Matthew Boss: Thanks and congrats on a great quarter?
John Swygert: Thanks Matt.
Eric van der Valk: Thanks.
Matthew Boss: So John, larger picture, could you elaborate on customer behavior that you’re seeing across the box? I think it’s really two things that we’ve talked about in the past. Maybe could you speak to trade down activity that you’re seeing? And then the second piece is the trade-out headwind that I know you spoke to a year ago, where that stands today? And then just any comments on August trends or continued momentum in the business?
John Swygert: Yes, Matt, I’ll let Eric take the first question, and then Rob can pipe in on the second one.
Eric van der Valk: Sure. Thanks. We are continuing to see a trade down of the higher income customer, defined at $75,000 or greater. So, we are continuing to see that momentum. It’s similar versus the prior two quarters. Our new customer acquisition is – continues to be very strong, actually, especially in the $100,000-plus income cohort. So, we’re seems to indicate that those customers in that income cohort are really looking for value. They need value. And then in terms of the trade out, the lower income consumer that we would we would say it’s under $40,000 in household income. We did see that cohort index down slightly in Q2 versus other quarters. Keep in mind, Matt, that we underpenetrate in low-income consumers. That’s not a concern and it was ever so slight. Our largest new customer growth is coming from the $100,000 to $150,000 cohort specifically.
JohnSwygert: And from a current business perspective, we’re pleased with our positive momentum. We feel like there’s great deal flow right now and there’s great content in our store, and our customers are responding accordingly. We’re comfortable with the guidance that we gave.
Matthew Boss: Great. And then just a follow-up on new stores. Could you elaborate on the performance that you’re seeing from the most recent openings? And then John, maybe for you, as the fleet continues to scale, how — maybe if you could walk through, how are your relationships with larger manufacturers changing and maybe brand awareness with customers evolving?
John Swygert: Yes, Matt, with regards to the vendor community and the manufacturing community, as we continue to scale and we have more notoriety in the business, it continues to get stronger and stronger and more opportunities continue to open up for us. And the one thing we do and we focus on each and every day, our merchants are trained to build relationships. And really it’s a relationship business. This is not a one transaction business from our perspective. We want the first deal, but we want all the other deals that come along with it. So building that relationship is key. And the brand manufactured – the brands are – most of the brands that work with us continue to come back, and they feel very comfortable with how we respect their brand.
And we do what we say we’re going to do, and they are very comfortable that they’ll never find goods they’ve sold to Ollie’s on the market outside of Ollie’s. So we really don’t – we do our best not to give them any channel conflicts with other retailers out there.
Matthew Boss: Great. Best of luck, guys.
JohnSwygert: Thanks Mat.
Eric van der Valk: Thanks Mat.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Scot Ciccarelli from Truist. Your question, please.
Scot Ciccarelli: Good morning, guys. I think on the call, John, you said 70% of your categories were positive. I think I recall from ancient history, at one point, you’re talking about how it’s even 50% of your category is comp positive. That would be a good performance. So is the 7% figure an outlier on the upside? And if so, how often do you see such broad-based sales strength?
John Swygert: Yes, 70% of our departments comping positive, Scot, is definitely a positive, especially in the environment we’re living in today, discretionary income, inflation and the consumer being a little more strapped than normal. That’s – I’d say that’s an outsized performance and an outsized response to the deals that were given to the customer or execution at store level. 50% is what we normally see in terms of the departments comping positive. It’s just the number, though. I mean it doesn’t really tell you everything, but it is an indicator that we’re hitting on all cylinders. And obviously, with the 7.9% positive comp for the quarter, it gives you some indication.
Scot Ciccarelli: Okay. That makes sense. And then the incentive comp in 2Q, was there some sort of true-up? Or will we have additional kind of pressure on SG&A from so comp in 2H?
Eric van der Valk: Last year, as we underperformed versus plan, we did not record incentive compensation starting in the second quarter. The accruals in the third quarter were also light relative to historical incentive compensation expense level. So the expense pressure will step up in the second half. We called 40 basis points in the second quarter. It’s probably closer to 50 basis points of pressure for the second half, with Q4 being a little more pressure than Q3.
John Swygert: And I think, Scot, the one takeaway – that’s all baked into our numbers that we guided for the full year. So that’s not an incremental to what we’ve already guided to.
Scot Ciccarelli: Correct. Got it. Okay. Thanks guys.
John Swygert: Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from the line of Mark Carden from UBS. Your question, please.
Mark Carden: Good morning. Thanks so much for taking the questions. So to start another question on shopping trends. Are you seeing many repeat trips from that $100,000 to $150,000 income cohort you talked about? Are they signing up for Ollie’s Army at rates that are comparable to what you see across your customer base? Basically, do you see our core demographic expanding much? Thanks.
Eric van der Valk: We do, to answer all your questions. Yes. Repeat visits is a little bit hard to track. It’s maybe a little early in this trend with the trade-down customer to be able to answer that with certainty. But they’re signing up for Ollie’s Army, and we’d expect there to be some stickiness there.
Mark Carden: Okay. Great. And then just as a follow-up. Throughout the quarter, did you see much of a shift in terms of sales cadence as it progressed, just given some of your intensifying compares?
Rob Helm: Sure. This is Rob. From a quarterly flow perspective, May was pretty much the sales velocity we saw coming out of the first quarter. June ticked up a bit. July was the strongest month of the quarter as the really warm temperatures supported our AD sales in that multiple.
