Good morning, and welcome to Ollie's Bargain Outlet Conference Call to discuss financial results for the second quarter of fiscal year 2024. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and interactive instructions will follow at that time. Please be advised that this call is being recorded, and reproduction of this call, in whole or in part, is not permitted without express written authorization of Ollie's. Joining us on today's call from Ollie's management are John Swygert, Chief Executive Officer, Eric van der Valk, President, and Robert Helm, Executive Vice President and Chief Financial Officer. Certain comments made today may constitute forward-looking statements and are made pursuant to, and within the meaning of, the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our annual report on Form 10-K and quarterly reports on Form 10-Q, on file with the SEC, and the earnings press release. Forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non-GAAP financial measures. Reconciliation of those most closely comparable GAAP financial measures to non-GAAP financial measures are included in our earnings press release. With that said, I'll now turn the call over to Mr. Swygert. Please go ahead, sir. Thank you, and good morning, everyone. We appreciate you joining our call today. We are extremely pleased with our strong performance this quarter, with better-than-expected sales and earnings. Our customers continue to respond to our amazing deals, and we are executing our model at a high level. Our comparable store sales increase of 5.8% was well above our expectations and was driven by increases in both transactions and basket. Our room air, and housewares departments were the two big standouts in the quarter, but we also continue to see strength in sporting goods, food, and candy. Food, candy, and sporting goods have been leading categories for some time, and these are all good examples of how strengthening our vendor relationships with major manufacturers continues to drive consistent product flow of compelling deals. Consumers are seeking value, and this is driving growth in the discount and off-price channels. The bigger retailers are gaining share, and the larger manufacturers who supply them are competing for shelf space. Retailers are continuously updating their product offerings, and manufacturers are supporting this by introducing new products and packaging. As a result, there is a constant availability of products and inventory across the supply chains, and this provides additional opportunities in the closeout market. Consolidation on both sides of the aisle has led to more product flow, higher levels of excess inventory, and a larger closeout industry. Some very large retailers have gone out of business in the past several years, and the stakes for those remaining are getting higher. While the closeout industry continues to grow in size, the number of large-scale buyers for this product continues to shrink. Our size, scale, and over 42 years of industry experience is a real strategic advantage, and this is fueling our growth. Anyone can sell cheap products these days, but our true value proposition is selling good stuff, cheap. We sell nationally branded products that people need and want at prices typically 20%-70% below the fancy stores. Real brands, real bargains, has always resonated with customers, and we don't think this will ever go out of style. We completed the quarter with 525 stores across 31 states. Our longer-term target is more than 1,300 stores across the United States. To support our continued growth, we have invested in people, processes, marketing, supply chain, and information technology, all of which have led to better and more consistent execution. The proof is in the strength and consistency of our results. Nine consecutive quarters of comparable store sales growth, a return to a 40% annual gross margin, an adjusted EBITDA margin in the low teens, and the ability to opportunistically accelerate new store openings without sacrificing execution of the business. The 99 Cents Only Stores transaction was one of those opportunities, and there are potentially others on the horizon. Our team is ready for such opportunities. The operational improvements that Eric and the team have made up and down the business have enabled us to be more nimble, a more nimble organization, and I have never been more confident in our ability to drive profitable growth. We are well positioned to continue executing at a high level and winning into the future. We announced a number of executive promotions and appointments on our last earnings call that position us for continued long-term success. With the team in place and the transition progressing, the plan is to pass the CEO responsibilities to Eric in early 2025. Eric will play a more visible role on these calls and investor events going forward. With that said, it's my pleasure to turn the call over to Eric. Thanks, John, and good morning, everyone. Our strong second quarter performance is the result of our great deal flow and the strong execution of our team. ... The process improvements and investments we have made in our people, supply chain, stores, and marketing continue to pay off in the form of better productivity and consistent financial results. As John alluded to, this has also made us a more nimble organization, capable of working through exogenous challenges and opportunities. The collapsing of the Baltimore Bridge was a tragic event that could have been catastrophic to our business, given this is one of our most important ports of entry. However, we were able to quickly reroute ocean containers with minimal impact to the business. The same goes for the recent rise in ocean shipping rates. We negotiated our annual contracts in early May, slightly below budget. Despite the short-term spike in rates, we've been able to effectively move products while delivering against our gross margin targets. The startup of our fourth distribution center is another significant event that we've methodically planned and executed over the past several years. Located in Princeton, Illinois, this facility was opened on time and on budget. We began shipping products to stores in late July, and we are very pleased with its performance. This facility was a big undertaking, and every associate who worked on this project deserves a huge congratulations and thank you. The new facility has a number of technology and productivity enhancements that will help us scale and increase productivity over time. This new distribution center sets us up for continued growth in the Midwest, and we now have the capacity to service up to 750 stores in total. On our last earnings call, we talked about the acquisition of a number of 99 Cents Only stores and our ability to take advantage of this opportunity by prioritizing the opening of these stores and accelerating our store growth over the next 18 months. The majority of the 99 Cents Only stores will open in September, and our team did a fantastic job of reprioritizing around these grand openings. Texas is a great market for us and one where we still have tremendous growth opportunity. These stores are the right size, located in good trade areas, have attractive occupancy costs, and have an established base of value-oriented customers. They will only strengthen our presence in key markets across the state. There's been a recent uptick in the number of store closures, and we are positioned to make the most of these opportunities. This could take some time to play out, but we feel very good about our ability to shift resources and pursue opportunities as they present themselves. On the store operations front, we are testing a higher mix of full-time associates in select stores. Like any other retailer, associate turnover at the store level presents challenges. Full-time associates tend to have a higher vested interest, lower turnover, resulting in significantly higher productivity rates. With time and experience, associates become more proficient in how we operate, including how to best merchandise the stores. This can have a meaningful impact on store execution, and the early results of this test are encouraging. On the marketing front, we continue to shift advertising dollars into various platforms. Our enhanced digital capabilities are helping us to reach new and younger customers and keeping our brand top of mind with existing customers. They are also allowing us to selectively target specific profiles, such as previous customers of 99 Cents Only Stores and customers of other discount retailers. Our expanding customer base is reflected in our Ollie's Army results. Consistent with prior trends, we are seeing growth in our younger customer demographic and retention of higher-income customers. We ended the quarter with 14.5 million active Ollie's Army members, and sales to members continue to account for over 80% of total sales. To enhance the benefits of our Ollie's Army program, we recently announced the offering of a new co-branded Visa credit card. We designed the card program that's tailored to our value-based customers with unique features and benefits. These include higher approval rates, no annual fees, and no late fees of any kind. Ollie's credit card holders will automatically be enrolled in our Ollie's Army loyalty program and receive $10 back on their first purchase at Ollie's, Ollie's Army points for every purchase made anywhere on the card, and extra points for purchases at Ollie's stores. We are rolling out the card to customers on a state-by-state basis over the next year, beginning with Pennsylvania this month. The credit card program will help grow Ollie's Army, build a stronger connection to our members, and give us better insights into customer spending patterns. Before I turn the call over to Rob, I would like to thank the entire Ollie's Army team for their continued hard work and commitment. I am honored to be part of an organization that has a clear purpose and an amazing culture. We sell good stuff cheap and save customers money on the things they want and need for their everyday lives. This has been our business from day one and continues to motivate us each and every day. Rob? Thanks, Eric, and good morning, everyone. We are pleased with our second quarter results, which exceeded our expectations, driven by strong sales growth and disciplined expense control. Before we run through the second quarter numbers, let me touch on a few key areas. First, seasonal sales were very strong in the quarter, particularly the room air category. We had a great in-stock inventory position in air conditioners and fans, and the warm weather throughout the quarter drove better-than-expected sales. The higher mix of AC sales generated strong increases in both average ticket and gross profit dollars, but put a little more pressure on our gross margin rate than originally planned. Second, our sales momentum built as the quarter progressed, with our two-year stacked comps peaking in the month of July. We're pleased with the momentum ending the quarter into August, but we're also aware of the competitor liquidations taking place around us in the next month or so that could impact our stores in the surrounding areas. With that said, let me run through some of the second quarter numbers. Net sales increased 12% to $578 million, driven by new store growth and a 5.8% increase in our comparable store sales. Our comp increase was primarily led by strong growth in transactions, but basket and average unit retail were also nicely positive in the quarter. Our best-performing categories were room air, housewares, sporting goods, food, and candy. Ollie's Army membership increased 8% to 14.5 million members, and sales to our members represented over 80% of total sales. During the quarter, we opened nine new stores, ending with 525 stores in 31 states, an increase of 9% year- over- year. We remain pleased with the performance of our new stores, which continue to perform in line with our expectations. Gross margin decreased slightly to 37.9%. The 30 basis point decline from last year was primarily driven by a mix shift towards the room air and consumables categories. SG&A expenses were well managed during the quarter, decreasing 100 basis points as a percentage of net sales to 25.2%, driven by leverage to fixed expenses on the increase in comparable store sales and disciplined expense control. Operating income increased 16% to $61 million, and operating margin increased 30 basis points to 10.5% in the quarter. Adjusted net income increased 16% to $48 million, and adjusted earnings per share increased to $0.78. Lastly, adjusted EBITDA increased 16% to $74 million, and adjusted EBITDA margin increased 50 basis points to 12.9% for the quarter. Turning to the balance sheet, our balance sheet remains very strong and is a significant strategic asset, which provides us maximum flexibility to drive growth and maximize shareholder returns. We ended the quarter with $353 million between cash on hand and short-term investments, and no outstanding borrowings under our revolving credit facility. Inventories increased 7% to $531 million, primarily driven by new unit growth. Capital expenditures totaled $38 million for the quarter and were primarily related to the completion of our new distribution center in Princeton, Illinois, the purchase of the 99 Cents Only store locations, the remodeling of existing stores, and the development of new stores. We bought back $6 million of our common stock in the second quarter and ended the first half with $31 million in share repurchases, right on our targeted capital allocation. Turning to our outlook, we are raising our fiscal 2024 sales and earnings guidance. This raise flows through the upside in the second quarter and maintains our outlook for the second half of the fiscal year, despite some near-term potential impact from the liquidation sales from a large discount retailer closing stores. For the full year, which is a 52-week year compared to 53 weeks in 2023, we now expect total net sales of $2.276 billion - $2.291 billion. Comparable store sales growth of 2.7% - 3.2%. Gross margin of approximately 40%. Depreciation and amortization expense of approximately $42 million, which includes $11 million that runs through cost of goods sold. Pre-opening expenses are approximately $17 million. Operating income of $252 million - $259 million. Net interest income of approximately $15 million, and adjusted net income of $199 million - $203 million, and adjusted net income per diluted share of $3.22 - $3.30. Capital expenditures are expected to be approximately $104 million, which includes the $14 million purchase price for the 99 Cents Only Stores. Lastly, let me provide color on how we're thinking about the quarterly comp and store opening cadence. For the third quarter, we are still projecting comparable store sales to be flat. While we have good momentum in the business, the flat comp assumption now includes some disruption from the store closing liquidation sales later this quarter. As a reminder, the third quarter will also have one less flyer that moves out of the quarter and into the fourth quarter. For the fourth quarter, we would expect comparable store sales to be slightly above the high end of our long-term algo of 1%-2% due to the shift of the flyer. For new store openings, we are still targeting a total of 50 new stores, less two closures that we chose not to renew the leases. We expect to open 25 stores in the third quarter and 12 in the fourth quarter. We prioritize the opening of the 99 Cents Only Stores, having already opened a handful, with the balance expected to open in the next few weeks. With other real estate opportunities on the horizon, we are ready to shift resources towards accelerating unit growth and will evaluate opportunities as they become available. Now, let me turn the call back over to John. Thanks, Rob. I would like to thank the entire Ollie's team for everything they do to make us great. It's the combined experience, passion, and commitment from everyone that makes us successful. Our teams are doing an incredible job buying deals, taking care of our customers, and keeping our stores stocked with amazing deals. We have so much growth ahead of us, and in many ways, we are just getting started. As we say, we are Ollie's! That concludes our prepared remarks, and we are now happy to take your questions. Operator? Certainly. And our first question for today comes from the line of Matthew Boss from J.P. Morgan. Your question, please? Great, thanks, and congrats on a really nice quarter. Thanks, Matt. So, John, maybe two-part question. So impressive 2Q comp, 5%-6%, despite lapping the toughest compare of the year. I guess maybe could you elaborate on the cadence of trends through the quarter, maybe what you've seen so far in August? Seems like you're embedding some level of consolidation impact as the quarter progresses. And then second part to that question is just what do you see as the, as a multi-year opportunity, potentially from industry consolidation? I think both from a market share perspective, but then also, what is size and scale doing to the business as it relates to relationships and potentially longer term to margins? Hey, Matt, this is Rob. I'll take the first part of the question, then I'll hand it over to John for the second part. From a comp perspective, for the second quarter, we were nicely positive in all 3 months of the quarter. As you recall, when we discussed, we had a really strong comp in the month of July last year, and so to exit the quarter with a positive comp against that big comp that we saw in July, we were very pleased with that. In terms of August, we've continued that momentum from July into August. We have had our flyer shifts that have impacted us in the month of August, but we're pleased with where we're sitting. We're running slightly ahead of plan. You know, our guidance of the flat reflects the potential for the impact of the liquidations happening at the tail end of this quarter, but is offset by the momentum that we're seeing right now in our business. Matt, it's Eric. I'll take the second part of your question. With the investments we've made in our infrastructure over the past several years, including the expansion of our Pennsylvania distribution center and the Illinois DC that we just successfully started up, we're revising our long-term growth target from what was 50 - 55 stores, to set the floor at 10% unit growth, with the ability to accelerate that growth. We're excited about the real estate opportunities that are out there, and on an opportunistic basis, when the unit economics make sense, we will accelerate. We're not gonna risk the continuing to execute our business and deliver profitable growth for this acceleration, but we are preparing for it. In terms of the market and the market share opportunity, we have a fairly meaningful share of wallet with some of the customers out there that, or some of the retailers out there that are distressed, so we are excited about the opportunities in terms of market share. We're excited, not only for real estate and people, but we're also excited for product and closeouts that come out of those situations, as we've experienced in the past with other retailers that have gone out, like Bed Bath & Beyond and Tuesday Morning, for example, so we're positioned well. And Matt, let me just add to that one little thing here. With regards to our size and scale and our ability to continue to foster and drive strong relationships with key vendors, I think that's a key takeaway as well. And we are the largest buyer of closeouts in the market today, and we continue to focus on that. And I think we continue to have a stronger moat in our model that we continue to be able to be the first call, and we're seeing a lot of activity from many different vendors out there in the marketplace. And we're continue to do what we've done for many, many years. We continue to have great relationships and a very strong balance sheet, and the vendor community appreciates that, and we appreciate them. It's great to hear. Thanks a lot. Thanks, Matt. Thank you. And our next question comes from the line of Edward Kelly from Wells Fargo. Your question, please. Hi, guys. Good morning, and yeah, reiterate, nice quarter. I wanted to ask you about the gross margin. You know, as we think about this quarter, I don't know, can you maybe quantify, you know, how much, you know, the mix ended up hurting you? And then, you know, going forward, presumably, I mean, and obviously, the, you know, the AC stuff's not gonna continue, but maybe the consumables do. You reiterate the full year gross margin target, even though Q2 was a little light, so just curious as to what the offset to that would be, and then how we should be thinking about this, you know, Q3 and Q4 cadence around that. Ed, let me take the last part, and then I'll let Rob take the details that with regards to Q2. With regards to the full year guided, the 40%, we had some pressure in Q2 from the overall mix shift. Not as significant as you might think in what versus what your expectations would have been. So we believe that we're still well positioned to deliver the full year 40% gross margin, because the business does change significantly in Q3 than Q4. So we feel like we're in pretty good shape to continue to feel confident about the 40% gross margin on a full year basis. And I'll let Rob kind of take you through Q2. From a mix shift perspective, we were coming into the quarter before we saw the higher penetration, the AC sales and the consumables area. We were planning for a modest expansion year over year. So call it, you know, a 38.4%-38.5% gross margin. Essentially, all of the differential from our original plans to our actual results delivered is that mix shift. ... Okay. And then, as it pertains to, you know, competitor liquidations, you know, that you see on the horizon, I guess how are you thinking about the impact? How difficult is that to estimate, and how long, you know, does that last? I'm just kind of curious and, you know, your confidence around the back-half comp guidance with, you know, with that sort of in the background. The impact of the liquidation is somewhat unprecedented for us. You know, we haven't seen a competitor closure like this in terms of share of wallet, at least in recent history. Typically, these compressed liquidations, they're selling a large amount of goods into a short, compressed window at high markdown rates. Initially, the customers of the brand or the shop, you know, shop these liquidations. But once you get towards the end, you kind of get away from your core customer. So it's really hard to quantify, you know, how much of an impact this could have. We know that we've been gaining share, you know, over the last, you know, say, 2 years, particularly. So we like our ability to compete, but we thought it prudent to call it out for the street and our guidance and be conservative and try to beat the expectations. Ed, we're very well positioned, so there's, you know, I call it a potential, but it's very hard to quantify, almost impossible to quantify, but it's a short-term pain for a long-term gain that we're gonna experience here. Yeah. Understood. Thanks, guys. Thank you. Thanks, Ed. Thank you. And our next question comes from the line of Peter Keith from Piper Sandler. Your question, please. Hi. Thanks. Good morning, guys. Great results, and the stores look great. On the competitor closures, I'll just say it looks like Big Lots is closing a bunch of stores, so maybe that's who we're talking about. You historically haven't called out a headwind from competitor closures, so I guess the straightforward question is, are those a larger opportunity than, you know, previous store liquidations from other competitors? Peter, I think simply put, the answer is yes. We've not typically called it out because it hasn't been as directly located in our marketplaces that we believe could be impactful, but we don't know the answer, so we're just taking a cautious approach at it. We're not worried, but we thought it would be prudent to call it out. We do think there's obviously gonna be some impacts. We don't know what they are at this point, but we think, you know, we're like I said earlier, we're well positioned. We feel comfortable where we're sitting right now, and we'll be able to navigate through it. Okay, very good, and then you did provide the gross margin mix impact from the air conditioners. Could you also provide us with maybe the comp lift that you got from that category in Q2? The comp lift was about two full points of comp on the 5.8% comp that we delivered this quarter. Very good. Thanks so much, guys. Thanks, Peter. Thanks, Peter. Thank you. And our next question comes from the line of Kate McShane from Goldman Sachs. Your question, please. Hi. Thanks for taking our question. Just to ask another question about the liquidations that are taking place. Can you quantify how much of your store base is being impacted by this, or how much overlap there is? And is there any kind of risk that the liquidation can pull forward demand, where it could impact the quarters beyond Q3? Hey, this is Rob. I'll answer that question. There are 296 stores closing. We account for roughly 100 of those stores as located in our trade areas. So that's the quantification there. From a pull forward of demand, you know, John referenced it is unprecedented. You know, we haven't seen this, something this big, you know, in recent years. But our intel suggests that, you know, that there's not a seasonal assortment, not a high degree of toys sitting in these stores and that, you know, the go-forward seasons, they didn't buy in place in these liquidating stores. So we're hopeful that it won't impact the core Q4. Okay. Thank you. And if I could just follow up, I know you talked about the performance of categories that drove the comp in the quarter, but we wondered about the performance of maybe some of your other bigger categories and what that's telling you about the consumer health and market share gains. Yeah, Kate, we pretty much, you know, about 50% of our categories comp positive for the quarter. And as we've, you know, we've said in the past, a lot of our fluctuations departmentally are deal driven and annualizing a deal from the prior year or year. So for instance, flooring was one of our weakest performing categories in the quarter, but we're annualizing a strong deal from last year. So it's not necessarily the reflection of the customer. The deal motivates the consumer. We're not seeing any real slowdown from the deals we're offering categorically that the customers are responding to. So we feel really good with what we're seeing from our customer shopping patterns in our stores. Yeah, I think, Kate, also, just on the health of the consumer, we're actually seeing strength across all income segments this quarter. Our strongest growth is coming from the lower middle income segment, which is the 40-60 thousand household income segment, and we're continuing to see retention of higher income customers at that 100K + level. So we're very happy with what we're seeing in terms of the overall strength of our customer. Thank you. Thank you. And our next question comes from the line of Scott Ciccarelli from Truist. Your question, please. Hey, good morning, guys. This is Josh Young on for Scott. So you talked about SG&A being well controlled, but based on the new guidance, it looks like flow-through is a little limited on the higher sales. So could you just give us some color on how you're thinking about that? We were really pleased with the flow-through for this quarter. We leveraged 100 basis points. Our 5.8 comp would attribute roughly 40 basis points of leverage, so we gained 60 basis points of other leverage within our expenses. We were able to see some efficiency on advertising as, you know, we continue to shift from digital to print. Print to digital. Yeah, print to digital, as well as some favorability in store payroll for some of our early optimization efforts in those initiatives. Okay, that's helpful. And then, you know, you mentioned strength across kind of the different cohorts and gaining some share with higher income consumers. Just curious, within that, that group, how sticky you think those customers are in the longer term here? We're seeing a couple quarters of trend that they look to be sticky, but it's only a couple quarters. So we'd seen a pretty sizable trade-down over a number of quarters, and now we're seeing good retention. We measure retention over a 2-year period, so we haven't lapped the trade-down impact yet, but we like the trend we're seeing a lot. Got it. All right, that's helpful. Thanks, guys. Thanks, Josh. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Brad Thomas from KeyBanc Capital Markets. Your question please. Good morning, and congrats as well. I want to talk about- Okay ... the real estate opportunity ahead. You know, when we think about some of the Big Lots closures that are happening, and additional ones may happen on the horizon, I was hoping you could talk a little bit about your bandwidth to perhaps take on opportunistic real estate opportunities. And, you know, how many stores would be too many? At what level do you worry about your ability to source these new stores? How much could you take them on and perhaps tuck them away for the next couple of years? Just how are you thinking about things if we do find ourselves with many more store locations that might be opportunities for you all? Yeah, Brad, I'll answer it, and then I think, Eric will probably add some to it. With regards to how many, I don't know, at this point in time, how many we think we could take and tuck, for a year, you know, two or 3-year period. I don't think that's very feasible. I think that's riskier than it is beneficial. So, we would probably not be interested in trying to do something of that nature. That just adds a lot of pressure on our overall core business and our ability to run it. So, you know, trying to carry the dead rent of stores for a long period of time is not beneficial to us and the way we look at it today. In terms of our ability, how many we could open and accelerate, I'll let Eric take that piece of it. Yeah, I think just, just to follow up on, on dead rent, we're considering every angle on that. So it really depends on how attractive the occupancy costs and, you know, what the sort of the penalty of dead rent would be. The cadence of the store openings is critical to acceleration, so if there's enough inventory of stores out there that we can get at, opening a cadence that's a little bit more even quarter to quarter, gives us the ability to accelerate rather substantially. We're very aggressive in the process of any surplus locations that are out there, any announced closures. We've been able to navigate now the bankruptcy process through our experience with Bed Bath & Beyond, as an example, and 99 Cents Only, so we're, we're becoming very proficient at this. We're not setting necessarily a limit on how many stores we would open as part of the acceleration, but we do believe it can be meaningful, and we will ensure whatever acceleration we ultimately commit to based on opportunities in front of us, that we do not risk the execution of our core business. That's really helpful. And you talked about the trends and how the consumer's performing, but as we look to the all-important holiday season, could you talk a little bit about perhaps any merchandising opportunities that you have and any nuances that you're seeing and how the customer shop in your stores today as it relates to how fourth Q may play out? I think, Brad, that's probably very speculative, for us to comment on. I would tell you, we believe we're very well positioned, for the holiday season. Our merchants have done a great job, getting the inventory that we believe is right for the customer at the right values. So I think we're set to win, but I think it's a little too early to speculate on anything else at this point in time. Yeah, I would add that we're very excited about our seasonal assortment and our toy assortment moving into the holiday season, and we have some evidence of early selling on the seasons that are kind of the prelude to Christmas, and we really like what we're seeing, and it's getting us more excited about what's flowing into stores. We'll start setting Christmas actually next week, so excited to see what comes out of that business, seasonal and toys. ... Very helpful. Thanks so much. Thanks, Brad. Thank you. And our next question comes from the line of Eric Cohen from Gordon Haskett. Your question, please. Hi, thanks. Good morning. You talked about more retailers are closing stores, and the closeout market is growing, and your scale is improving. Are you seeing deeper deals, bigger deals with your existing vendors, or are you adding new vendors with new categories to the store? And with Big Lots store closings going on now, have you been able to capitalize on any of the vendors that were with them that you didn't have relationships with previously? Eric, I'm only gonna comment that I would tell you we are seeing great deal flow. We're seeing some additions to our offerings from new relationships with vendors, and the deals we're seeing out there are very compelling, and we're very excited with what we're getting out there. Great. And you still haven't commented on shrink. I think it was running like a 100 basis points ahead of sort of pre-pandemic levels. Just curious where that is now. And then as that sort of normalizes, could that be gross margin upside to the 40% over time, or would you likely reinvest that back into the business? Hey, Eric, this is Rob. Shrink's pretty much hit a plateau. We've kind of been at this level for a bit now. We're working hard as possible to mitigate it. You know, we've talked about it. It's a local hyper-local problem, and we're putting resources into those hyper-local markets to mitigate it. But so far, you know, we've been pretty flat to where we've been over the last couple of quarters. From a tailwind perspective, our model has always been to deliver a 40% gross margin and then to reinvest and price above that. At this moment, as competitors are struggling and, you know, consumers are pinched, we would continue to do that in the near term. Great. Thanks a lot. Thank you. And our next question comes from the line of Jeremy Hamblin from Craig-Hallum. Your question, please. Thanks, and I'll add my congratulations on the strong results. I wanna come back to the real estate question and, you know, think about in terms of if you accelerated real estate, you know, plans because, you know, there are 300, roughly 300 locations closing. You noted that only about a third of them are in your current trade areas. You have just opened up a new DC in Illinois. You know, in terms of thinking about where you might go after locations, and you've had some success, or hopefully had some success with the 99 Cents Only, would you potentially add into new trade areas in these, you know, real estate opportunities that are coming, or would you exclusively focus on areas that you already currently have markets in? Jeremy, it's Eric. Yes, kind of, sort of. Like, we're committed to contiguous growth, so contiguous states will consider to our current trade areas. We think, given the size of the opportunity, we should have a meaningful opportunity in our current trade areas, and there are plenty of locations that will make sense in existing trade areas. In general, even in a state like Pennsylvania, where we're most saturated, we have opportunities to open additional stores. So our focus is on existing trade areas, but we're considering contiguous states. Got it. Just a quick follow-up to that. I know it's a bit forward-looking, but in terms of thinking about, you know, CapEx budgets and the potential range of outcomes that you might have in 2025, you know, now that you're past the DC opening, what would you suggest was kind of the range of potential CapEx, you know, given the potential for real estate acquisition? It's really hard to tell in this moment. We don't have a lot of information besides the 296 closures that have been reported. You know, there's the potential for other things to happen. So we've got to really see, you know, what happens there and then respond to it. You know, I'd say broadly, you know, our CapEx assumption for next year, you know, based on what we see today, is probably 2.5% of our net sales, somewhere in that range. But we certainly have the financial strength to be able to flex that up, if required. And Jeremy, just to add, I don't think it's prudent to speculate on what could be. That's not how we operate the business and how we plan. So it's great to talk about, but it's not something we're gonna commit to or speculate at this point in time either. Great. Appreciate the call. Our best wishes. Thank you. Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Melanie Nunez from Bank of America. Your question, please. Hi, good morning. Thanks for taking my question. I just wanted to ask quickly on the 99 Cents Only Stores. I know you mentioned you've opened a handful of them. Just curious how those have been performing, if they're in line with expectations, and if there's any update to the economics of those that you previously laid out. Thanks. Sure. Hi, Melanie, it's Eric. We only have about a week under our belt on a couple stores and a day on some others. We've opened half of the 99 Cents Only stores to date. We took a little bit of a different approach with this, since it was an acquisition, and we were on the hook for the ownership or the rent immediately. We actually soft opened these stores and haven't run our grand opening event, which we'll run in late September. We're running a pretty big event across the entire Houston market to celebrate opening these stores, including some of our existing stores in that market. So, the answer is, it's too early to tell, but we're pretty excited about the results. It seems we're getting a very meaningful positive response from customers. We're also excited, and I mentioned it in my opening remarks, about our ability to market to the previous customers of 99 Cents Only Stores and get that message out to them through our various digital channels with our enhanced capabilities in that space, and let them know that we're here now in that former 99 Cents Only space. So far, we like the results we're seeing there as well. Great, thank you. And then if I can just follow up on any trends you saw by geographic region during the quarter? Thanks. In terms of region, we were pretty strong across the board. I would say that we, if anywhere to call out significant strength, we probably saw the most strength in our southern states in Texas and those areas. Thank you. Thank you. Thank you. And our next question comes from the line of Simeon Gutman from Morgan Stanley. Your question, please. Good morning, everyone. I wanted to ask on product mix and gross margin through the back half. Seasonal and toy, I'm sure that's always a decent part of the mix as you get into the third and the fourth quarter. What is the implication on gross margin? And is there any expectation that, you know, it's a good guy or a bad guy based on the volume that you expect within each category? And if I heard correctly, I thought maybe I heard some gen merch categories hurt the product mix this quarter. Can you just clarify that? And why would that be the case? Yeah, Simeon, what was the margin impact for Q2 was impacted from the room air, which is predominantly air conditioners, which has a lower margin profile than a lot of our other categories. And we call that consumables, which would have been specifically related more on the cleaning front. So that normally carries a lower margin profile as well. So those would have been a slight drag to what we normally would have reported to you in Q2. Definitely seasonal and toys would have a higher margin profile than those two categories, so there's not a drag expected from our seasonal categories whatsoever in Q3 and four. But we'll continue to drive the business. We don't expect the same pressures we saw in Q2 to replicate in Q3 and four from the categories perspective, so. Okay, that's helpful. Can I ask, are you seeing signs of the consumer strained at all? I know you mentioned you're seeing strength from every income cohort, but are there any signs based on the categories in which you're selling, the consumer is hurting more, and then you're just taking share as a store and as a channel? Well, I- Yeah. Okay, go ahead. Go ahead, Eric. Simeon, it's Eric. The only sign of weakness is in big-ticket categories, which has continued now for, I don't know, a couple of years, so you know, flooring category, mattresses, furniture, there's weaknesses in those categories, and I think, you know, it continues to be weak across the entire industry. We offer extremely strong value across all categories, and the strength of the value resonates across all income groups. Okay, thank you. I'd just add one thing to it, Simeon. I think that's, that's why we're winning. You know, we're, we're definitely, I think there's the consumer stress, but, you know, that's why Ollie's is here to serve, and, and we're serving them very well. Appreciate it. Thanks. Good luck. Thank you, and our next question comes from the line of Paul Lejuez from Citi. Your question, please. Hey, everyone, this is Brandon Cheatham on for Paul. I was hoping we could dig in on the Ollie's Days liquidation event in 2Q that I think you normally run. You know, how did that compare to what you're expecting? Did you see the consumer gravitate more towards those deals, and did that have any impact on gross margin in the quarter relative to your expectations? I'll answer the first part, but then I need you to repeat the second part. From an Ollie's Days events perspective, we were pleased with Ollie's Days, just like we were pleased with the comp in the quarter and our results. So, strong events again this year, and no concerns there. No unexpected impact on margin, I think is what you're getting at, so- What was the second part, Brandon? Yeah, it was around gross margin. If there was any impact on gross margin from that event potentially being stronger than you anticipated? None. Okay. I was hoping if you could expand on the co-branded credit card you mentioned you're launching. Anything you could share on the terms there, any margin impact as you start to roll that out, or marketing expense consideration? Sure. This is Rob. We're excited about the card, and our expectation is that the cardholder should, we should see a modest uplift in their baskets and their spends, similar to how we see an uplift for our Ollie's Army customers. We'd expect for that to be nicely accretive to our comps. We are rolling it out over the course of the next few months, so we're expecting very limited impact to fiscal 2024, and should have some data to better guide how we're thinking about it for 2025. From a margin implication perspective, we'd expect for it to be slightly accretive to our margin rate. If the card features a loyalty and membership bonuses with the card company, which would drive that accretiveness. What we're most excited about, and I mentioned in my opening remarks, is the value proposition to the Ollie's Army customer. It's enhanced value of the program itself. We believe it's gonna attract new members as well as a result of the strength of the offering. Gotcha. And if I could just ask one more. You know, you mentioned that you are looking at full-time employees versus part-time employees. Just, you know, is there a potential for that to be a potential headwind, or could that be a tailwind if you are converting more to full-time and getting more productivity out of your associates? Thanks. Yeah, Brandon, it's Eric. We look at it more as a tailwind, but it's really about better executing the store, which is gonna drive top line over time. It's not necessarily an SG&A-related initiative, although it could be slightly accretive or perhaps it offsets any wage pressure that we may see in the future. But we look at it as more execution-focused because that full-time associate is more committed to us, more career-oriented, looking to advance in our company. Turnover is significantly lower for a full-time associate versus a part-time associate. It results in better execution. Got it. Makes sense. Thanks, and good luck. Thanks, Brandon. Thank you, and this does conclude the question and answer session of today's program. I'd like to hand the program back to Mr. John Swygert for any further remarks. I would like to thank everyone for their time and interest in Ollie's. We look forward to updating you on our continued progress on our next earnings call. Thank you, and have a great day.