☑ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
001-37501
|
80-0848819
|
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
6295 Allentown Boulevard
Suite 1
Harrisburg, Pennsylvania
|
17112
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer ☒
|
Accelerated filer ☐
|
Non-accelerated filer ☐
(Do not check if a smaller reporting company)
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
PART I - FINANCIAL INFORMATION
|
Page
|
|
Item 1.
|
1
|
|
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
Item 2.
|
15
|
|
Item 3.
|
26
|
|
Item 4.
|
27
|
|
PART II - OTHER INFORMATION
|
||
Item 1.
|
27
|
|
Item 1A.
|
27
|
|
Item 2.
|
27
|
|
Item 3.
|
27
|
|
Item 4.
|
27
|
|
Item 5.
|
27
|
|
Item 6.
|
28
|
Thirteen weeks ended
|
Twenty-six weeks ended
|
|||||||||||||||
August 4,
2018
|
July 29,
2017
|
August 4,
2018
|
July 29,
2017
|
|||||||||||||
Net sales
|
$
|
288,098
|
$
|
254,645
|
$
|
563,837
|
$
|
482,247
|
||||||||
Cost of sales
|
175,474
|
154,419
|
338,337
|
289,086
|
||||||||||||
Gross profit
|
112,624
|
100,226
|
225,500
|
193,161
|
||||||||||||
Selling, general and administrative expenses
|
72,990
|
65,778
|
145,354
|
127,509
|
||||||||||||
Depreciation and amortization expenses
|
2,854
|
2,375
|
5,617
|
4,647
|
||||||||||||
Pre-opening expenses
|
1,917
|
2,255
|
3,681
|
3,853
|
||||||||||||
Operating income
|
34,863
|
29,818
|
70,848
|
57,152
|
||||||||||||
Interest expense, net
|
278
|
1,124
|
816
|
2,458
|
||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
100
|
397
|
||||||||||||
Income before income taxes
|
34,585
|
28,694
|
69,932
|
54,297
|
||||||||||||
Income tax expense
|
4,737
|
8,982
|
9,630
|
15,619
|
||||||||||||
Net income
|
$
|
29,848
|
$
|
19,712
|
$
|
60,302
|
$
|
38,678
|
||||||||
Earnings per common share:
|
||||||||||||||||
Basic
|
$
|
0.48
|
$
|
0.32
|
$
|
0.97
|
$
|
0.63
|
||||||||
Diluted
|
$
|
0.45
|
$
|
0.30
|
$
|
0.92
|
$
|
0.60
|
||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
62,444
|
61,194
|
62,306
|
61,037
|
||||||||||||
Diluted
|
65,868
|
64,889
|
65,745
|
64,640
|
Assets
|
August 4,
2018
|
July 29,
2017
|
February 3,
2018
|
|||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
29,415
|
$
|
24,820
|
$
|
39,234
|
||||||
Inventories
|
287,440
|
253,008
|
255,185
|
|||||||||
Accounts receivable
|
1,602
|
766
|
1,271
|
|||||||||
Prepaid expenses and other assets
|
9,918
|
4,193
|
7,986
|
|||||||||
Total current assets
|
328,375
|
282,787
|
303,676
|
|||||||||
Property and equipment, net of accumulated
depreciation of $56,579, $43,942and $50,076, respectively
|
57,991
|
49,975
|
54,888
|
|||||||||
Goodwill
|
444,850
|
444,850
|
444,850
|
|||||||||
Trade name and other intangible assets, net
of accumulated amortization of $1,992,$1,658 and $1,825, respectively
|
232,472
|
232,806
|
232,639
|
|||||||||
Other assets
|
4,081
|
2,319
|
2,146
|
|||||||||
Total assets
|
$
|
1,067,769
|
$
|
1,012,737
|
$
|
1,038,199
|
||||||
Liabilities and Stockholders’ Equity
|
||||||||||||
Current liabilities:
|
||||||||||||
Current portion of long-term debt
|
$
|
10,178
|
$
|
8,887
|
$
|
10,158
|
||||||
Accounts payable
|
69,015
|
53,276
|
74,206
|
|||||||||
Income taxes payable
|
-
|
1,936
|
6,035
|
|||||||||
Accrued expenses and other
|
51,762
|
37,040
|
46,327
|
|||||||||
Total current liabilities
|
130,955
|
101,139
|
136,726
|
|||||||||
Revolving credit facility
|
-
|
-
|
-
|
|||||||||
Long-term debt
|
11,516
|
119,552
|
38,835
|
|||||||||
Deferred income taxes
|
57,184
|
87,600
|
59,073
|
|||||||||
Other long-term liabilities
|
7,961
|
6,675
|
7,103
|
|||||||||
Total liabilities
|
207,616
|
314,966
|
241,737
|
|||||||||
Stockholders’ equity:
|
||||||||||||
Preferred stock - 50,000 shares authorized at $0.001 par value;no shares issued
|
-
|
-
|
-
|
|||||||||
Common stock - 500,000 shares authorized at $0.001 par value; 62,611,61,295 and 62,007 shares issued,
respectively
|
63
|
61
|
62
|
|||||||||
Additional paid-in capital
|
592,446
|
573,693
|
583,467
|
|||||||||
Retained earnings
|
267,730
|
124,103
|
213,019
|
|||||||||
Treasury - common stock, at cost; 9 shares
|
(86
|
)
|
(86
|
)
|
(86
|
)
|
||||||
Total stockholders’ equity
|
860,153
|
697,771
|
796,462
|
|||||||||
Total liabilities and stockholders’ equity
|
$
|
1,067,769
|
$
|
1,012,737
|
$
|
1,038,199
|
Additional
|
Total
|
|||||||||||||||||||||||||||
Common stock
|
Treasury stock
|
paid-in
|
Retained
|
stockholders’
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
earnings
|
equity
|
||||||||||||||||||||||
Balance as of January 28, 2017
|
60,756
|
$
|
61
|
(9
|
)
|
$
|
(86
|
)
|
$
|
565,861
|
$
|
85,425
|
$
|
651,261
|
||||||||||||||
Stock-based compensation expense
|
-
|
-
|
-
|
-
|
4,039
|
-
|
4,039
|
|||||||||||||||||||||
Proceeds from stock options exercised
|
519
|
-
|
-
|
-
|
4,012
|
-
|
4,012
|
|||||||||||||||||||||
Vesting of restricted stock
|
27
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Common shares withheld for taxes
|
(7
|
)
|
-
|
-
|
-
|
(219
|
)
|
-
|
(219
|
)
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
38,678
|
38,678
|
|||||||||||||||||||||
Balance as of July 29, 2017
|
61,295
|
$
|
61
|
(9
|
)
|
$
|
(86
|
)
|
$
|
573,693
|
$
|
124,103
|
$
|
697,771
|
||||||||||||||
Balance as of February 3, 2018
|
62,007
|
$
|
62
|
(9
|
)
|
$
|
(86
|
)
|
$
|
583,467
|
$
|
213,019
|
$
|
796,462
|
||||||||||||||
Cumulative effect of adopting ASU 2014-09 (Note 2)
|
-
|
-
|
-
|
-
|
-
|
(5,591
|
)
|
(5,591
|
)
|
|||||||||||||||||||
Stock-based compensation expense
|
-
|
-
|
-
|
-
|
3,510
|
-
|
3,510
|
|||||||||||||||||||||
Proceeds from stock options exercised
|
564
|
1
|
-
|
-
|
6,171
|
-
|
6,172
|
|||||||||||||||||||||
Vesting of restricted stock
|
52
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Common shares withheld for taxes
|
(12
|
)
|
-
|
-
|
-
|
(702
|
)
|
-
|
(702
|
)
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
60,302
|
60,302
|
|||||||||||||||||||||
Balance as of August 4, 2018
|
62,611
|
$
|
63
|
(9
|
)
|
$
|
(86
|
)
|
$
|
592,446
|
$
|
267,730
|
$
|
860,153
|
Twenty-six weeks ended
|
||||||||
August 4,
2018
|
July 29,
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
60,302
|
$
|
38,678
|
||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization of property and equipment
|
6,723
|
5,667
|
||||||
Amortization of debt issuance costs
|
248
|
339
|
||||||
Amortization of original issue discount
|
3
|
9
|
||||||
Loss on extinguishment of debt
|
100
|
397
|
||||||
(Gain) loss on disposal of assets
|
(24
|
)
|
26
|
|||||
Amortization of intangibles
|
167
|
171
|
||||||
Deferred income tax provision (benefit)
|
33
|
(1,624
|
)
|
|||||
Deferred rent expense
|
994
|
1,088
|
||||||
Stock-based compensation expense
|
3,510
|
4,039
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Inventories
|
(32,255
|
)
|
(42,901
|
)
|
||||
Accounts receivable
|
(331
|
)
|
(465
|
)
|
||||
Prepaid expenses and other assets
|
(4,075
|
)
|
(596
|
)
|
||||
Accounts payable
|
(4,776
|
)
|
2,372
|
|||||
Income taxes payable
|
(6,035
|
)
|
(2,612
|
)
|
||||
Accrued expenses and other liabilities
|
(2,055
|
)
|
(7,272
|
)
|
||||
Net cash provided by (used in) operating activities
|
22,529
|
(2,684
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(10,241
|
)
|
(8,667
|
)
|
||||
Proceeds from sale of property and equipment
|
43
|
17
|
||||||
Net cash used in investing activities
|
(10,198
|
)
|
(8,650
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings on revolving credit facility
|
599,162
|
511,264
|
||||||
Repayments on revolving credit facility
|
(599,162
|
)
|
(511,264
|
)
|
||||
Repayments on term loan and capital leases
|
(27,620
|
)
|
(66,322
|
)
|
||||
Proceeds from stock option exercises
|
6,172
|
4,012
|
||||||
Common shares withheld for taxes
|
(702
|
)
|
(219
|
)
|
||||
Net cash used in financing activities
|
(22,150
|
)
|
(62,529
|
)
|
||||
Net decrease in cash and cash equivalents
|
(9,819
|
)
|
(73,863
|
)
|
||||
Cash and cash equivalents at the beginning of the period
|
39,234
|
98,683
|
||||||
Cash and cash equivalents at the end of the period
|
$
|
29,415
|
$
|
24,820
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
581
|
$
|
2,112
|
||||
Income taxes
|
$
|
16,284
|
$
|
19,857
|
||||
Non-cash investing activities:
|
||||||||
Accrued purchases of property and equipment
|
$
|
1,352
|
$
|
1,470
|
(a) |
Description of Business
|
(b) |
Fiscal Year
|
(c) |
Basis of Presentation
|
(d) |
Use of Estimates
|
(e) |
Fair Value Disclosures
|
· |
Level 1 inputs are quoted prices available for identical assets and liabilities in active markets.
|
· |
Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or
other inputs which are observable or can be corroborated by observable market data.
|
· |
Level 3 inputs are less observable and reflect the Company’s assumptions.
|
(f) |
Recently Issued Accounting Pronouncements
|
(2) |
Net Sales
|
Balance at
February 3,
2018
|
Adjustments
Due to ASU
2014-09
|
Balance at
February 4,
2018
|
||||||||||
Assets
|
||||||||||||
Inventories
|
$
|
255,185
|
$
|
339
|
$
|
255,524
|
||||||
Liabilities
|
||||||||||||
Accrued expenses and other
|
46,327
|
7,853
|
54,180
|
|||||||||
Deferred income taxes
|
59,073
|
(1,923
|
)
|
57,150
|
||||||||
Equity
|
||||||||||||
Retained earnings
|
213,019
|
(5,591
|
)
|
207,428
|
· |
Revenue is deferred for the Ollie’s Army loyalty program where members
accumulate points that can be redeemed for discounts on future purchases. The Company determined it has an additional performance obligation to Ollie’s Army members at the time of the initial transaction. The Company
allocates the transaction price to the initial transaction and the discount awards based upon its relative standalone selling price, which considers historical redemption patterns for the award. Revenue is recognized as those discount
awards are redeemed. Discount awards which are issued upon the achievement of specified point levels are valid for a maximum of 90 days from the date of issuance. At the end of each fiscal period, unredeemed discount awards and
accumulated points to earn a future discount award are reflected as a liability. Discount awards are combined in one homogeneous pool and are not separately identifiable. Therefore, the revenue recognized consisted of discount
awards redeemed that were included in the deferred revenue balance at the beginning of the period as well as discount awards issued during the current period. The following table is a reconciliation of the liability related to this
program (in thousands):
|
Balance at February 3, 2018
|
$
|
8,321
|
||
Revenue deferred
|
5,861
|
|||
Revenue recognized
|
(5,553
|
)
|
||
Balance at August 4, 2018
|
$
|
8,629
|
· |
Gift card breakage for gift card liabilities not subject to escheatment is
recognized as revenue in proportion to the redemption of gift cards rather than when redemption of the gift card was considered remote. Ollie’s gift cards do not expire. The rate applied to redemptions is based upon a historical
breakage rate. Gift cards are combined in one homogenous pool and are not separately identifiable. Therefore, the revenue recognized consisted of gift cards that were included in the liability at the beginning of the period as
well as gift cards that were issued during the period. The following table is a reconciliation of the gift card liability (in thousands):
|
Balance at February 3, 2018
|
$
|
1,223
|
||
Gift card issuances
|
1,966
|
|||
Gift card redemption and breakage
|
(2,009
|
)
|
||
Balance at August 4, 2018
|
$
|
1,180
|
· |
Sales return allowance is recorded on a gross basis on the condensed
consolidated balance sheet as a refund liability and an asset for recovery rather than as a net liability. The allowance for estimated retail merchandise returns is based on prior experience.
|
(3) |
Earnings per Common Share
|
Thirteen weeks ended
|
Twenty-six weeks ended
|
|||||||||||||||
August 4,
2018
|
July 29,
2017
|
August 4,
2018
|
July 29,
2017
|
|||||||||||||
Net income
|
$
|
29,848
|
$
|
19,712
|
$
|
60,302
|
$
|
38,678
|
||||||||
Weighted average number of common shares outstanding – Basic
|
62,444
|
61,194
|
62,306
|
61,037
|
||||||||||||
Dilutive impact of stock options and restricted stock units
|
3,424
|
3,695
|
3,439
|
3,603
|
||||||||||||
Weighted average number of common shares outstanding - Diluted
|
65,868
|
64,889
|
65,745
|
64,640
|
||||||||||||
Earnings per common share – Basic
|
$
|
0.48
|
$
|
0.32
|
$
|
0.97
|
$
|
0.63
|
||||||||
Earnings per common share - Diluted
|
$
|
0.45
|
$
|
0.30
|
$
|
0.92
|
$
|
0.60
|
(4) |
Accrued Expenses and Other
|
August 4,
2018
|
July 29,
2017
|
February 3,
2018
|
||||||||||
Compensation and benefits
|
$
|
11,557
|
$
|
8,630
|
$
|
14,181
|
||||||
Deferred revenue
|
8,629
|
-
|
-
|
|||||||||
Insurance
|
5,198
|
3,370
|
2,768
|
|||||||||
Freight
|
4,113
|
5,184
|
3,836
|
|||||||||
Real estate related
|
3,888
|
3,623
|
4,019
|
|||||||||
Sales and use taxes
|
3,815
|
2,990
|
3,865
|
|||||||||
Advertising
|
1,968
|
1,966
|
5,523
|
|||||||||
Other
|
12,594
|
11,277
|
12,135
|
|||||||||
$
|
51,762
|
$
|
37,040
|
$
|
46,327
|
(5) |
Debt Obligations and Financing Arrangements
|
August 4,
2018
|
July 29,
2017
|
February 3,
2018
|
||||||||||
Term loan, net
|
$
|
21,173
|
$
|
128,027
|
$
|
48,530
|
||||||
Capital leases
|
521
|
412
|
463
|
|||||||||
Total debt
|
21,694
|
128,439
|
48,993
|
|||||||||
Less: current portion
|
(10,178
|
)
|
(8,887
|
)
|
(10,158
|
)
|
||||||
Long-term debt
|
$
|
11,516
|
$
|
119,552
|
$
|
38,835
|
(6) |
Income Taxes
|
(7) |
Commitments and Contingencies
|
(8) |
Equity Incentive Plans
|
Number
of options
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
term (years)
|
||||||||||
Outstanding at February 3, 2018
|
4,458,387
|
$
|
11.65
|
|||||||||
Granted
|
276,276
|
58.90
|
||||||||||
Forfeited
|
(12,922
|
)
|
33.29
|
|||||||||
Exercised
|
(563,564
|
)
|
10.95
|
|||||||||
Outstanding at August 4, 2018
|
4,158,177
|
14.82
|
5.9
|
|||||||||
Exercisable at August 4, 2018
|
2,766,732
|
9.03
|
4.9
|
Twenty-six weeks ended
|
||||||||
August 4,
2018
|
July 29,
2017
|
|||||||
Risk-free interest rate
|
2.70
|
%
|
2.20
|
%
|
||||
Expected dividend yield
|
—
|
—
|
||||||
Expected term (years)
|
6.25 years
|
6.25 years
|
||||||
Expected volatility
|
25.85
|
%
|
28.31
|
%
|
Number
of shares
|
Weighted
average
grant date
fair value
|
|||||||
Non-vested balance at February 3, 2018
|
207,346
|
$
|
26.15
|
|||||
Granted
|
63,442
|
58.86
|
||||||
Vested
|
(51,424
|
)
|
26.06
|
|||||
Non-vested balance at August 4, 2018
|
219,364
|
35.63
|
(9) |
Transactions with Related Parties
|
(10) |
Subsequent Events
|
· |
growing our merchant buying team to increase our access to brand name/closeout merchandise;
|
· |
adding members to our senior management team;
|
· |
expanding the capacity of our two distribution centers to their current 1.6 million square feet; and
|
· |
investing in information technology, accounting, and warehouse management systems.
|
· |
growing our store base;
|
· |
increasing our offerings of great bargains; and
|
· |
leveraging and expanding Ollie’s Army, our customer loyalty program.
|
· |
have been remodeled while remaining open;
|
· |
are closed for five or fewer days in any fiscal month;
|
· |
are closed temporarily and relocated within their respective trade areas; and
|
· |
have expanded, but are not significantly different in size, within their current locations.
|
Thirteen weeks ended
|
Twenty-six weeks ended
|
|||||||||||||||
August 4,
2018
|
July 29,
2017
|
August 4,
2018
|
July 29,
2017
|
|||||||||||||
( dollars in thousands)
|
||||||||||||||||
Condensed consolidated
statements of income data:
|
||||||||||||||||
Net sales
|
$
|
288,098
|
$
|
254,645
|
$
|
563,837
|
$
|
482,247
|
||||||||
Cost of sales
|
175,474
|
154,419
|
338,337
|
289,086
|
||||||||||||
Gross profit
|
112,624
|
100,226
|
225,500
|
193,161
|
||||||||||||
Selling, general and administrative expenses
|
72,990
|
65,778
|
145,354
|
127,509
|
||||||||||||
Depreciation and amortization expenses
|
2,854
|
2,375
|
5,617
|
4,647
|
||||||||||||
Pre-opening expenses
|
1,917
|
2,255
|
3,681
|
3,853
|
||||||||||||
Operating income
|
34,863
|
29,818
|
70,848
|
57,152
|
||||||||||||
Interest expense, net
|
278
|
1,124
|
816
|
2,458
|
||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
100
|
397
|
||||||||||||
Income before income taxes
|
34,585
|
28,694
|
69,932
|
54,297
|
||||||||||||
Income tax expense
|
4,737
|
8,982
|
9,630
|
15,619
|
||||||||||||
Net income
|
$
|
29,848
|
$
|
19,712
|
$
|
60,302
|
$
|
38,678
|
||||||||
Percentage of net sales (1):
|
||||||||||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Cost of sales
|
60.9
|
60.6
|
60.0
|
59.9
|
||||||||||||
Gross profit
|
39.1
|
39.4
|
40.0
|
40.1
|
||||||||||||
Selling, general and administrative expenses
|
25.3
|
25.8
|
25.8
|
26.4
|
||||||||||||
Depreciation and amortization expenses
|
1.0
|
0.9
|
1.0
|
1.0
|
||||||||||||
Pre-opening expenses
|
0.7
|
0.9
|
0.7
|
0.8
|
||||||||||||
Operating income
|
12.1
|
11.7
|
12.6
|
11.9
|
||||||||||||
Interest expense, net
|
0.1
|
0.4
|
0.1
|
0.5
|
||||||||||||
Loss on extinguishment of debt
|
—
|
—
|
— |
0.1
|
||||||||||||
Income before income taxes
|
12.0
|
11.3
|
12.4
|
11.3
|
||||||||||||
Income tax expense
|
1.6
|
3.5
|
1.7
|
3.2
|
||||||||||||
Net income
|
10.4
|
%
|
7.7
|
%
|
10.7
|
%
|
8.0
|
%
|
||||||||
Select operating data:
|
||||||||||||||||
Number of new stores
|
6
|
11
|
14
|
16
|
||||||||||||
Number of stores open at end of period
|
282
|
250
|
282
|
250
|
||||||||||||
Average net sales per store (2)
|
$
|
1,032
|
$
|
1,031
|
$
|
2,043
|
$
|
1,993
|
||||||||
Comparable stores sales change
|
4.4
|
%
|
4.5
|
%
|
3.2
|
%
|
3.2
|
%
|
(1) |
Components may not add to totals due to rounding.
|
(2) |
Average net sales per store represents the weighted average of total net sales divided by the number of
stores open at the end of each week in each fiscal period.
|
Thirteen weeks ended
|
Twenty-six weeks ended
|
|||||||||||||||
August 4,
2018
|
July 29,
2017
|
August 4,
2018
|
July 29,
2017
|
|||||||||||||
( dollars in thousands)
|
||||||||||||||||
Net income
|
$
|
29,848
|
$
|
19,712
|
$
|
60,302
|
$
|
38,678
|
||||||||
Interest expense, net
|
278
|
1,124
|
816
|
2,458
|
||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
100
|
397
|
||||||||||||
Depreciation and amortization expenses (1)
|
3,497
|
2,976
|
6,890
|
5,838
|
||||||||||||
Income tax expense
|
4,737
|
8,982
|
9,630
|
15,619
|
||||||||||||
EBITDA
|
38,360
|
32,794
|
77,738
|
62,990
|
||||||||||||
Non-cash stock-based compensation expense
|
1,910
|
2,128
|
3,510
|
4,039
|
||||||||||||
Non-cash purchase accounting items (2)
|
-
|
(20
|
)
|
(1
|
)
|
(42
|
)
|
|||||||||
Adjusted EBITDA
|
$
|
40,270
|
$
|
34,902
|
$
|
81,247
|
$
|
66,987
|
(1) |
Includes depreciation and amortization relating to our distribution centers, which is included within cost of sales on our condensed consolidated statements of income.
|
(2) |
Includes purchase accounting impact from unfavorable lease liabilities related to a prior acquisition.
|
Twenty-six weeks ended
|
||||||||
August 4,
2018
|
July 29,
2017
|
|||||||
(in thousands)
|
||||||||
Net cash provided by (used in) operating activities
|
$
|
22,529
|
$
|
(2,684
|
)
|
|||
Net cash used in investing activities
|
(10,198
|
)
|
(8,650
|
)
|
||||
Net cash used in financing activities
|
(22,150
|
)
|
(62,529
|
)
|
||||
Net decrease in cash and cash equivalents
|
$
|
(9,819
|
)
|
$
|
(73,863
|
)
|
Exhibit No.
|
Description of Exhibits
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
**101.INS
|
XBRL Instance Document.
|
|
**101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
**101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
**101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
**101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
**101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
OLLIE’S BARGAIN OUTLET HOLDINGS, INC.
|
|||
Date: September 7, 2018
|
/s/ Jay Stasz
|
||
Jay Stasz
|
|||
Senior Vice President and
|
|||
Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Ollie’s Bargain Outlet Holdings, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 7, 2018
|
/s/ Mark Butler
|
Mark Butler
President, Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Ollie’s Bargain Outlet Holdings, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 7, 2018
|
/s/ Jay Stasz
|
Jay Stasz
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: September 7, 2018
|
||
|
/s/ Mark Butler
|
|
Mark Butler
|
||
Chief Executive Officer
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: September 7, 2018
|
||
/s/ Jay Stasz
|
||
Jay Stasz
|
||
Chief Financial Officer
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Aug. 04, 2018 |
Sep. 05, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Ollie's Bargain Outlet Holdings, Inc. | |
Entity Central Index Key | 0001639300 | |
Current Fiscal Year End Date | --02-03 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,698,476 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 04, 2018 |
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Consolidated Statements of Income (Unaudited) [Abstract] | ||||
Net sales | $ 288,098 | $ 254,645 | $ 563,837 | $ 482,247 |
Cost of sales | 175,474 | 154,419 | 338,337 | 289,086 |
Gross profit | 112,624 | 100,226 | 225,500 | 193,161 |
Selling, general and administrative expenses | 72,990 | 65,778 | 145,354 | 127,509 |
Depreciation and amortization expenses | 2,854 | 2,375 | 5,617 | 4,647 |
Pre-opening expenses | 1,917 | 2,255 | 3,681 | 3,853 |
Operating income | 34,863 | 29,818 | 70,848 | 57,152 |
Interest expense, net | 278 | 1,124 | 816 | 2,458 |
Loss on extinguishment of debt | 0 | 0 | 100 | 397 |
Income before income taxes | 34,585 | 28,694 | 69,932 | 54,297 |
Income tax expense | 4,737 | 8,982 | 9,630 | 15,619 |
Net income | $ 29,848 | $ 19,712 | $ 60,302 | $ 38,678 |
Earnings per common share: | ||||
Basic (in dollars per share) | $ 0.48 | $ 0.32 | $ 0.97 | $ 0.63 |
Diluted (in dollars per share) | $ 0.45 | $ 0.30 | $ 0.92 | $ 0.60 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 62,444 | 61,194 | 62,306 | 61,037 |
Diluted (in shares) | 65,868 | 64,889 | 65,745 | 64,640 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
Jul. 29, 2017 |
---|---|---|---|
Assets | |||
Property and equipment, accumulated depreciation | $ 56,579 | $ 50,076 | $ 43,942 |
Trade name and other intangible assets, accumulated amortization | $ 1,992 | $ 1,825 | $ 1,658 |
Stockholders' equity: | |||
Preferred stock, shares authorized (in shares) | 50,000 | 50,000 | 50,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 | 500,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 62,611 | 62,007 | 61,295 |
Treasury - common stock (in shares) | 9 | 9 | 9 |
Organization and Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 04, 2018 | ||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies |
Ollie’s Bargain Outlet Holdings, Inc. and subsidiaries (collectively referenced to as the “Company” or “Ollie’s”) principally buys overproduced, overstocked, and closeout merchandise from manufacturers, wholesalers and other retailers. In addition, the Company augments its name-brand closeout deals with directly sourced private label products featuring names exclusive to Ollie’s in order to provide consistently value-priced goods in select key merchandise categories. Since its first store opened in 1982, the Company has grown to 282 retail locations in 22 states as of August 4, 2018. Ollie’s Bargain Outlet retail locations are located in Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia and West Virginia.
Ollie’s follows a 52/53-week fiscal year, which ends on the Saturday nearer to January 31 of the following year. References to the thirteen weeks ended August 4, 2018 and July 29, 2017 refer to the thirteen weeks from May 6, 2018 to August 4, 2018 and from April 30, 2017 to July 29, 2017, respectively. References to year-to-date periods ending August 4, 2018 and July 29, 2017 refer to the twenty-six weeks from February 4, 2018 to August 4, 2018 and January 29, 2017 to July 29, 2017, respectively. References to “2017” refer to the fiscal year ended February 3, 2018, which consisted of a 53-week period. References to “2018” refer to the fiscal year ending February 2, 2019, which consists of a 52-week period.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the Company’s results of operations, financial condition, and cash flows for all periods presented. The condensed consolidated balance sheets as of August 4, 2018 and July 29, 2017, the condensed consolidated statements of income for the thirteen and twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively, and the condensed consolidated statements of stockholders’ equity and cash flows for the twenty-six weeks ended August 4, 2018 and July 29, 2017 have been prepared by the Company and are unaudited. The Company’s business is seasonal in nature and results of operations for the interim periods presented are not necessarily indicative of operating results for 2018 or any other period. All intercompany accounts, transactions, and balances have been eliminated in consolidation. The Company’s balance sheet as of February 3, 2018, presented herein, has been derived from the audited balance sheet included in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2018 (“Annual Report”), but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the financial statements for 2017 and footnotes thereto included in the Annual Report. For purposes of the disclosure requirements for segments of a business enterprise, it has been determined that the Company is comprised of one operating segment.
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair value is defined as the price which the Company would receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. In determining fair value, GAAP establishes a three‑level hierarchy used in measuring fair value, as follows:
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, its revolving credit facility and its term loan facility. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of their short maturities. The carrying amount of the revolving credit facility and term loan facility approximates its fair value because the interest rates are adjusted regularly based on current market conditions.
Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases. ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing a right-of-use asset and lease liability. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. Substantially all of the Company’s store locations and distribution centers are subject to operating lease arrangements. The Company is currently evaluating the impact of the adoption of this new standard on its consolidated financial statements and related disclosures, and anticipates it will result in significant right-of-use assets and related liabilities on its consolidated balance sheets. |
Net Sales |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Net Sales [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Sales |
Ollie’s recognizes retail sales in its stores when merchandise is sold and the customer takes possession of 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. The Company provides an allowance for estimated retail merchandise returns based on prior experience. Adoption of ASU 2014-09, Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard supersedes U.S. GAAP guidance on revenue recognition and requires the use of more estimates and judgments than prior guidance. The Company adopted ASU 2014-09 as of February 4, 2018 using the modified retrospective transition method. Results for reporting periods beginning after February 4, 2018 are presented pursuant to the requirements of the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under prior guidance. The Company recorded a net reduction to the opening balance of retained earnings of $5.6 million as of February 4, 2018 due to the cumulative impact of adopting ASU 2014-09, with the impact primarily related to the changes in revenue recognition associated with the Company’s customer loyalty program and gift card breakage. The cumulative effect of changes to the Company’s consolidated February 4, 2018 balance sheet for the adoption of ASU 2014-09 was as follows (in thousands):
The Company determined the adoption of ASU 2014-09 changed the presentation for the following:
The adoption of ASU 2014-09 did not have a material impact on the Company’s condensed consolidated income statement and statement of cash flows for the thirteen and twenty-six weeks ended August 4, 2018. As a result of the adoption of ASU 2014-09, the Company’s balance sheet at August 4, 2018 reflected an additional liability of $8.6 million related to the Ollie’s Army loyalty program which would not have been recorded prior to adoption. Other changes to the condensed consolidated balance sheet at August 4, 2018 were not significant. |
Earnings per Common Share |
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Earnings per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share |
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding after giving effect to the potential dilution, if applicable, from the assumed exercise of stock options into shares of common stock as if those stock options were exercised and the assumed lapse of restrictions on restricted stock units. The following table summarizes those effects for the diluted earnings per common share calculation (in thousands, except per share amounts):
The effect of the weighted average assumed exercise of stock options outstanding totaling 266,285 and 345,326 for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively, and 195,512 and 249,609 for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively, were excluded from the calculation of diluted weighted average common shares outstanding because the effect would have been antidilutive. The effect of weighted average non-vested restricted stock units outstanding totaling 345 and 88 for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively, and 13,339 and 20,093 for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively, were excluded from the calculation of diluted weighted average common shares outstanding because the effect would have been antidilutive. |
Accrued Expenses and Other |
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Accrued Expenses and Other |
Accrued expenses and other consists of the following (in thousands):
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Debt Obligations and Financing Arrangements |
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Debt Obligations and Financing Arrangements |
Long-term debt consists of the following (in thousands):
On January 29, 2016, the Company refinanced its existing senior secured credit facility with the proceeds of its new Credit Facilities (as defined below). The new credit facilities consist of a $200.0 million term loan (“Term Loan Facility”) and a $100.0 million revolving credit facility (“Revolving Credit Facility”, and together with the Term Loan Facility, the “Credit Facilities”), which includes a $25.0 million sub-facility for letters of credit and a $25.0 million sub-facility for swingline loans. The interest rates for the Credit Facilities are not subject to a floor and are calculated as the higher of the Prime Rate, the Federal Funds Effective Rate plus 0.50% or the Eurodollar Rate plus 1.0%, plus the Applicable Margin, or, for Eurodollar Loans, the Eurodollar Rate plus the Applicable Margin. The Applicable Margin will vary from 0.75% to 1.25% for a Base Rate Loan and 1.75% to 2.25% for a Eurodollar Loan, based on reference to the total leverage ratio. The Credit Facilities mature on January 29, 2021. As of August 4, 2018, the Term Loan Facility is subject to amortization with principal payable in quarterly installments of $2.5 million to be made on the last business day of each fiscal quarter prior to maturity. The remaining initial aggregate advances under the Term Loan Facility are payable at maturity. The Company made voluntary prepayments under the Term Loan Facility totaling $25.0 million and $65.0 million during the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. In connection with these prepayments, $0.1 million and $0.3 million of debt issuance cost and $7,000 and $0.1 million of original issue discount were accelerated and included in loss on extinguishment of debt for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. In accordance with the terms of the Term Loan Facility, prepayments were applied against the remaining scheduled installment payments of principal due under the Term Loan Facility in direct order of maturity. As a result, the Company is no longer obligated to make the scheduled installment payments of principal; however, the Company currently intends to continue to make these payments and therefore has classified such payments as current portion of long-term debt in the condensed consolidated balance sheet. Under the terms of the Revolving Credit Facility, as of August 4, 2018, the Company could borrow up to 90.0% of the most recent appraised value (valued at cost, discounted for the current net orderly liquidation value) of its eligible inventory, as defined, up to $100.0 million. As of August 4, 2018, the Company had $21.2 million of outstanding indebtedness under the Term Loan Facility and no outstanding borrowings under the Revolving Credit Facility, with $95.4 million of borrowing availability, letter of credit commitments of $4.3 million and $0.3 million of rent reserves. The interest rate on the outstanding borrowings under the Term Loan Facility was 1.75% plus the 30-day Eurodollar Rate, or 3.82%. The Revolving Credit Facility also contains a variable unused line fee ranging from 0.250% to 0.375% per annum. As of August 4, 2018 and July 29, 2017, the amounts outstanding under the Term Loan Facility are net of unamortized original issue discount of $5,000 and $0.1 million and deferred financing fees of $0.1 million and $0.7 million in each respective period. The Credit Facilities are collateralized by the Company’s assets and equity and contain financial covenants, as well as certain business covenants, including restrictions on dividend payments, which the Company must comply with during the term of the agreements. The financial covenants include a consolidated fixed charge coverage ratio test of at least 1.1 to 1.0 and a total leverage test of no greater than 3.5 to 1.0. The Company was in compliance with all terms of the Credit Facilities during the thirteen and twenty-six weeks ended August 4, 2018. The provisions of the Credit Facilities restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all of the net assets on the Company’s consolidated balance sheet as of August 4, 2018, from being used to pay any dividends or make other restricted payments to the Company without prior written consent from the financial institutions that are a party to the Credit Facilities, subject to certain exceptions. |
Income Taxes |
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Aug. 04, 2018 | |||
Income Taxes [Abstract] | |||
Income Taxes |
The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for discrete events occurring in a particular period. The effective tax rates for the thirteen and twenty-six weeks ended August 4, 2018 were 13.7% and 13.8%, respectively. The effective tax rates for the thirteen and twenty-six weeks ended July 29, 2017 were 31.3% and 28.8%, respectively. The effective tax rate was lower for the thirteen and twenty-six weeks ended August 4, 2018 primarily as a result of the provisions of the 2017 Tax Cuts and Jobs Act, which, among other things, permanently lowered the federal corporate tax rate to 21% from the prior maximum rate of 35%, effective for tax years including or commencing January 1, 2018. In addition, the thirteen weeks ended August 4, 2018 and July 29, 2017 included a discrete tax benefit of $3.8 million and $1.9 million, respectively, due to the excess tax benefits related to stock-based compensation. The twenty-six weeks ended August 4, 2018 and July 29, 2017 included a similar discrete tax benefit of $7.7 million and $5.1 million, respectively. |
Commitments and Contingencies |
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Commitments and Contingencies [Abstract] | |||
Commitments and Contingencies |
The Company commenced 21 new store leases during the twenty-six weeks ended August 4, 2018. The fully executed leases have initial terms of approximately seven years with options to renew for three or four successive five-year periods. The initial terms of these new store leases have future minimum lease payments totaling approximately $27.4 million. From time to time the Company may be involved in claims and legal actions that arise in the ordinary course of its business. The Company cannot predict the outcome of any litigation or suit to which it is a party. However, the Company does not believe that an unfavorable decision of any of the current claims or legal actions against it, individually or in the aggregate, will have a material adverse effect on its financial position, results of operations, liquidity or capital resources. |
Equity Incentive Plans |
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Equity Incentive Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plans |
During 2012, Ollie’s established an equity incentive plan (the “2012 Plan”) under which stock options were granted to executive officers and key employees as deemed appropriate under the provisions of the 2012 Plan, with an exercise price at the fair value of the underlying stock on the date of grant. The vesting period for options granted under the 2012 Plan was five years (20% ratably per year). Options granted under the 2012 Plan are subject to employment for vesting, expire 10 years from the date of grant and are not transferable other than upon death. As of July 15, 2015, the date of the pricing of the Company’s initial public offering, no additional equity grants will be made under the 2012 Plan. In connection with its initial public offering, the Company adopted the 2015 equity incentive plan (the “2015 Plan”) pursuant to which the Company’s Board of Directors may grant stock options, restricted shares or other awards to employees, directors and consultants. The 2015 Plan allows for the issuance of up to 5,250,000 shares. Awards will be made pursuant to agreements and may be subject to vesting and other restrictions as determined by the Board of Directors or the Compensation Committee of the Board. The Company uses authorized and unissued shares to satisfy share award exercises. As of August 4, 2018, there were 3,459,101 shares available for grant under the 2015 Plan. Stock Options The exercise price for stock options is determined at the fair value of the underlying stock on the date of grant. The vesting period for awards granted under the 2015 Plan is generally set at four years (25% ratably per year). Awards are subject to employment for vesting, expire 10 years from the date of grant, and are not transferable other than upon death. A summary of the Company’s stock option activity and related information follows for the twenty-six weeks ended August 4, 2018 (in thousands, except share and per share amounts):
The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. The weighted average grant date fair value per option for options granted during the twenty-six weeks ended August 4, 2018 and July 29, 2017 was $18.77 and $10.57, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that used the weighted average assumptions in the following table:
Restricted Stock Units Restricted stock units (“RSUs”) are issued at a value not less than the fair market value of the common stock on the date of the grant. RSUs granted to date vest ratably over three or four years or cliff vest in one or four years. Awards are subject to employment for vesting and are not transferable other than upon death. A summary of the Company’s RSU activity and related information for the twenty-six weeks ended August 4, 2018 is as follows:
Stock-Based Compensation Expense The compensation cost for stock options and RSUs which have been recorded within selling, general and administrative expenses related to the Company’s equity incentive plans was $1.9 million and $2.1 million for the thirteen weeks ended August 4, 2018 and July 29, 2017, respectively and $3.5 million and $4.0 million for the twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively. As of August 4, 2018 there was $16.9 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 2.7 years. Compensation costs related to awards are recognized using the straight-line method. |
Transactions with Related Parties |
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Transactions with Related Parties [Abstract] | |||
Transactions with Related Parties |
The Company has entered into five non-cancelable operating leases with related parties for office and store locations. Ollie’s made $0.6 million in rent payments to such related parties during each of the twenty-six weeks ended August 4, 2018 and July 29, 2017. |
Subsequent Events |
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Subsequent Events [Abstract] | |||
Subsequent Events |
On August 29, 2018, the Company acquired a total of 12 former Toys “R” Us store sites as part of the ongoing real estate auctions for Toys “R” Us locations being conducted in the United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division). The Company paid an aggregate of approximately $42.0 million for the store locations. |
Organization and Summary of Significant Accounting Policies (Policies) |
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Organization and Summary of Significant Accounting Policies [Abstract] | |||||||||||||
Fiscal Year |
Ollie’s follows a 52/53-week fiscal year, which ends on the Saturday nearer to January 31 of the following year. References to the thirteen weeks ended August 4, 2018 and July 29, 2017 refer to the thirteen weeks from May 6, 2018 to August 4, 2018 and from April 30, 2017 to July 29, 2017, respectively. References to year-to-date periods ending August 4, 2018 and July 29, 2017 refer to the twenty-six weeks from February 4, 2018 to August 4, 2018 and January 29, 2017 to July 29, 2017, respectively. References to “2017” refer to the fiscal year ended February 3, 2018, which consisted of a 53-week period. References to “2018” refer to the fiscal year ending February 2, 2019, which consists of a 52-week period. |
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Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The condensed consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the Company’s results of operations, financial condition, and cash flows for all periods presented. The condensed consolidated balance sheets as of August 4, 2018 and July 29, 2017, the condensed consolidated statements of income for the thirteen and twenty-six weeks ended August 4, 2018 and July 29, 2017, respectively, and the condensed consolidated statements of stockholders’ equity and cash flows for the twenty-six weeks ended August 4, 2018 and July 29, 2017 have been prepared by the Company and are unaudited. The Company’s business is seasonal in nature and results of operations for the interim periods presented are not necessarily indicative of operating results for 2018 or any other period. All intercompany accounts, transactions, and balances have been eliminated in consolidation. The Company’s balance sheet as of February 3, 2018, presented herein, has been derived from the audited balance sheet included in the Company’s Annual Report on Form 10-K filed with the SEC on April 4, 2018 (“Annual Report”), but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the financial statements for 2017 and footnotes thereto included in the Annual Report. |
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Segment Reporting | For purposes of the disclosure requirements for segments of a business enterprise, it has been determined that the Company is comprised of one operating segment. |
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Use of Estimates |
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Fair Value Disclosures |
Fair value is defined as the price which the Company would receive to sell an asset or pay to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. In determining fair value, GAAP establishes a three‑level hierarchy used in measuring fair value, as follows:
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, its revolving credit facility and its term loan facility. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of their short maturities. The carrying amount of the revolving credit facility and term loan facility approximates its fair value because the interest rates are adjusted regularly based on current market conditions. |
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Recently Issued Accounting Pronouncements |
Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases. ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing a right-of-use asset and lease liability. The updated guidance is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. Substantially all of the Company’s store locations and distribution centers are subject to operating lease arrangements. The Company is currently evaluating the impact of the adoption of this new standard on its consolidated financial statements and related disclosures, and anticipates it will result in significant right-of-use assets and related liabilities on its consolidated balance sheets. |
Net Sales (Tables) |
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Cumulative Effect of Changes to Consolidated Balance Sheet for Adoption of ASU 2014-09 | The cumulative effect of changes to the Company’s consolidated February 4, 2018 balance sheet for the adoption of ASU 2014-09 was as follows (in thousands):
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Ollie's Army Loyalty Program Liability |
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Gift Card Liability |
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Earnings per Common Share (Tables) |
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Earnings per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share |
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Accrued Expenses and Other (Tables) |
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Accrued Expenses and Other | Accrued expenses and other consists of the following (in thousands):
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Debt Obligations and Financing Arrangements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations and Financing Arrangements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term debt consists of the following (in thousands):
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Equity Incentive Plans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Aug. 04, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity | A summary of the Company’s stock option activity and related information follows for the twenty-six weeks ended August 4, 2018 (in thousands, except share and per share amounts):
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Weighted Average Assumptions | The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that used the weighted average assumptions in the following table:
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RSU Activity | A summary of the Company’s RSU activity and related information for the twenty-six weeks ended August 4, 2018 is as follows:
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Organization and Summary of Significant Accounting Policies (Details) |
6 Months Ended |
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Aug. 04, 2018
Location
State
Segment
| |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Number of retail locations | Location | 282 |
Number of states in which retail locations are located | State | 22 |
Number of operating segments | Segment | 1 |
Accrued Expenses and Other (Details) - USD ($) $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
Jul. 29, 2017 |
---|---|---|---|
Accrued Expenses and Other [Abstract] | |||
Compensation and benefits | $ 11,557 | $ 14,181 | $ 8,630 |
Deferred revenue | 8,629 | 0 | 0 |
Insurance | 5,198 | 2,768 | 3,370 |
Freight | 4,113 | 3,836 | 5,184 |
Real estate related | 3,888 | 4,019 | 3,623 |
Sales and use taxes | 3,815 | 3,865 | 2,990 |
Advertising | 1,968 | 5,523 | 1,966 |
Other | 12,594 | 12,135 | 11,277 |
Total accrued expenses | $ 51,762 | $ 46,327 | $ 37,040 |
Debt Obligations and Financing Arrangements, Long-term Debt (Details) - USD ($) $ in Thousands |
Aug. 04, 2018 |
Feb. 03, 2018 |
Jul. 29, 2017 |
---|---|---|---|
Debt Obligations and Financing Arrangements [Abstract] | |||
Term loan, net | $ 21,173 | $ 48,530 | $ 128,027 |
Capital leases | 521 | 463 | 412 |
Total debt | 21,694 | 48,993 | 128,439 |
Less: current portion | (10,178) | (10,158) | (8,887) |
Long-term debt | $ 11,516 | $ 38,835 | $ 119,552 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Dec. 31, 2017 |
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Income Taxes [Abstract] | ||||||
Effective income tax rate | 13.70% | 31.30% | 13.80% | 28.80% | ||
Statutory federal rate | 21.00% | 35.00% | ||||
Excess tax benefits related to stock-based compensation | $ (3.8) | $ (1.9) | $ (7.7) | $ (5.1) |
Commitments and Contingencies (Details) - New Stores [Member] $ in Millions |
6 Months Ended |
---|---|
Aug. 04, 2018
USD ($)
Lease
Option
| |
Commitments and Contingencies [Abstract] | |
Number of new store leases | Lease | 21 |
Initial term of leases | 7 years |
Renewal term of leases | 5 years |
Future minimum lease payments | $ | $ 27.4 |
Minimum [Member] | |
Commitments and Contingencies [Abstract] | |
Number of options to renew leases | 3 |
Maximum [Member] | |
Commitments and Contingencies [Abstract] | |
Number of options to renew leases | 4 |
Equity Incentive Plans, Equity Incentive Plans (Details) |
6 Months Ended |
---|---|
Aug. 04, 2018
shares
| |
2012 Plan [Member] | Stock Options [Member] | |
Equity Incentive Plans [Abstract] | |
Vesting period | 5 years |
Vesting percentage | 20.00% |
Expiration period | 10 years |
2015 Plan [Member] | |
Equity Incentive Plans [Abstract] | |
Number of shares authorized for issuance (in shares) | 5,250,000 |
Number of shares available for grant (in shares) | 3,459,101 |
2015 Plan [Member] | Stock Options [Member] | |
Equity Incentive Plans [Abstract] | |
Vesting period | 4 years |
Vesting percentage | 25.00% |
Expiration period | 10 years |
Equity Incentive Plans, Weighted Average Assumptions (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Equity Incentive Plans [Abstract] | ||
Weighted average grant date fair value per option granted (in dollars per share) | $ 18.77 | $ 10.57 |
Risk-free interest rate | 2.70% | 2.20% |
Expected dividend yield | 0.00% | 0.00% |
Expected term | 6 years 3 months | 6 years 3 months |
Expected volatility | 25.85% | 28.31% |
Equity Incentive Plans, RSU Activity (Details) - Restricted Stock Units [Member] |
6 Months Ended |
---|---|
Aug. 04, 2018
$ / shares
shares
| |
Number of Shares [Roll Forward] | |
Non-vested at beginning of period (in shares) | shares | 207,346 |
Granted (in shares) | shares | 63,442 |
Vested (in shares) | shares | (51,424) |
Non-vested at end of period (in shares) | shares | 219,364 |
Weighted Average Grant Date Fair Value [Abstract] | |
Non-vested at beginning of period (in dollars per share) | $ / shares | $ 26.15 |
Granted (in dollars per share) | $ / shares | 58.86 |
Vested (in dollars per share) | $ / shares | 26.06 |
Non-vested at end of period (in dollars per share) | $ / shares | $ 35.63 |
Minimum [Member] | |
Equity Incentive Plans [Abstract] | |
Vesting period | 3 years |
Cliff vesting period | 1 year |
Maximum [Member] | |
Equity Incentive Plans [Abstract] | |
Vesting period | 4 years |
Cliff vesting period | 4 years |
Equity Incentive Plans, Stock-Based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 04, 2018 |
Jul. 29, 2017 |
Aug. 04, 2018 |
Jul. 29, 2017 |
|
Stock-Based Compensation Expense [Abstract] | ||||
Total unrecognized compensation cost related to non-vested stock-based compensation arrangements | $ 16.9 | $ 16.9 | ||
Weighted average period to recognize stock-based compensation expense | 2 years 8 months 12 days | |||
Selling, General and Administrative Expenses [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Compensation expense | $ 1.9 | $ 2.1 | $ 3.5 | $ 4.0 |
Transactions with Related Parties (Details) - Operating Leases for Office and Store Locations [Member] $ in Millions |
6 Months Ended | |
---|---|---|
Aug. 04, 2018
USD ($)
Lease
|
Jul. 29, 2017
USD ($)
|
|
Transactions with Related Parties [Abstract] | ||
Number of non-cancelable operating leases with related parties | Lease | 5 | |
Payments to related parties | $ | $ 0.6 | $ 0.6 |
Subsequent Events (Details) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Aug. 29, 2018
USD ($)
Store
|
Aug. 04, 2018
USD ($)
|
Jul. 29, 2017
USD ($)
|
|
Subsequent Events [Abstract] | |||
Purchases of property and equipment | $ 10,241 | $ 8,667 | |
Subsequent Event [Member] | |||
Subsequent Events [Abstract] | |||
Number of Toys "R" Us store sites acquired | Store | 12 | ||
Purchases of property and equipment | $ 42,000 |
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