Good morning. Welcome to Ollie's Bargain Outlet conference call to discuss the financial results for the third quarter fiscal year 2022. Currently, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, and interactive instructions will follow at that time. Please be advised this call is being recorded, and the reproduction of this call in whole or in part is not permitted without express written authorization of Ollie's. Joining us on the call today from Ollie's management are John Swygert, President and Chief Executive Officer, Eric van der Valk, Executive Vice President and Chief Operating Officer, and Rob Helm, Senior Vice President and Chief Financial Officer. I would now turn the conference call over to your host, Lyn Walther with ICR. Please go ahead. Thank you. Good morning, and welcome to Ollie's Third Quarter Conference Call. A press release covering the company's financial results was issued this morning, and a copy of that press release can be found in the investor relations section on the company's website. I want to remind everyone that management's remarks on this call may contain forward-looking statements, including but not limited to predictions, expectations, or estimates, and that actual results could differ materially from these mentioned on today's call. Any such items, including with respect to our future performance, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these forward-looking statements, which speak only as of today, and we undertake no obligation to update or revise them for any new information or future events. Factors that might affect future results may not be in our control and are discussed in our SEC filings. We encourage you to review these filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q, as well as our earnings release issued earlier today for a more detailed description of these factors. We will be referring to certain non-GAAP financial measures on today's call that we believe may be important for investors to assess our operating performance. Reconciliation of those most closely comparable GAAP financial measures to the non-GAAP financial measures are included in our earnings release. With that, I will turn the call over to John. Thanks, Lyn, and hello, everyone. Thank you for joining our call today. Before we begin, I would like to welcome Rob Helm, our new Chief Financial Officer, to the Ollie's family. Rob has a strong track record in the consumer retail sector, and I am confident in his ability to be a valued contributor to Ollie's and look forward to working with him for many years. Our third quarter total sales increased 9% over last year, and comparable store sales increased 1.9%. While we were pleased with our overall sales results for the quarter, we were tracking to the low end of our comp guidance until we experienced softness in business during the last two weeks of October. During the quarter, more than half of our departments generated positive comparable store sales. We saw particular strength in lawn and garden, hardware, food, health and beauty aids, and sporting goods. We were pleased with the significant improvement in our gross margin rate compared to last quarter. This was driven by lower supply chain costs and improved merchandise margin. We continue to invest in price to motivate consumers as the competitive environment is highly promotional. As consumers need to save on everyday essentials, we are seeing continued strength in our consumable categories. We believe we are well-positioned to thrive in the current environment, and we have tremendous deals in our stores and in the pipeline. The closeout market remains extremely favorable with deals, and more deals. We are seeing incredible opportunities across all of our categories, and the availability of deals continue to grow from both new and existing vendors. At this point, we see no slowdown in sight. We sell good stuff cheap. This type of environment allows us to emphasize our compelling value proposition to consumers. Moving to real estate. We had a busy quarter, opening 15 new stores and closing one due to a relocation, which reopened early in the fourth quarter. We ended the quarter with 463 stores in 29 states, compared to 426 last year. While store opening challenges persist, we have opened 39 stores as of today, bringing us to a store count of 467, with one additional store opening planned in January. We remain pleased with the productivity levels of our new stores overall. New stores are the engine for our sales growth. We continue to face challenges in the market today with permitting and construction and as a result, expect to open approximately 45 stores in 2023. Our long-term plan is to open between 50 and 55 stores annually and are confident that our model can support over 1,050 stores in total. In terms of remodels, we are pleased with the results of our store remodel program. We have tested several different layouts and continue to learn what works best for our customers. We have remodeled 15 stores so far this year and plan to complete between five to 10 more by the end of the fiscal year, for a total of 20-25 stores. Turning to our supply chain. We are well positioned to benefit from the improvements we have made to our supply chain over the past year. The environment is more favorable as pressure on transportation continues to ease compared to last year in the first half of 2022. We're in a strong position to service our stores during the peak holiday selling season. To support our new store growth, we are finalizing plans to open our fourth distribution center in the Midwest and have agreed to purchase land in Princeton, Illinois. Together with the expansion of our York, Pennsylvania, distribution center next year, our distribution center network will be able to support over 700 stores. We expect to complete the expansion of our York distribution center in the first half of 2023 and the fourth distribution center by the end of the second quarter of 2024. On the marketing front, we have made progress on enhancing brand awareness to attract new customers and motivate existing customers. As part of our 40th anniversary celebration, we unveiled a 16 ft 7 in bobblehead of our mascot, Ollie, which won the Guinness World Records for the world's largest bobblehead. This event created a lot of buzz for our brand and generated over 1,200 news mentions through our online, TV, and newspaper outlets. Our 40th birthday events, including our America's Biggest Cheapskate contest, combined with our enormous bobblehead, led to over 1 billion impressions of our brand. We invite you to visit the Ollie's bobblehead on display at our Harrisburg, Pennsylvania store. We are excited by the results we are seeing from our social media strategy to test micro and nano influencers on platforms such as TikTok, Facebook, and Instagram, which we began in the second quarter. We will continue to invest in and build on all forms of digital marketing. Ollie's Army continues to perform very well and accounted for over 80% of our sales and grew 5.2% during the quarter. Our busiest and most exciting night of the year, Ollie's Army Night, is this Sunday, December 11th. We are thrilled once again to open our doors exclusively to Ollie's Army members. Our teams have worked tirelessly to fill our stores with tremendous deals for this special night, and we can't wait to welcome our loyal Bargainauts. Come join us for a great evening of fun and bargains. If you're not an Ollie's Army member, there's still time to enlist and share in the fun and special savings. We hope to see you there. Our civilian database, which is comprised of non-Ollie's Army shoppers, also continues to grow. In October, we began testing targeted direct mailings to these customers as part of our efforts to expand our customer base. We are encouraged with the progress we made during the third quarter. We recognize that consumers are facing significant inflationary pressures and remain focused on what we can control, which is delivering great deals to our customers. Although the environment remains uncertain, we were pleased with our Black Friday sales as customers responded favorably to our in-store deals. Our quarter to date comparable store sales trends are running in line with our updated guidance. We have a lot of business still in front of us and believe we are in great inventory position to finish the season strong. In closing, we are a high growth company in one of the most attractive sectors in retail, extreme value, and we believe we have the scale, the know-how, and the relationships to benefit from the continued disruption in the marketplace. We have tremendous runway to expand our footprint, and we believe the value proposition of our business model supports our long-term growth plans. I'll now turn the call over to Rob to take you through our financial results and Q4 outlook in more detail. Thanks, John. Good morning, everyone. I'd like to start off by thanking John, Eric, and the rest of the team at Ollie's for the warm welcome. While I've only been here for a few weeks, I've been really impressed with the caliber of our team and the dedication of our associates. For the third quarter, net sales totaled $418 million, an increase of 9% from the prior year. Comparable store sales increased 1.9% in the quarter compared to last year. During the quarter, we opened 15 new stores and closed one store, ending the quarter with 463 stores in 29 states, an 8.7% increase in store count year-over-year. Since the end of the third quarter, we've opened an additional four stores. Gross profit margin declined 40 basis points to 39.4% compared to 39.8% in Q3 last year due to higher supply chain costs and slightly lower merchandise margin. We were pleased with our significant gross margin improvement from the second quarter, primarily driven by lower supply chain costs, which were meaningfully lower than the first half of the year. We also benefited from a higher merchandise margin compared to the second quarter. SG&A expenses as a percentage of net sales increased to 29.9% compared to 29.7% in the prior year. The 20 basis point increase was primarily due to the deleverage of our fixed expenses related to higher selling costs, partially offset by our disciplined expense control. Operating income totaled $30 million for the quarter, flat to last year. Operating margin decreased 80 basis points to 7.1% due to higher supply chain costs, a slightly lower merchandise margin, and higher selling costs. Adjusted net income was $23 million, and adjusted earnings per share was $0.37 compared to $0.34 last year. Adjusted EBITDA was $39 million, and Adjusted EBITDA margin decreased 50 basis points to 9.4% for the quarter. Inventories increased 11% to $524 million in the quarter, compared with $472 million a year ago, primarily due to the increased number of stores, the timing of merchandise receipts, and higher supply chain costs. In addition, it is important to note that our inventories at the end of Q3 2021 were lower than our historical level due to the supply chain disruption. Our balance sheet cash remains strong with $182 million in cash on hand and no outstanding borrowings under our revolving credit facility. Capital expenditures totaled $15 million, primarily for new and existing stores and the expansion of the York Distribution Center. This compares with $12 million in the prior year. During the quarter, we invested $20 million to repurchase shares of our common stock. Moving on to our outlook for the fourth quarter, we have a lot of business ahead of us, including Ollie's Army Night, and believe we are well-positioned to deliver great deals to our customers. However, given the uncertainty and unpredictability of the current environment, we are adjusting our expectations for the fourth quarter. We now expect total net sales of $540 million-$550 million. Com store sales of flat-2%. Gross margin rate in the range of 38.2%-38.4%. Operating income of $66 million-$70 million. Adjusted net income of $49 million-$52 million. Adjusted earnings per share of $0.78-$0.83, both of which exclude excess tax benefits related to stock-based compensation. For the full year, we now expect total net sales of $1.817 billion-$1.827 billion. Com store sales of -3.8% to -3.3%. The opening of 40 new stores left two relocations and one closure. Full year gross margin of approximately 36.1%-36.2%. Operating income of $129.5 million-$133.5 million. Adjusted net income of $98.8 million-$101.8 million. Adjusted earnings per share of $1.57-$1.62, both of which exclude excess tax benefits related to stock-based compensation. An annual effective tax rate of 24%, which excludes the tax benefits related to stock-based compensation and diluted weighted average shares outstanding of approximately 63 million. We expect capital expenditures in the range of $55 million related to new stores, our York distribution center expansion, costs related to our fourth distribution center, store level initiatives, and IT projects. I will now turn the call over to the operator to take your questions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your touchtone telephone. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Brad Thomas with KeyBanc Capital Markets. Your line is open. Hi, this is Taylor Zick for Brad Thomas. I appreciate you taking the question. I was wondering if you could talk a little bit more about the cadence of the sales during the quarter and if you can talk any more about how the holiday is shaping up more specifically. Thanks. Sure. With regards to the overall cadence of the quarter, as I said initially, our trends are running really, really strong and at the low end of our guidance until the end of the 11th week of the 13-week quarter. We had some slowdown in business mainly related to warmer weather. We obviously we're locked and loaded for the cold weather at this point in time, and that did not come out in the Q3 perspective. Obviously looking at the overall, the quarter was actually August and September were pretty much in line with each other and October was definitely the drag on the overall quarter. As we said, we're liking the way the fourth quarter is shaping up. We had a strong Black Friday day and a Black Friday weekend and we continue to see some nice trends in the business. We're obviously, pretty comfortable where we're sitting today and we feel good with the business. Got it. Thank you. If I could just squeeze one more in. Can you talk about how the toy and maybe the seasonal or maybe just generally how the discretionary items are performing versus the more stable items? Obviously, That's couple questions there. Toys is a seasonal item as well as holiday. We have a ton more discretionary items within our stores. Discretionary is performing well as you could note in our top five selling departments, lawn and garden and hardware are definitely on the discretionary front. Those were our top two departments in the quarter. We're definitely seeing some pressure on some discretionary items that are higher ticket. We believe the value proposition we're providing is pretty strong and the consumer is responding as well with what we're offering. With regards to toys, obviously last year was a little unique to where there was a lot of supply chain disruptions. People were worried that there was gonna be a shortage of holiday goods. We believe the toy sales were pulled forward a little bit into Q3 last year. Made a little bit of a tougher Q3 for us. There's still, you know, 17 shopping days to go for the rest of the holiday period. We're in very good shape with toys and we feel like we'll end the season pretty strong. Thank you. Best of luck. Thank you. One moment for our next question. Our next question comes from Peter Keith of Piper Sandler. Your line is open. Hi, this is Matt Edgar on for Peter. Thanks for taking our questions. Just real quickly, how is the closeout backdrop kind of changing sequentially? You know, I know you mentioned that you're getting more and more closeouts but just how is it changing and then how is the margin on those closeouts changing? Appreciate it. The overall closeout business has been strong. I will tell you it is getting stronger. The deals are getting bigger, and we're seeing some positive movement there as we had expected. I don't think this is a surprise to us. Obviously we can't call out the timing of deals, but we are seeing some nice flow in some categories that we're excited about. We're seeing good activity in the flooring department, automotive, believe it or not, lawn and garden. Domestics and housewares are our biggest contributors right now to the deal flow. Closeout margin profile is pretty consistent year-over-year. We feel real good with where we're sitting on the margin profile of the deals. We think we're gonna continue to see momentum in the business as we move forward here. Great. That's good to hear. I guess you maybe you just answered this on you can't really talk to timing, but how long do you think this elevated closeout environment can last? We never know that answer, to be honest with you. Closeouts have been pretty good for 40 years. I would tell you the closeout business is pretty strong. I think what we're seeing today in the overall inventory challenges that people are facing, in a lot of goods that are sitting in warehouses, I would tell you, I think we have pretty good runway through at least the first half of 2023 through 2023. Great. Thanks. I'll hop off. Thank you. One moment for our next question. Our next question comes from Jason Haas with Bank of America. Your line is open. Hey, good morning, and thanks for taking my questions. I'm curious if. Hey, Jason. -Seeing anything... Hey, John. I'm curious if you're seeing anything this year that changes your philosophy around the long-term algo for the business? I think in the past, we've talked about 1%- 2% annual comps and a 39%- 40% gross margin. I understand there's some things that can swing that gross margin around, but I'm curious if just given, you know, there's been some volatility this year, understandable given the environment we're in, but any changes here to the long-term algo? Yeah, I think, Jason, the answer on that would be, I don't think the answer is no. I would tell you, I'm pretty excited about 2023 coming up because I think we're gonna get back to more normalized cadence and more normalized business model, and people are gonna get their lives back to normal. Which I think will bode well for us and everyone else in the business. I don't think that the long-term algo has changed at all. I'll call it choppiness in 2023 for us to get back to our normal algo. The margin may be a little bit lower on 2023 than where I'd like to be, but I think we'll get there by 2024. As we said, the store growth, I'd like to be at 50- 55. Just with the permitting and construction challenges, I think 2023 will be, call it 45 stores. We'll have a little bit of slowness in 2023 with regards to long-term algo, but I think we'll get right back to it and that's intact. Got it. That's great to hear. Can you just remind us how the business performed through the last recession in 2008-2009 period? Just curious going forward, assuming your, you know, the low income customer remains under some pressure, you know, to what extent do you expect to see some trade down, and could that be potentially a greater benefit going forward? Yeah. Going back to the, you know, 2008, 2009 period, obviously it was a long time ago. I think it was very different than it is today. We obviously experienced about an 8% comparable store sales in 2009, which was very strong. The customers responded to the deals we had in the pipeline and what we offered to the customer, and they were under significant financial pressure. This one I think is a little different. People have had a lot of time at home. They've not spent as much money as they had previously, and also we haven't had a real shock to the financial system like we had in 2008, 2009. There's obviously the inflationary pressures are gonna put continued pressure on folks at the lower income and middle income ranges. I think the annualization of the heating bills and whatnot are gonna create pressure there. We should see some favorableness come back to us. Jason, it's Eric. I'll just jump in on trade down. We're seeing a similar trend in Q3, similar to Q2. You know, we're encouraged that the customer, the higher income customer is trading down. We're continuing to see the lower income, fixed income consumers trade out. It's still a marginal benefit to us, similar to Q2, so slightly favorable. Hopefully that trend continues. We see stabilization of that fixed lower income consumer and the continued trade down of the higher income consumer moving forward. Sounds good. Thank you. Thanks, Jason. One moment for our next question. Our next question comes from Edward Kelly with Wells Fargo. Your line is open. Yeah. Hi. Hi, guys. Good morning. Hey, Ed. John, you mentioned. A couple things for you. Q4 gross margin guidance, you know, came down. Can you maybe just provide a bit more color on that? You mentioned, in response to another question, that the 2023 gross margin could be below where you'd like it to be. Could you provide more color there as well and sort of how we should be thinking about it? I guess the whole thing, right, is that, you know, you're buying product, what I would expect to be at a very good rate, but yet there is still margin pressure. Maybe could you just sort of wrap it all together for us as you sort of think about those two items of Q4 and 2023? Yeah. Ed, obviously, we're coming off of Q2, which was probably the lowest margin we've ever delivered to the street at a 31 and change, which was severely disappointing. We obviously had said we expected to be at close to a 39.4 for this quarter, and we delivered that number. We've done a lot of work to get back to where we think we should be. The Q4 slight change on the margins really related to deleveraging with the pullback on the sales from our last guide from a 3%-5% down to a 0%-2%. That's just leverage of the deleveraging of supply chain costs that we have to deal with for that quarter, which is temporary. It'll come back to us. With regards to 2023, we are seeing great deal flow. I do think we have some opportunity in the margin, but I don't wanna get ahead of ourselves and set ourselves up for disappointment. We're gonna have some nice improvement in the margin for 2023 versus 2022. I don't think we're gonna see. I'd love to see a 40%, and if I can get it, I'm gonna get it and deliver it, but I'm probably closer to let's call it a 39% right now, with regards to full year 2023. I wanna get a little more time under our belt to see how the supply chain costs shake out here in Q4. If we think we can do better than the 39%, we will definitely give you a better guide in the upcoming call in March, but I don't think you're looking at a 36%, 37%. I think we'll be closer to the 40% than not. Okay. Just another bigger picture question for you. You know, you're getting, you know, great deals today. Your flyer is robust. You know, the question is though, is that consumers don't really seem to be responding in a way that, you know, historically we would have expected, I guess. Why do you think that is the case, and what does that mean even for next year? I think the consumers are responding, Ed. The number one department we had was lawn and garden, so that's a total discretionary department, consumers responded pretty well to that. Hardware as well is discretionary, they responded pretty well to that. I think they're responding. I just think that, you know, we're operating in a highly inflationary environment, as we continue to say. It's an uncertain environment. It's a very promotional environment, everyone's fighting for everyone's dollar. I think that, you know, am I disappointed that we didn't keep our 3.5 comp going in the quarter? Yeah. We had some weather that impacted us that we know was not something structurally wrong with the business. The cold weather's gonna come, and we'll get those sales back. We feel like we're well positioned, and we'll continue to move forward. I think we're getting back to a more stable operating environment and the company's on the right track to continue to deliver increased earnings to the shareholders. Okay. Thanks, guys. Thanks, Ed. One moment for our next question. Our next question comes from Jeremy Hamblin with Craig-Hallum. Your line is open. Thanks. I wanted to come back to the gross margins for Q4 and just understand. You know, it looks like you're guiding to about 75 basis points to 100 below expectation. Some of that would be explained by the downside, I think, of roughly $17 million of lower sales forecasted for Q4. You know, I needed to understand, you know, are some of the categories underperforming? You know, toys in particular, you're running a, you know, 15% off promotion ahead of Ollie's Army Night. I don't think that's consistent with what you've done historically. Historically, toy promotions have always come after Ollie's Army Night. I wanted to just understand whether or not there's certain categories, toys maybe being one of them, where, you know, you talked about in the prior, you know, kind of buyout deal that, you know, toys were, I think, like 40% of that deal. Just wanted to understand if some of this is more, you know, products that you brought in that maybe aren't moving as well as you had hoped, as opposed to just, you know, pressure on, you know, your consumer. Yeah. Jeremy, with regards to the Q4 margin, I would tell you it's 100% attributable to the deleveraging of sales. The merchandise margin, we expect that to actually be up year-over-year. There's not a compression in the merchandise margin from Q4 of 2022- 2021. It's, you know, the implied margin guide that we're given is really related to the $17 million-$18 million of lower sales volume for the quarter. With regards to our promotional event for toys, as you know, we're operating in a highly promotional environment. Everybody is being very aggressive with the seasonal and toy items right now. We don't have a toy issue. We're trying to take advantage of the holiday period where people are shopping very heavily. What I think all that's gonna do for us is we'll have less markdowns on the post-holiday period than we normally do. We're getting, again, some nice impact from the overall promotional environment we're running today for a five-day period. I'm not too worried about that. I think we're just changing dollars. I think we'll be changing less dollars in markdowns when it's all said, all done. I think we're very comfortable with where we're sitting in our inventory position. Okay. Then just a follow-up question on the York DC expansion. You know, can you give us a sense for what the potential impact on margins might be in the first half of the year or if it would carry on into the second half of the year? Jeremy, the expansion of the DC in York will not have any impact on the margins. In 2023 at all. Okay. Gotcha. Okay, thanks. Best wishes. Thank you. One moment for our next question. Our next question comes from Eric Cohen with Gordon Haskett. Your line is open. Good morning. Thanks for taking the question. Understanding it's been a very dynamic environment, just kinda looking back the last couple quarters, comps relative to guidance have underperformed and recognizing you were at the low end through most of the quarter up until the late Q3, late October softness. Just curious of the underperformance, sort of how much would you attribute to kind of execution versus more external dynamics? How have you incorporated those learnings in setting the Q4 guidance? Yeah, I think, Eric, with regards to execution, I don't think any of it was execution. I think it's just the external factors we're all dealing with. It's not just Ollie's, it's everyone who's out there. There's challenges with the consumer. The consumer's under, you know, significant pressure with inflation. We're just dealing in a very uncertain environment, and I think we're navigating pretty well. I'm not ashamed of a 1.9% comp and two quarters in a row of positive comp. We're just gonna build off of that and continue to move forward. I think we're in good position to execute Q4. Obviously we're taking the guide down a little bit, from where we were before. I think that's just a prudent thing to do with all the uncertainty and the highly promotional environment we're running in. I think we're navigating very well. I think we're locked and loaded for the remaining 17 days here of the holiday. I think we're gonna come right out of the holiday and ready to go. I think we're in good shape. Just last year, obviously, around this time, Omicron was becoming a headwind and certainly impacted store traffic, and it was lack of visibility on the timing of inventory receipts. Sort of how are you going to market different this holiday season versus last year? Can you just remind us sort of what the comp cadence was in Q4 last year? Eric, you're correct with the resurgence of Omicron for last year. I do think that that does provide some upside for us and other retailers later in the holiday season. It's something that I think is a positive. We've not really baked that into our numbers. We've kind of just left that, let that be at this point in time. I think the inventory position we're in today versus last year from a seasonal perspective is much stronger, and I think we have an opportunity to finish pretty strong as we round up the holiday season. I think the lessons we've learned is to just be conservative and move forward with what we're seeing and guiding with where we're at so far quarter to date. Thank you. One moment for our next question. Our next question comes from Mark Carden with UBS. Your line is open. Good morning. Thanks so much for taking my questions. To start, when you see deals of the magnitude of the one that you heavily advertised this quarter, how long does it typically take for you to sell through them? Could we expect to see much in the way of further tailwinds in 4Q, or has the bulk of the lift from that one already taken place? The sell-through of that item and those deals that are that large, they take a while to sell through. You know, obviously the tapering of the velocity does start to taper down. We're still in pretty good inventory shape going into Q4 with that deal and will benefit from that deal pretty well. I got to remind everyone that that deal is while it was exciting, while we promote it, we make it bigger than life, it's not that large relative to our total inventory and our total sales velocity for Q2 and Q3 combined. It's very meaningful, but it's not the end-all be-all there. Got it. That's helpful. Thanks. We've seen some states start to put out their own stimulus plan. Go on. Excuse me, I missed that. Oh, sorry. Okay, back to my follow-up. We've seen some states put out their own stimulus programs recently. Are you expecting for that to have much of an impact on your comps, or is it too small to really make move the needle much? My guess is it's probably too little to move the needle a whole lot for us. It's not that meaningful from what we've seen so far and what we're thinking. Okay, great. Thanks so much, and best of luck. Thank you. One moment for our next question. Our next question comes from Simeon Gutman with Morgan Stanley. Your line is open. Hey, guys, this is Michael Kessler for Simeon. Thanks for taking our questions. Hi, Michael. First I wanted to ask about sales per foot, sales per store in Q3. They were a little bit below 2019 levels. I know there's been some volatility throughout this year, but I'm just curious how you view that in the broader context of, you know, your customer counts, your loyalty membership base. I guess I don't know if you would expect it to be higher or just because of the macro we're in a period of depression relative even in 2019, despite, you know, some of the upwards you've had the prior two years. I don't know if there's any framing around that. Be great. Yeah, Michael, I think you're spot on with that the way we're looking at it. I think there's obviously macro headwinds that we're all dealing with. With regards to 2019, we were, you know, call it 99.2%, 99.3% of 2019 from a comparable basis. Just but barely off. If we would've, you know, we would've maintained the velocity of our sales through the quarter without the last two weeks, we would've, we would've been somewhere in the neighborhood of call it 101% or something of that nature that we had planned to be. There, there's I think just macro pressures going on that we're, that we're all rebuilding to. You know, a lot of consumers under pressure, we're navigating through that. I don't... You know, we're not coming out with a - 5, - 10, -1 5. We're in pretty good shape. I think we're gonna continue to see some momentum in our business as we move forward and go into 2023. We're looking forward more so that the deal flow is strong and we have the right item, the right deal to motivate the consumer. Okay, thanks. Follow up on the supply chain costs, the distribution, transportation backdrop. It is easing, you mentioned that. Can you size up, I guess, when we might begin to see some of those benefits roll through the P&L as far as you guys moved to more contracts in the last year? In the volatility, is that something that we would expect, you know, beyond just the lapping of, you know, kind of artificially lower cost this year? Beyond that, just the actual reduction or the easing in the backdrop, how that might play out in 2023, or is that more of a 2024 dynamic? I think we're definitely seeing some easing in the supply chain costs. With regards to the overall, you know, and we did obviously see a pretty large improvement in the gross margin from Q2 to Q3. It was about 600 basis points in supply chain. We started to see the easing, relatively speaking, take place in the Q3 period. I think Q4 is just, it's a moderate easing. Then the big ease is gonna happen in Q1 and Q2 of next year. I still think we're operating at an elevated supply chain cost at this point in time, just because all the investments we had to make in wages in the four walls. There's still gonna be an elevated component there and supply chain costs aren't back down to where they were pre-COVID. We all have a little bit of elevation there that I think is more permanent in nature that we've got to get a little bit better on the merchandise margin to offset it. I think, Michael, in terms of how we're structured on the international transportation side, we very much like how we're structured. It's been favorable for this contract season and, you know, we like that the market is a little more favorable as well, a lot more favorable when you compare year-over-year. The stars are aligning, you know, real well moving into 2023 in terms of our business strategy. Thank you. One moment for our next question. Our next question comes from Robert Friedner with JP Morgan. Your line is open. Great. It's Matt Boss at J.P. Morgan. John. Hey, Matt. Comps, hey. Comps in the third quarter on a three-year geometric stack turned negative. Fourth quarter guidance calls for a similar trend. I guess, what exactly, if you could maybe help us, is the bridge from today's negative trend line, and we have seen sequential improvement broadly with closeout inventory versus positive comps next year. Is it traffic would improve? Is it something with ticket? Do we need macro to improve? Just struggling with the bridge between the three-year geometric negative in 3Q, guided negative in 4Q, and then positive comps for next year with, it seems like closeout inventory having improved. Matt, the closeout inventory and the closeout opportunities definitely have improved. I think the macro backdrop that we don't have the timing on yet is when does the trade down start to outpace the trade out of the lower income consumer. I do believe that that's absolutely coming. I can't tell you if it's coming here in the end of Q4, if it's coming in Q1 of next year. We have seen some of it start. I don't know exactly when it's gonna kick in. We are positioned to capitalize on it. I believe we're, you know, we're right on the cusp from our perspective. We definitely have seen some improvement in the trends from Black Friday forward. We're optimistic that we're starting to see some breakthrough. Obviously, we're not gonna get ahead of ourselves at this point in time. We wanna see some true numbers come out, and I think we're there. I think we'll get there, and I think we'll be there soon. Just to follow up on expenses. Implied SG&A rate in the seems to be high 20s this year. How best to think about maybe puts and takes with SG&A, wages and investments as we think about next year? SG&A definitely is under pressure, Matt Boss, and has been. You know, our historical, call it 25%, 25.3%, 25.5%, is definitely something I don't think we get back to at this point in time. I'm looking more, probably 26%-ish percent in the SG&A front, 23% going forward. Maybe a tad bit higher, not much. It's definitely, I think we'll do better than this year with what we're looking at. It's just the pressures we're dealing with on the wage front and utility costs are something we have to absorb and deal with. Great. Best of luck. Thank you. One moment for our next question. Our next question comes from Paul Lejuez of Citi. Your line is open. Hey, thanks, guys. You mentioned the 39% gross margin for next year is where you think you might shake out, but I'm kinda curious how you think about the promotional environment that you'll be playing in in 2023 versus what you're playing in today and how you think about the sales gross margin trade-off just from a high level perspective. I guess, you know, implicit in that 39% gross margin, you gotta have some sort of comp assumption. Curious what you think that is and just what happens. How do you react if the environment gets more promotional? Do you look to preserve margins or drive sales? Thanks. Yeah, Paul, we're obviously, you know, the way we price and the way we go to market is we price below all the fancy stores in a pretty big way. The promotional activity doesn't make us change to impact our margin. As I explained earlier with regards to even toys, we're shifting the timing of markdowns. I don't think we're shifting the increase of overall markdown rate because we're already priced strong and we're just clearing more inventory earlier than later. I don't think 2023 is gonna be as promotional as this year has been. We'll be prepared for it if it does happen, and we price off of the market. If the market's being promotional, we're gonna be focused on that. Our merchants are gonna go to market with knowing that there is still very active and we're gonna price below that. We're always in everyday value. We don't play the high-low game, obviously. We give them the best price up front and that builds the loyalty with the customer. I think that the value wins and the way we run our business. Got it. Just one follow-up on the, you know, you guys marketed that fancy store buy, which you talked about. I think it was, you know, part of the reason the gross margins fell a bit short in the second quarter, but I'm curious if that buy has performed as well as you had anticipated and how much of the benefit on the margin side was a third quarter event versus a fourth quarter event? Yeah. The overall deal performed well. We're very pleased with the deal, and we're excited how it performed. As I said earlier, it's not the end all be all. There's a lot of deals we have in our pipeline and a lot of departments that perform very, very well outside of these categories. But the deal was strong, definitely impacted the margin in Q3, and obviously it has opportunities to impact the margin in Q4. As I said a few minutes ago, the shortfall in the margin in Q4 is not related to the merchandise margin. It's all sitting in supply chain and deleveraging fixed costs. The margin I think is in good shape and then we feel we're in a good position here. Got it. Thank you. Good luck. Thanks, Paul. I'm not showing any further questions at this time. I'd like to turn the call back over to John for any closing remarks. Over the past 40 years, we've grown to over 10,500 team members who are working harder than ever. We know the holiday season places extra demands on our associates, I sincerely thank them all for what they do, not only at this time of year, but every day. It's the combined experience, passion, commitment of the team that makes Ollie's successful. Thank you for your support of Ollie's. As we say, we are Ollie's. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.