this business happen, especially our merchandise suppliers, vendors, and manufacturers. We greatly appreciate the deep and long-lasting relationships. Now let me turn the call over to Rob.
Thanks, Eric, and good morning, everyone. We are very pleased with our second quarter results and the continued momentum in our business. New store openings, new store performance, comparable store sales, total sales, and earnings were all ahead of our expectations for the quarter, and we're raising our sales and earnings outlook for the fiscal year. Accelerating new unit growth and expanding the Ollie's Army loyalty program are 2 big priorities this year. We are delivering on both of these initiatives. We opened 29 new stores in the second quarter and ended the period with a total of 613 stores, an increase of 17% year-over-year. Both our new store openings and new store performance were ahead of our plans for the quarter and first half of the year. Eric spoke to a number of changes to our Ollie's Days event in June. These and other enhancements to our loyalty program are working. We drove strong customer acquisition in a way that benefited sales and protected margin. Ollie's Army members increased 10.6% to 16.1 million, and we estimate that the revamped Ollie's Days event added approximately 100 basis points to comp store sales in the quarter. Now let me run you through our P&L numbers. Net sales increased 18% to $680 million, driven by new store openings and comparable store sales growth. Comparable store sales increased 5% and was driven by an increase in transactions. We saw strong demand for consumer staples throughout the quarter, and demand for seasonal items accelerated as the weather normalized in June and July. Our top 5 performing categories were lawn and garden, hardware, food, housewares, and domestics. Gross margin increased 200 basis points to 39.9%, and this was better than our expectations. Lower supply chain costs and higher merchandise margins were the primary drivers of the increase. Benefiting merchandise margins in the quarter was strong deal flow and lower shrink. SG&A expense as a percentage of net sales increased 60 basis points to 25.8%, driven primarily by higher medical and casualty claims as well as slightly higher store labor expenses. Consistent with the trends we experienced in Q1, the higher medical expenses were from an unusually high number of severe medical cases. This is not typical for us, and we expect medical expenses to work their way back down as these cases are resolved. Preopening expenses were $9 million in the quarter. Most of the $4 million increase was from the higher number of new store openings this year. We opened 29 stores in the quarter compared to 9 last year. Dark rent associated with the bankruptcy acquired stores was $2.3 million, which was also a factor in the year-over-year increase. Moving down to the bottom line, adjusted net income was $61 million and adjusted earnings per share increased 26.9% to $0.99 for the quarter. Lastly, adjusted EBITDA increased 26% to $94 million and adjusted EBITDA margin increased 90 basis points to 13.8% for the quarter. Let me also take a moment to comment on our balance sheet. Given the nature of our business, the strength of our balance sheet is a strategic asset. Our financial stability, the visibility of being a public company, and our size and scale truly differentiates us in the closeouts and off-price space. As a result, we are committed to maintaining a fortress type of balance sheet going forward because it helps drive our business. For the quarter, our total cash and investments increased by 30% or over $100 million to $460 million, and we had no meaningful long-term debt at quarter end. Inventories increased 20% year-over-year, primarily driven by our accelerating store growth and higher in-transit inventory. Capital expenditures totaled $26 million for the quarter, with the majority of the spending going towards the opening of new stores, the build-out of the bankruptcy acquired stores, and to a lesser degree, investments in both our supply chain and existing stores. We bought back $12 million worth of our common stock in the quarter and had $304 million remaining under our current share repurchase authorization at the end of the quarter. Lastly, let me run through our outlook for fiscal year 2025. We are raising both our sales and earnings outlook for the full year. Our revised outlook flows through the upside in our first half results and raises our comparable store sales outlook for the third quarter, given the momentum in our business. Our updated outlook also assumes the current tariffs remain in place for the balance of the year. Our updated guidance figures are contained in the table in our earnings release posted this morning and include 85 new store openings, net sales of $2.631 billion to $2.644 billion, comparable store sales growth of 3% to 3.5%, gross margin in the range of 40.3%, operating income of $292 million to $298 million, and adjusted net income and adjusted earnings per share of $233 million to $237 million and $3.76 to $3.84, respectively. These estimates assume depreciation and amortization expenses of $54 million, inclusive of $14 million within cost of goods sold, preopening expenses of $23 million, which includes dark rent of approximately $5 million related to the acquired Big Lots locations, an annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock-based compensation, diluted weighted average shares outstanding of approximately 62 million and capital expenditures of $83 million to $88 million, which includes the build-out of the former Big Lots locations. As far as the quarterly comps are concerned, we now think our third quarter comp growth could be above our long-term algorithm of 1% to 2%. We are leaving our fourth quarter numbers in place for the moment as we generally do not update more than 1 quarter ahead at a time. This puts us in the range of 3% in the third quarter and leaves us just below 2% in the fourth quarter. For the remaining new stores, the large majority of these are planned to open in the third quarter. In closing, we are taking advantage of the unique opportunity in this moment to gain market share through accelerated unit growth and enhancements to our Ollie's Army program to aggressively go after these abandoned customers up for grabs. Our actions are clearly working. We are strengthening our competitive positioning, broadening our footprint and setting us up to drive strong shareholder returns for the years to come. Now let me turn the call back to Eric.
Thanks, Rob. This is a very exciting time for Ollie's. We are delivering extraordinary value to consumers. We are accelerating our unit growth. We are doubling down on customer acquisition. We are delivering profitable growth and consistent financial results. And most importantly, we are Ollie's. Carmen, we are ready for questions.
分析師問答
It comes from the line of Matthew Boss with JPMorgan.
Congrats on a really nice quarter, and you killed the chance this morning. So Eric, could you elaborate on the improving cadence of comp as the second quarter progressed and maybe speak to trends that you've seen in August? And then with the wind in your sails, as you cited, what are you seeing from deal flow given the tariff disruption? Or maybe how would you characterize the state of the closeout industry today?
Great. Yes. Thanks, Matt. I'll cover deal flow and Rob can cover the cadence of comp for the quarter. I feel like a broken record because the answer is always deal flow is strong. It's always strong. There are so many different sources of closeouts in any given quarter. In this particular quarter, as everyone is aware, our model thrives on disruption. Tariffs have created uncertainty in the market, which is disruptive. This has resulted in additional buying opportunities. The retail bankruptcies and store closures have certainly resulted in additional buying opportunities. Some of this is abandoned product that was made for these retailers. And then we're starting to see abandoned product pipelines as well, which are typically very good for us long term. Those are sometimes new relationships or growth of some of our existing relationships. So they tend to be sticky and very good for the pipeline on a long-term basis. And just to remind everyone, our inventory was up 20% at the end of Q2, which is a pretty strong indicator of strong deal flow.
On the quarterly cadence of comps, as you might recall from our Q1 call, May got off to a slow start. We were essentially flat for the month of May. June began to accelerate and includes the upside that we mentioned relative to the Ollie's Army Night on our prepared remarks. And July was, in fact, the strongest month of the quarter for us.
Our next question comes from the line of Peter Keith with Piper Sandler.
Great results. I want to dig into the Ollie's Army Night from Q2. And maybe comparing it to the traditional December Ollie's Army Night, were there any differences or call-outs as it related to the sales lift or new member adds? And then just any general learnings from that event and how you might think about future events.
Sure, Peter. Thanks for the question. We were very excited about the event moving into it, and we are very pleased with what ended up happening with the reimagined Ollie's Days event. It surpassed all of our expectations on every level. It drove record-setting customer engagement and Ollie's Army acquisition, and Rob will take us through the numbers in a minute. The Ollie's Army members are a very passionate group who take great pride in saving money, and they just very much appreciated the additional private shopping event. Most stores had very long lines when we opened the doors. I know here in Harrisburg, it was close to 200 people that were waiting to get in, which was super exciting. The organization executed the event very well in every discipline of the company. We did learn a few things to the point of your question, Peter, that we will apply moving forward, whether it's to the Ollie's Army Night in December or some insights into how our customers think about the benefits of the program. Not ready yet to expand on that because we're finalizing some plans and preparing communication to customers, and you'll hear it alongside when our customers receive that communication.
And in terms of the financials, if you recall, we went into this event with pretty muted expectations. We were doing this purely as an enhancement and for customer acquisition, not for a short-term gain in our P&L. The sales exceeded all of our expectations by far, and we talked about it driving 100 basis points of comp to the quarter. From a gross margin perspective, it was very neutral to our gross margin for the quarter, and we're really pleased about where our gross margins ended up for the full quarter. In terms of customer acquisition, our customer acquisition for the week was up almost 60%. So that well outpaced our sales gain from the event. And the last thing that I would end off with is we were very nicely surprised with how it performed in respect to the December night, where the sales actually exceeded the December night, which we felt was awesome considering we are not in a peak holiday moment.
Our next question comes from the line of Chuck Grom with Gordon Haskett.
Congrats, guys. I love the energy this morning. Hoping we peak ahead to 2026 a bit and how you're thinking about store growth. And I guess more broadly, earnings power. It seems to me that $4.50 to $5 is certainly an achievable number. And maybe, Rob, can you talk about the opportunities for gross margins over the next couple of years and how you see it flowing?
Sure. Thanks, Chuck. I'll take the store growth piece, and Rob will speak to earnings power. We're committed to delivering the 10% annual unit growth. It's our long-term algorithm on a go-forward basis. We acknowledge that there are moments in time where we may have opportunities to outpace that 10% unit growth target and flex up. And we're in one of those moments with the bankruptcies and store closures and the market share opportunity, we've been able to accelerate, and it doesn't take that off the table in future years to potentially consider. When you look into 2026, there are sufficient opportunities out there to continue to drive accelerated growth. And we would expect another year of elevated openings. We'll provide more color specifically on that in the Q3 call.
In terms of earnings power, Chuck, we don't get too ahead of ourselves, so I'm not going to give too much in terms of concrete numbers today. But what I would say is we're starting in the back half of this year, we're going to start to see the benefits of higher and earlier openings over the past 12 calendar months. We've opened 88 stores at this point. And that will flow through the second half and the annualization will be a big impact for earnings growth for 2026, as well as potentially another year of elevated growth, as Eric refers to. We will also gain some leverage of not having to incur the dark rent for the bankruptcy acquired stores, as well as improving trends in medical and casualty as some of those costs are transitory for this year. In terms of gross margin, we haven't really rethought the algorithm in terms of going above 40%. We are guiding to above 40% for this year, but that's really a product of how we performed year-to-date and not a change to the long-term algorithm. What does this mean for 2026 earnings? Assuming no radical changes to the current environment, it potentially looks like double-digit top-line growth that translates into faster growth on the bottom line in the mid-teens.
Comes from the line of Brad Thomas with KeyBanc Capital Markets.
Great quarter here. I wanted to follow up maybe a little bit off of the last question from Chuck and just ask about the SG&A side of things. And could you help us think a little bit about SG&A leverage, both in the back half and how that may feed into the long-term algorithm? And then perhaps, Eric, I could sneak in kind of a high-level one for you. The quarter was really interesting with you changing some kind of long-standing practices from Ollie's that seem to work very well. And I was wondering if you could just talk a little bit about maybe some cultural changes and the willingness to maybe look for new opportunities like that.
I'll take the first part, Brad. We're really excited about how we're executing right now and hitting all our core marks, the value proposition, store openings, accelerated growth, customer acquisition, you name it. Unforeseen costs happen from time to time, and that's what we're seeing with medical and casualty right now. While these costs are putting a little pressure on our first half SG&A, they don't structurally change how we think about our long-term algorithm or how we're managing this business. So when we come into the back half, we do have put a provision for higher medical in the back half, but we are up against some higher expenses in the back half of last year, specifically executive compensation leading up to the leadership transition last year, some of our pursuit expenses around Big Lots. So we had planned to leverage and we do plan to leverage in the back half, and we feel comfortable about delivering our guidance for the full year.
I appreciate your question. This is an excellent business model with a strong foundation and significant competitive advantages. As we rethink our approach moving forward, we will make some tweaks and adjustments to ensure our business remains highly relevant to consumers. Our priority is our commitment to Ollie's Army members and welcoming new members into the program. Recently, we've focused on enhancing the Ollie's Army program and on acquiring and retaining participants. However, we are open to all options, as the model remains impressive. As we aim for continuous improvement, these adjustments will largely involve minor changes. Regarding our culture, we at Ollie's are deeply passionate about it. Having a clear understanding of our identity and teamwork is foundational to our success. Much of our core cultural values originate from our founders, forming part of the legacy they left us. While it may be slightly modernized now compared to 43 years ago, it still retains the essence of our founders, which has contributed to our success. We have improved our communication around these values, both internally and externally, which has been beneficial for us.
Our next question comes from Steven Zaccone with Citi.
Our question was on new store economics. Can you just talk about how some of the new stores are performing, how these new stores compare to prior cohorts since you've accelerated the unit growth? And then just given the acceleration in store growth, at what point will you need a new distribution center?
I'll take the first part. Eric will take the second part. We have some of the strongest new store economics in the business, which have been very stable over time. We've long said that our model is portable, profitable, and predictable. The model is also flexible, which allows us to open and operate different sized stores across a wide range of demographics and geographies, all while maintaining mid-teens 4 walls and strong payback periods. The other strength of our model is our fortress balance sheet and our ability to generate strong cash flows. We can use this strong capital position to opportunistically fund our growth in whatever manner generates the highest rate of return, as was the case with the bankruptcy acquired stores. So in terms of the current cohort of stores we're opening this year, they're nicely performing above plan as a group. And I would say that the payback periods for the organic openings are very consistent with what we've seen in the past. The payback periods for the bankruptcy acquired stores are a little bit longer because there's upfront costs in terms of the dark rent component and the build-out costs that we're now on the hook for. But all in all, we're very pleased with the openings for this year.
On the DC question, Steve, we have the ability to expand our distribution center in both Texas and in Illinois. And we do plan to expand both those buildings in the coming, call it, 18 months, give or take. So each building's expansion is approximately 200,000 feet and adds another 50 stores of service for a total of 100 stores, which takes us somewhere in the, say, mid-800s in terms of total capacity from a store count standpoint. The fifth building, just to answer the question specifically, is 3-plus years out, so call it 3 to 4 years out. And we'll update, provide more color most likely on the Q4 call as to what that road map looks like a little bit more concretely.
Our next question is from Kate McShane with Goldman Sachs.
We just wondered how did the customer acquisition look from the Ollie's Army Night? Just you've indicated you were reaching a broader consumer with a younger cohort over the last couple of quarters. Did the Ollie's Army Night reflect this at all?
I'll answer this one, Kate. We didn't see much of a differential in what we saw in the rest of the quarter in the Ollie's Army Night results. For the quarter, our new customers were up across, I would say, mid-upper income and higher income levels reflective of trade down. And then in the existing customers, the biggest trend that we saw, which is a long-term trend that we're seeing, is our customer file is getting younger in the existing customer base as our digital strategies are really taking hold and driving that cohort.
If we could just ask a second question, and this kind of mirrors an earlier question about culture. Eric, you spent a lot of time working and refining the supply chain at Ollie's before you became CEO. I was wondering if you could talk through how some of that work is resulting in the strength and what you're seeing with the business today.
Yes, absolutely. We're very proud of our achievements in the supply chain. We have four distribution centers that are operating with strong momentum, particularly our Princeton, Illinois center, which we recently celebrated the anniversary of its opening and the automation we've implemented there. This is a crucial foundation we've built for future growth. We have also made several changes in transportation over the past few years, particularly in how we procure international freight, which have yielded positive results. Now we have the capacity to meet the business's needs effectively and economically, which wasn't the case a few years ago. Culture is the most important element for our success and for motivating our team, and it begins with our commitment to serving customers on a tight budget who appreciate the values we provide. We're dedicated to this mission and to each other, which applies equally to our distribution centers, our stores, and our support center in Harrisburg. We understand the importance of delivering for our customers, and we genuinely care about our consumers.
Our next question comes from Scot Ciccarelli with Truist.
Two questions. First, can you provide us an update on what you're seeing at your Ollie's stores that were in a similar market to Big Lots stores that have been closed? And then secondly, historically, you guys had a bit of a reverse new store waterfall process where new stores would open really strong with your grand openings and then you'd incur a bit of a comp drag as that store moved into the comp base. Just given this year's unit acceleration, is that something we should be thoughtful of as we roll into '26?
Sure. This is Rob. I'll take this one, Scot. We're excited about our performance that we're seeing in the stores where the Big Lots were closed. This is the first full quarter that has not been impacted by some type of store closing from the Big Lots chain. So we're starting to see the trends a little more clearly. The best performers out of where Big Lots closed are the overlapping stores where they closed and have not reopened. That's, call it, 290-ish stores. In the stores where the Big Lots has reopened, those stores are still performing well. With a 5% comp, it's a little hard to separate the standouts from the underperformers, though. So I would say in that 290 store set, we're seeing between the low single-digit to mid-single-digit comp above the balance of the chain. That's holding in place as we've discussed in the past. From a new store waterfall perspective, our new stores are performing really well. The vast majority of our stores this year are performing over plan. We're not sure about what it means about the reverse waterfall yet because we're only a year or so into these bankruptcy acquired stores in these warm boxes where we made the approach change to our soft opening cadence. So we're watching the data. We're looking at it, but we're going to study it in the back half, and we'll have updates as we go along.
And it comes from Steven Shemesh with RBC Capital Markets.
Nice results. Just wanted to circle back on the comp. So strong result and with May being flat and improving throughout the quarter, it sounds like the exit rate was in the high single-digit, low double-digit range. So as we just try to kind of triangulate 3Q being in the 3% range off of an easier compare. I'm just curious, have you seen anything different quarter-to-date? Is there anything to keep in mind from a compare perspective? Or is there just a lot of quarter left?
There's certainly a lot of quarter left, and we typically have a pretty conservative approach to how we guide, remaining in the 1% to 2% long-term algorithm. Us signaling today the 3% certainly shows that we believe that we have the wind in our sails, and we're operating with good momentum right now. And you're very accurate on the exit rate on Q2. That's right about where we were at.
Got it. Okay. That's very helpful. And then just a bigger picture question on gross margin and understand that the baseline is 40%. But as we think about what's changed over the last handful of years, supply chain costs peaked up during the pandemic, and they've since been coming down, still running above pre-pandemic levels, but you are running above that 40% gross margin now. So I guess on the quarter and then just bigger picture, like what has changed from a merchandising margin perspective that's allowed you to over-deliver despite the higher supply chain costs?
Yes. Thanks, Steve. Our size and scale remain significant factors. It is still uncertain what this will mean in the long term, but our size and scale have given us considerable buying power. This has attracted new suppliers and strengthened our existing relationships, allowing us to secure better prices. Typically, we pass these benefits on by investing in pricing, which in turn rewards our customers. We have managed to both expand our price gaps and achieve elevated margins, so at this moment, things feel very positive.
And I would just say that we're flowing product better through our distribution centers into our stores with our people. We're executing really well on all fronts. So that's underpinning it. And that comes in the form of lower supply chain costs, but also lower markdowns to a degree. And then shrink has been a tailwind. And that's one thing to note. We now have 3 quarters of positive shrink trend under our belts. But we have not changed our guidance in the back half, which is still on that elevated number that we had seen in the previous quarters.
Our next question comes from the line of Jeremy Hamblin with Craig-Hallum.
Congrats on the impressive results. I wanted to just come back to the medical and casualty costs and just see, Rob, if you could share what is the incremental cost expected both for the full year '25, but also baked into the second half of the year? And then just want to come back to Q2 in particular because you have such outsized results now over a multiyear period or 3-year stacks, 20%. Gross margin in Q2 by far the best that you've ever had in Q2. And just see, is there something that's changed in the mix of product that is driving both gross margin upside but also sales upside? I mean, I know, obviously, the Ollie's Days added 100 basis points, but any other color you can share?
I'll address the first part and maybe the second part as well. From a medical perspective, our deleveraging process last year was a significant factor. We noticed a similar trend in the first quarter, and we expect slight improvement in the third and fourth quarters. This improvement is based on early signs of trend softening as we enter the third quarter. If we see a return to historical patterns, we could experience some upside in our numbers. Regarding gross margin and sales for the second quarter, Eric highlighted our ability to effectively size and source better deals, which helps us drive down costs and improve access to goods. The strength of our consumables business, which is characterized by high frequency and high visitation, has also supported us during what is typically a slower summer quarter. This consistent traffic, combined with our attractive deals and product assortment, encourages customers to take advantage of great offers during their visits.
Yes. I'd just add a little bit of color. It's also the consolidation of the closeout market. There aren't as many buyers out there for closeouts. So as the biggest buyer, we believe, in the country for closeouts, that market share of closeouts comes to us. And we have a very tenured, experienced buying team with the acumen to really leverage the moment and consume that market share, and that is just what we're doing. We've been very, very aggressive about establishing new relationships and expanding existing relationships. It's not the case where we just pick up the phone. It's both proactive seeking and our phone is ringing a lot more as a result of this consolidation. So we do believe that's going to have lasting positive consequences for us.
Our next question comes from Mark Carden with UBS.
So I wanted to ask another one on Big Lots. Just how meaningful were the differences in sales capture between warm boxes in your existing footprint? So said another way, how should we think about the Big Lots contribution going to your same-store sales versus your new store productivity? And then what are you seeing with respect to the Ollie's Army sign-ups from some of these former Big Lots customers?
I would say on the top line, not a noticeable difference between our organic openings and our Big Lots openings. A little bit of lift potentially because there is that warm box dynamic. I would say the most meaningful difference from a profit flow-through perspective is better operating margins than the bottom line because the rents in these locations were, in many cases, much, much lower than some of the deals that we're signing today.
Can you repeat the second question about Ollie's Army? We are experiencing strong growth in our new stores, and while I haven't specifically analyzed the data between Big Lots and non-Big Lots, most of these stores are indeed Big Lots. We're seeing significant acquisition growth in these newer locations. Our stores effectively communicate the program and its value to consumers. Many customers coming into the converted Big Lots stores express their familiarity with deep discount retail and how it reminds them of Big Lots from a decade ago. They truly appreciate the value we provide, making it easier for them to make a purchase rather than needing persuading to sign up. Additionally, we are experiencing solid growth in our comparable stores, which is positive, but the new stores are definitely outpacing them.
Our next question comes from the line of Simeon Gutman with Morgan Stanley.
This is Lauren Ng on for Simeon. I just were curious about what specifically was driving that higher merch margin. Is this maybe more a result of better buying or product mix or maybe both? And then a follow-up is just on the Q2 comp of the 5%. Can you share how much of this coming from maybe stores ramping versus your mature stores?
From a merch margin perspective, we chalked it up to strong deal flow, better margin on deals than we expected. Mix was more in line with where we thought it was going to be. And we also saw lower shrink, which also assisted the gross margin. In terms of comps in terms of relatively new stores versus vintages, we saw broad-based strength across all cohorts. It was really just how high the comp was across all the different cohorts of stores that we track.
And our last question comes from Edward Kelly with Wells Fargo.
Great quarter. Congratulations on that. I have a couple of questions. I wanted to follow up regarding the gross margin. Q2 was impressive, possibly the strongest you've had. I'm curious why we should expect a decline in the second half. It seems like there might be some caution in that forecast. I also want to know about the impact of tariffs, particularly as we approach the fourth quarter. Additionally, I have a broader question for you, Eric, regarding your product mix. The closeout opportunity seems very strong, so I'm wondering if that percentage of the mix has increased. Also, what is happening with the products that vendors might be creating specifically for Ollie's? You've seen some ramp-up over time, but it still seemed small. Are you noticing a more consistent flow from vendors who are now creating products uniquely for Ollie's?
Well, that was a lot. I'll try to answer at least a part of it, and then you might have to remind me. On the gross margin line, we are planning a deceleration in gross margin off the first half. You know us for a long time and have been following us. We are the kind of folks that like to underpromise and overdeliver. We feel like our guidance gives us the opportunity to execute in the environment. If we need to take the opportunity to invest in price, we have the room while we can still deliver to the Street. So that's kind of how we're thinking about the gross margin. There's also that outstanding performance we had in the fourth quarter last year; we're over 40%. That typically is not something that we would plan to when entering a year. And so we've left our fourth quarter guidance in place. So that also kind of drags down the gross margin in the second half.
Yes, regarding tariffs, we follow market pricing. Our strategy remains consistent, even without tariff disruptions. If we can't source a product, whether through imports or closeouts, that allows us to maintain an appealing price gap, we won't purchase it. Thus, we'll ensure our pricing remains competitive. Adjustments to our product mix will be made based on our sourcing strategies, which may involve seeking alternatives in different countries or replacing imported goods with items sourced domestically, particularly from the closeout market. We are fully dedicated to upholding our value proposition and fulfilling our responsibility to shareholders by achieving the expected merchandise margin. Currently, our mix of closeout and import products has not changed significantly. It's difficult to predict how this will evolve in future quarters as we respond to shifting tariffs, but we are committed to providing the best values. Regarding closeouts, we acquire products from suppliers who may have them due to intentional manufacturing, which can include overruns or last production runs, and sometimes these products are made to compensate for prior shortages. We don't inquire deeply into the background of these products; if they are priced right, we will buy them and offer them to consumers at competitive retail prices while meeting our financial targets. As for supply availability, there is plenty of product available for purchase, and we haven't needed to pursue contracted manufactured items. We remain opportunistic, and we recognize that our scale lends predictability and stability to our business operations, which benefits us in the long term.
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