What changed in this filing

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Item 1. Business

2021-03-24 compared with 2020-03-25 · 95 added, 56 removed, 219 unchanged (41% of the section changed)

Ollie’s is a highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices.

Known for our assortment of “Good Stuff Cheap,” we offer customers a broad selection of brand name products, including food, housewares, books and stationery, bed and bath, floor coverings, electronics and toys.

Known for our assortment of “Good Stuff Cheap,” we offer customers a broad selection of brand name products, including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys and electronics.

Our differentiated go-to market strategy is characterized by a unique, fun and engaging treasure hunt shopping experience, compelling customer value proposition and witty, humorous in-store signage and advertising campaigns.

These attributes have driven our rapid growth and strong and consistent store performance.

Ollie’s was founded in 1982, based on the idea that “everyone in America loves a bargain.” Since opening our first store in Mechanicsburg, PA, we have expanded throughout the eastern half of the United States.

We have grown to 345 stores in 25 states as of February 1, 2020.

Ollie’s was founded based on the idea that “everyone in America loves a bargain.” Since opening our first store in Mechanicsburg, PA, we have expanded throughout the eastern half of the United States.

We have grown to 388 stores in 25 states as of January 30, 2021.

Our no-frills, “semi-lovely” warehouse style stores average approximately 33,000 square feet and generate consistently strong financial returns across all vintages, geographic regions, population densities, demographic groups, real estate formats and regardless of any co-tenant.

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From 2016 through 2020 (except as noted):

Our store base expanded from 203 stores to 345 stores, a compound annual growth rate, or CAGR, of 14.1% and we entered eight new states;

Our store base expanded from 234 stores to 388 stores, a compound annual growth rate, or CAGR, of 13.4% and we entered six new states;

Comparable store sales grew at an average rate of 5.4% per year;

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Our product assortment frequently changes based on the wide variety of deals available from the hundreds of brand name suppliers we have relationships with.

We augment these opportunistic deals on brand name merchandise with directly-sourced unbranded products or those under our own private label brands such as Sarasota Breeze, Erin’s Garden, Steelton Tools, American Way and Middleton Home and exclusively licensed recognizable brands and celebrity names such as Magnavox, Josh Capon, Dan River, Cannon, and Wells Lamont.

Brand name and closeout merchandise represented approximately 70% and non-closeout goods and private label products collectively represented approximately 30% of our 2019 merchandise purchases.

We augment these opportunistic deals on brand name merchandise with directly-sourced unbranded products or those under our own private label brands and exclusively licensed recognizable brands and celebrity names.

Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of our 2020 merchandise purchases, reflecting the increase in personal protective equipment (“PPE”) purchases, which were primarily non-closeout, due to the COVID-19 pandemic.

Excluding the impact of PPE purchases, brand name and closeout merchandise represented approximately 70% and non-closeout goods and private label products collectively represented approximately 30% of our 2020 merchandise purchases.

Our treasure hunt shopping environment and slogan “when it’s gone, it’s gone” help to instill a “shop now” sense of urgency that encourages frequent customer visits.

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Our 20-member merchant team maintains strong, long-standing relationships with a diverse group of suppliers, allowing us to procure branded merchandise at compelling values for our customers.

This team is led by four senior merchants, and has over 100 combined years of experience at Ollie’s.

This team is led by three senior merchants and has over 100 combined years of experience at Ollie’s.

We have been doing business with our top 15 suppliers for an average of 16 years, and no supplier accounted for more than 5% of our purchases during 2020.

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Our direct relationships with our suppliers have increased as we have grown and we continuously strive to broaden our supplier network.

These factors provide us with increased access to goods, which enables us to be more selective in our deal-making and, we believe, helps us provide compelling value and assortment of goods to our customers and fuels our continued profitable growth.

These factors provide us with increased access to goods, which enable us to be more selective in our deal-making and, we believe, help us provide compelling value and assortment of goods to our customers and fuel our continued profitable growth.

Distinctive brand and engaging shopping experience .

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Extremely loyal “Ollie’s Army” customer base.

Our best customers are members of our Ollie’s Army customer loyalty program, which stands at 10.2 million members as of February 1, 2020.

For 2019, approximately 70% of our sales were from Ollie’s Army members, and we grew our base of loyal members by 13.3% in 2019.

Our best customers are members of our Ollie’s Army customer loyalty program, which stands at 11.6 million members as of January 30, 2021.

For 2020, over 75% of our sales were from Ollie’s Army members, and we grew our base of loyal members by 13.6% in 2020.

Ollie’s Army members spend approximately 37% more per shopping trip at Ollie’s than non-members.

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We augment our brand name merchandise with opportunistic purchases of unbranded goods and our own domestic and direct-import private label brands in underpenetrated categories to further enhance the assortment of products that we offer.

Brand name and closeout merchandise represented approximately 70% and non-closeout goods and private label products collectively represented approximately 30% of our 2019 merchandise purchases.

Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of our 2020 merchandise purchases, reflecting the increase in PPE purchases, which were primarily non-closeout, due to the COVID-19 pandemic.

We believe our compelling value proposition and the unique nature of our merchandise offerings have fostered our customer appeal across a variety of demographics and socioeconomic profiles.

Our warehouse format stores feature a broad number of categories including food, housewares, books and stationery, bed and bath, floor coverings, electronics and toys as well as other products including hardware, personal health care, candy, clothing, sporting goods, pet and lawn and garden products.

Our warehouse format stores feature a broad number of categories including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys and electronics as well as other products including hardware, candy, clothing, sporting goods, pet and lawn and garden products.

We focus on buying cheap to sell cheap and source products as unique buying opportunities present themselves.

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cooking utensils, dishes, appliances, plastic containers, cutlery, storage and garbage bags, detergents and cleaning supplies, cookware and glassware, fans and space heaters, candles, frames and giftware;

packaged food including coffee, bottled non-carbonated beverages, salty snacks, condiments, sauces, spices, dry pasta, canned goods, cereal and cookies;

Bed and bath:

household goods including bedding, towels, curtains and associated hardware;

Books and stationery:

novels, children’s, how-to, business, cooking, inspirational and coffee table books, greeting cards and various office supplies and party goods;

packaged food including coffee, bottled non-carbonated beverages, salty snacks, condiments, sauces, spices, dry pasta, canned goods, cereal and cookies;

Floor coverings:

laminate flooring, commercial and residential carpeting, area rugs and floor mats;

air conditioners, home electronics, cellular accessories and as seen on television ;

dolls, action figures, puzzles, educational toys, board games and other related items;

Health and beauty aids:

personal care, hair care, oral care, health and wellness, over-the-counter medicine, first aid, sun care, and personal grooming;

personal care, hair care, oral care, health and wellness, including PPE related to the COVID-19 pandemic, over-the-counter medicine, first aid, sun care, and personal grooming;

Books and stationery:

novels, children’s, how-to, business, cooking, inspirational and coffee table books, greeting cards and various office supplies and party goods;

dolls, action figures, puzzles, educational toys, board games and other related items;

air conditioners, home electronics, cellular accessories and as seen on television ;

hardware, candy, clothing, sporting goods, pet products, luggage, automotive, seasonal, furniture, summer furniture and lawn & garden.

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We maintain consistent average margins across our primary product categories described below.

Brand name and closeout merchandise (approximately 70% of merchandise purchases in 2019)

Brand name and closeout merchandise

Brand name and closeout merchandise represented approximately 65% of our 2020 merchandise purchases, reflecting the increase in PPE purchases, which were primarily non-closeout, due to the COVID-19 pandemic.

Excluding the impact of PPE purchases, brand name and closeout merchandise represented approximately 70% of our 2020 merchandise purchases.

Our focus is to provide huge savings to our customers primarily through brand name products across a broad range of merchandise.

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This merchandise includes overstocks, discontinued merchandise, package changes, cancelled orders, excess inventory and buybacks from retailers and major manufacturers.

Non-closeout goods/private label (approximately 30% of merchandise purchases in 2019)

Non-closeout goods/private label

Non-closeout and private label products collectively represented approximately 35% of our 2020 merchandise purchases, reflecting the increase in PPE purchases, which were primarily non-closeout, due to the COVID-19 pandemic.

Excluding the impact of PPE purchases, non-closeout goods and private label products collectively represented approximately 30% of our 2020 merchandise purchases.

We augment the breadth of our brand name merchandise with non-closeout and private label merchandise.

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These extreme value offerings are mixed in the stores with our brand name merchandise.

We also have a variety of domestic and direct-import private label merchandise and exclusive products sold under brands such as Sarasota Breeze, Erin’s Garden, Steelton Tools, American Way and Middleton Home.

We also have a variety of domestic and direct-import private label merchandise and exclusive products sold under numerous brands.

These high quality products are developed in key categories such as housewares and are designed to create brand-like excitement and complement our brand name merchandise.

We also have licenses for private label products that use recognizable celebrity names like Josh Capon, or brand names like Magnavox, Dan River, Cannon, and Wells Lamont.

We also have licenses for private label products that use recognizable celebrity names or brand names.

We routinely evaluate the quality and condition of these private label goods to ensure that we are delivering our customer a high quality product at a great price.

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We have made significant investments in our distribution network and personnel to support our store growth plan.

Currently, we distribute over 95% of our merchandise from our distribution centers in York, PA (603,000 square feet) and Commerce, GA (962,280 square feet).

In 2019, we constructed our third distribution center in Lancaster, TX (615,060 square feet).

This new distribution center became operational in February 2020.

Currently, we distribute over 95% of our merchandise from our distribution centers in York, PA (603,000 square feet), Commerce, GA (962,000 square feet), and Lancaster, TX (615,000 square feet).

In order to minimize the amount of time our retail stores devote to inventory management, our merchandise is seeded with price tickets and labeled with a bar code for shipping.

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We utilize independent third party freight carriers and, on average, load and ship between 85 and 95 trucks per day.

We believe our distribution capabilities, once our Lancaster, TX facility is fully operational, can support a range of 500 to 600 stores over the next several years.

As of February 1, 2020, we operated 345 stores, averaging approximately 32,500 square feet, across 25 contiguous states in the eastern half of the United States.

We believe our distribution capabilities can support a range of 500 to 600 stores over the next several years.

As of January 30, 2021, we operated 388 stores, averaging approximately 33,000 square feet, across 25 contiguous states in the eastern half of the United States.

Our highly flexible real estate approach has proven successful across all vintages, geographic regions, population densities, demographic groups, real estate formats and regardless of any co-tenant.

Our business model has resulted in positive financial performance during strong and weak economic cycles.

We have successfully opened stores in eight new states since 2015, highlighting the portability of our new store model.

The following map shows the number of stores in each of the states in which we operated as of February 1, 2020:

We have successfully opened stores in six new states since 2016, highlighting the portability of our new store model.

The following map shows the number of stores in each of the states in which we operated as of January 30, 2021:

Store design and layout

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Our recent store growth is summarized in the following table:

Stores open at beginning of period

Stores open at beginning of year

Stores opened

Stores closed

Stores open at end of period

Stores re-opened

Stores open at end of year

We utilize a rigorous site selection and real estate approval process in order to leverage our infrastructure, marketing investments and brand awareness.

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We target a store size between 25,000 to 35,000 square feet and an average initial cash investment of approximately $1.0 million, which includes store fixtures and equipment, store-level and distribution center inventory (net of payables) and pre-opening expenses.

With our relatively low investment costs and strong new store opening performance, we target new store sales of approximately $4.0 million.

With our relatively low investment costs and strong new store opening performance, we target first-year annual new store sales of approximately $4.0 million.

New stores opened from 2015 to 2019 have generated an average of $4.6 million in net sales in their first full year of operations and produced an average payback period of approximately two years.

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Store-level management and training

Our Senior Vice President of Store Operations oversees all store activities.

Our stores are grouped into three regions, divided generally along geographic lines.

We employ three regional directors, who have responsibility for the day-to-day operations of the stores in their region.

Our Vice President of Store Operations oversees all store activities.

Our stores are grouped into four regions, divided generally along geographic lines.

We employ four regional directors, who have responsibility for the day-to-day operations of the stores in their region.

Reporting to the regional directors are 39 district team leaders who each manage a group of stores in their markets.

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Part-time associates receive structured training as part of their onboarding throughout their first five scheduled shifts.

Our Ollie’s Leadership Institute (“OLI”) is a program that is used to equip associates with the ability to advance their career.

Each OLI participant receives an individual development plan, designed to prepare him or her for his or her next level position.

Our strong growth provides opportunities for advancement and OLI is focused on preparing eligible candidates for these positions.

OLI is our preferred source for new supervisors and team leaders as “home grown” talent has proven to be successful.

Since the program was implemented in 2009, our internal promotion rate has increased from approximately 18% to approximately 39% in 2019.

We believe our training and development programs help create a positive work environment and result in stores that operate at a high level.

For additional information on store-level management training and initiatives by the Company, see the discussion of Human Capital below.

Marketing and advertising

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We selectively utilize creative television and radio advertising campaigns in targeted markets at certain times of the year, particularly during the holiday sales season, to create brand awareness and support new store openings;

Sports marketing, charity and community events :

We sponsor professional and amateur athletics including Major League Baseball, NASCAR, National Basketball Association, NCAA basketball and football, as well as various local athletic programs.

Additionally, we are dedicated to maintaining a visible presence in the communities in which our stores are located through the sponsorship of charitable organizations such as Cal Ripken, Sr.

Charity and community events :

We are dedicated to maintaining a visible presence in the communities in which our stores are located through the sponsorship of charitable organizations such as Feeding America, Toys for Tots, Children’s Miracle Network, Cal Ripken, Sr.

Foundation and the Kevin Harvick Foundation.

We believe these sponsorships promote our brand, underscore our values and build a sense of community;

We believe supporting these organizations promotes our brand, underscores our values and builds a sense of community;

Digital marketing and social media :

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We also utilize targeted weekly email marketing to highlight our latest brand name offerings and drive traffic to our stores.

Our customer loyalty program, Ollie’s Army, stands at 10.2 million members as of February 1, 2020, an increase of 13.3% from 2018.

In 2019, Ollie’s Army members accounted for approximately 70% of net sales and spent approximately 40% more per shopping trip, on average, than non-members.

In addition, we invest in social media marketing where we target both our current and prospective customers with our flyer in digital ads.

Our customer loyalty program, Ollie’s Army, stands at 11.6 million members as of January 30, 2021, an increase of 13.6% from 2019.

In 2020, Ollie’s Army members accounted for over 75% of net sales and spent approximately 37% more per shopping trip, on average, than non-members.

Consistent with our marketing strategy, we engage new and existing Ollie’s Army members through the use of witty phrases and signage;

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For the first $250 and $500 members spend in a calendar year, they receive a coupon for 20% and 30% off of one item, respectively.

Historically, Ollie’s Army members have demonstrated double-digit redemption rates for promotional activities exclusive to Ollie’s Army members, such as our Valentine’s, Boot Camp and 15% off holiday mailers, as well as Ollie’s Army Night, an annual one-day after-hours sale in December exclusively for Ollie’s Army members.

Historically, Ollie’s Army members have demonstrated high redemption rates for promotional activities exclusive to Ollie’s Army members, such as our Valentine’s, Boot Camp and 15% off holiday mailers.

In addition, Ollie’s Army members have historically enthusiastically responded to Ollie’s Army Night, an annual one-day after-hours sale in December exclusively for members.

In 2020, we expanded the exclusive December promotion to Ollie’s Army Week, as we were mindful that the crowd size at the traditional one-day event could exceed the constraints of COVID-related social distancing requirements.

We expect to continue leveraging the data gathered from our proprietary database of Ollie’s Army members to better segment and target our marketing initiatives and increase shopping frequency.

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however, assuming that the trademark registrations are properly renewed, they have a perpetual duration.

We also own several domain names, including www.ollies.us, www.olliesbargainoutlet.com, www.olliesarmy.com, www.ollies.cheap, www.sarasotabreeze.com and www.olliesmail.com, and unregistered copyrights in our website content.

We also own several domain names, including www.ollies.us, www.ollies.com, www.olliesbargainoutlet.com, www.olliesarmy.com, www.ollies.cheap, www.sarasotabreeze.com and www.olliesmail.com, and unregistered copyrights in our website content.

We attempt to obtain registration of our trademarks as practical and pursue infringement of those marks when appropriate.

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officials for the purpose of obtaining or retaining business.

Our policies and our vendor compliance agreements mandate compliance with applicable law, including these laws and regulations.

Our policies, and our vendor code of conduct mandate compliance with applicable law, including these laws and regulations.

We maintain third-party insurance for a number of risk management activities, including workers’ compensation, general liability, commercial property, ocean marine, cyber, director and officer and employee benefit related insurance policies.

We evaluate our insurance requirements on an ongoing basis to ensure we maintain adequate levels of coverage.

As of February 1, 2020, we employed more than 8,300 associates, approximately 3,900 of whom were full-time and approximately 4,400 of whom were part-time.

Of our total associate base, approximately 180 were based at our store support center in Harrisburg, PA.

Our distribution centers employ approximately 660 associates.

The remaining were store and field associates.

Human Capital

Attracting, developing, and retaining quality talent is key to our growth, and our success depends on cultivating an engaged and motivated workforce.

We work hard to create an environment where Ollie’s team members can build fulfilling careers and we take pride in providing opportunities for growth and development.

We seek to build a diverse and inclusive workplace where we can leverage our collective talents, striving to ensure that all associates are treated with dignity and respect.

We are committed to providing equal employment opportunities and advancement consideration to all individuals and maintain an environment that is free of intimidation or harassment.

Oversight and Management

Our Human Resources department manages all associate matters, including recruiting, hiring, compensation and benefits, performance management and associate training.

In addition, our management team works closely with Human Resources to evaluate associate management issues such as retention and workplace safety.

As we strive to retain and engage talent at all levels of our business, our Human Resources department also reviews our retention and turnover rates, administers our talent and training programs and reviews process to support the development of our talent pipeline.

As of January 30, 2021, we employed more than 9,800 associates, approximately 4,400 of whom were full-time and approximately 5,400 of whom were part-time.

Of our total associate base, approximately 160 were based at our store support center, approximately 750 were employed at our distribution centers, and the remaining were store and field associates.

The number of associates in a fiscal year fluctuates depending on the business needs at different times of the year.

In 2020, we employed approximately 2,800 additional seasonal associates during our peak holiday sales season.

We have a long history of maintaining a culture that embraces our associates.

We take pride in providing a great work environment and strong growth opportunities for our associates.

As of January 30, 2021, approximately 60% of our workforce is self-identified female and approximately 40% is self-identified male.

Over 30% of our workforce has self-identified as having a racial or ethnic minority background.

None of our associates belong to a union or are party to any collective bargaining or similar agreement

Associate Training and Development Programs

We offer a compelling work environment with meaningful growth and career-development opportunities.

This starts with the opportunity to do challenging work and learn on the job and is supplemented by programs and continuous learning that help our team build skills to advance.

We encourage a promote-from-within environment when internal resources permit.

We also provide internal leadership development programs designed to prepare our high-potential team members for greater responsibility.

Our current team of district managers and store managers have an average tenure of approximately six and four years, respectively.

We believe internal promotions, coupled with the hiring of individuals with previous retail experience, will provide the management structure necessary to support our long-term strategic growth initiatives.

Our Ollie’s Leadership Institute (“OLI”) is a program that is used to equip field associates with the ability to advance their career.

Each OLI participant receives an individual development plan, designed to prepare them for their next level position.

Reflecting our belief in our “home grown” talent, OLI is our preferred source for new supervisors and team leaders.

In 2020, over 60% of our current district team leaders were internally promoted to their position.

Company-wide, over 70% of our field positions were filled by internal promotions.

We believe our training and development programs help create a positive work environment and result in stores that operate at a high level.

Compensation and Benefits

We are committed to providing market-competitive compensation for all positions.

Eligible team members participate in one of our various bonus incentive programs, which provide the opportunity to receive additional compensation based upon store and/or Company performance.

In addition, we provide our eligible team members the opportunity to participate in a 401(k) retirement savings plan with a Company- sponsored match.

We also share in the cost of health insurance provided to eligible team members, and team members receive a discount on merchandise purchased from the Company.

We additionally provide our team members with paid time off.

Workplace Health and Safety

We strive to maintain a safe and secure working environment and have established safety training programs.

This includes administering an occupational injury- and illness-prevention program, together with an employee assistance program for team members.

COVID-19 Response

Our top priorities in responding to the pandemic have been and continue to be the safety and well-being of our associates and customers.

We are committed to maintaining a safe work and shopping environment.

In response to COVID-19, we have taken several actions, including the following:

implemented procedures for social distancing, cleaning, sanitation, and use of personal protective equipment in our stores, distribution centers, and store support center to adhere to the appropriate CDC and local guidelines;

have taken actions to support our team members including COVID-19 paid medical leave and 100% coverage of COVID-19 testing and treatment under our medical plan;

implemented temporary premium pay for our in-store associates, store leadership, and distribution center employees;

supported our communities by raising money to provide much needed funding to local food banks through a partnership with Feeding America.

Our business is seasonal in nature and demand is generally the highest in our fourth fiscal quarter due to the holiday sales season.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business