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Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) reported first-quarter fiscal 2022 results, wherein both the top and the bottom lines missed the Zacks Consensus Estimate and declined year over year. The Harrisburg, PA-based company continued with its dismal comparable store sales run. Soaring inflation, unseasonably cold weather and the strong stimulus-induced sales last year were the headwinds encountered by the company in the reported quarter.
However, management highlighted that sales trends have improved substantially in the second quarter, driven by higher demand for warm weather seasonal products coupled with great deals and a healthy inventory position.
Here’s How the Top & the Bottom Lines Fared
Ollie's Bargain posted adjusted earnings of 20 cents a share that missed the Zacks Consensus Estimate of 30 cents and declined significantly from 80 cents reported in the year-ago quarter. This year-over-year decrease was due to lower net sales and higher SG&A expenses.
Net sales of $406.7 million fell 10.1% year over year and lagged the consensus mark of $416 million, thus marking the fourth straight miss. Impacts of soft comparable store sales performance in the reported quarter and higher consumer spending in the prior year due to stimulus checks were visible in the metric. However, this was partly offset by new store unit growth.
We note that comparable store sales slid 17.3% in the quarter under discussion against an increase of 18.8% in the prior-year period.
Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
Gross profit declined 22.6% to $141.3 million during the quarter. Gross margin shrunk 560 basis points to 34.8% due to an increase in supply chain costs stemming from higher import and labor costs. This was partly offset by an increase in merchandise margin.
SG&A expenses shot up 11.4% to $116.3 million from the prior-year quarter’s level, owing to an increased number of stores and higher wage rates in select markets. As a percentage of net sales, SG&A expenses increased 550 basis points to 28.6% due to deleveraging as a result of lower sales.
Operating income plunged 75.9% to $17.1 million, while adjusted operating margin shrunk 1,150 basis points to 4.2%, primarily due to contraction in gross margin and the deleveraging of SG&A expenses stemming from lower sales.
Adjusted EBITDA declined 66.9% to $26.2 million during the quarter under review. Adjusted EBITDA margin contracted 1,100 basis points to 6.5%.
Store Update
During the quarter, Ollie’s Bargain opened nine new stores and shuttered one store in connection with relocation, thereby bringing the total count to 439 stores in 29 states at the end of the period. This reflected an increase of 10.6% in-store count on a year-over-year basis.
The company intends to open 46-48 new stores, including two relocations, in fiscal 2022. It plans to remodel 30 stores to the newest merchandising format in the fiscal year.
Other Financial Aspects
Ollie’s Bargain ended the quarter with cash and cash equivalents of $205.5 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $90.9 million of availability under the facility as of the first quarter.
As of Apr 30, 2022, its total borrowings (consisting solely of finance lease obligations) were $1.1 million. Inventories, as of the end of the first quarter, increased 45.6% to $517.0 million.
During the quarter, the company incurred capital expenditures of $9.7 million, primarily for new and existing stores. For fiscal 2022, management projected capital expenditures in the band of $53-$58 million, principally for new outlets, the expansion of the company’s York, PA distribution center, store-level initiatives, and IT projects.
Subsequent to the first quarter, Ollie’s Bargain repurchased 238,485 shares worth $10 million. The company has $170.0 million remaining under its current share repurchase program.
Outlook
Management envisions fiscal 2022 total net sales between $1.870 billion and $1.900 billion, suggesting an increase from $1.753 billion reported in fiscal 2021. Ollie’s Bargain anticipates comparable store sales to be flat to down 2% compared with comparable store sales decrease of 11.1% reported last fiscal year.
Ollie’s Bargain envisions gross margin rate in the bracket of 36.5% to 36.7% for fiscal 2022. The company had reported a gross margin of 38.9% in the last fiscal year. The company anticipates operating income in the range of $155 million to $168 million for fiscal 2022, down from $204.2 million reported in fiscal 2021.
The company guided fiscal 2022 adjusted earnings in the range of $1.83 to $1.98 per share, down from adjusted earnings of $2.36 reported last fiscal.
Management envisions second-quarter total net sales in the bracket of $450-$460 million, up from $415.9 million reported in the year-ago period. It envisions comparable store sales to be flat to up 3%. The company had registered a comparable store sales decline of 28% in second-quarter fiscal 2021.
Ollie’s Bargain anticipates second-quarter fiscal 2022 gross margin to be approximately 34.5% compared with 39.2% in second-quarter fiscal 2021. It guided operating income between $27 million and $30 million compared with $45.7 million in the prior-year quarter. The company projected second-quarter adjusted earnings in the range of 32-35 cents a share, down from adjusted earnings of 52 cents reported in the year-ago quarter.
Shares of this Zacks Rank #4 (Sell) company have fallen 37.5% in the past year compared with the industry’s decline of 34.1%.
3 Picks You Can’t Miss Out On
We have highlighted three better-ranked stocks, namely Kroger (KR - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sysco Corporation (SYY - Free Report) .
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 3.7% and 4.4%, respectively, from the year-ago reported numbers. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2. The company has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.3% and 10.6%, respectively, from the year-ago period. TSCO has a trailing four-quarter earnings surprise of 12.4%, on average.
Sysco Corporation, the leading global foodservice distribution company, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco Corporation’s current financial year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago period. Sysco has an expected EPS growth rate of 11% for three-five years.
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Ollie's Bargain (OLLI) Q1 Earnings Miss, Comps Decline Y/Y
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) reported first-quarter fiscal 2022 results, wherein both the top and the bottom lines missed the Zacks Consensus Estimate and declined year over year. The Harrisburg, PA-based company continued with its dismal comparable store sales run. Soaring inflation, unseasonably cold weather and the strong stimulus-induced sales last year were the headwinds encountered by the company in the reported quarter.
However, management highlighted that sales trends have improved substantially in the second quarter, driven by higher demand for warm weather seasonal products coupled with great deals and a healthy inventory position.
Here’s How the Top & the Bottom Lines Fared
Ollie's Bargain posted adjusted earnings of 20 cents a share that missed the Zacks Consensus Estimate of 30 cents and declined significantly from 80 cents reported in the year-ago quarter. This year-over-year decrease was due to lower net sales and higher SG&A expenses.
Net sales of $406.7 million fell 10.1% year over year and lagged the consensus mark of $416 million, thus marking the fourth straight miss. Impacts of soft comparable store sales performance in the reported quarter and higher consumer spending in the prior year due to stimulus checks were visible in the metric. However, this was partly offset by new store unit growth.
We note that comparable store sales slid 17.3% in the quarter under discussion against an increase of 18.8% in the prior-year period.
Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote
A Look into Margins
Gross profit declined 22.6% to $141.3 million during the quarter. Gross margin shrunk 560 basis points to 34.8% due to an increase in supply chain costs stemming from higher import and labor costs. This was partly offset by an increase in merchandise margin.
SG&A expenses shot up 11.4% to $116.3 million from the prior-year quarter’s level, owing to an increased number of stores and higher wage rates in select markets. As a percentage of net sales, SG&A expenses increased 550 basis points to 28.6% due to deleveraging as a result of lower sales.
Operating income plunged 75.9% to $17.1 million, while adjusted operating margin shrunk 1,150 basis points to 4.2%, primarily due to contraction in gross margin and the deleveraging of SG&A expenses stemming from lower sales.
Adjusted EBITDA declined 66.9% to $26.2 million during the quarter under review. Adjusted EBITDA margin contracted 1,100 basis points to 6.5%.
Store Update
During the quarter, Ollie’s Bargain opened nine new stores and shuttered one store in connection with relocation, thereby bringing the total count to 439 stores in 29 states at the end of the period. This reflected an increase of 10.6% in-store count on a year-over-year basis.
The company intends to open 46-48 new stores, including two relocations, in fiscal 2022. It plans to remodel 30 stores to the newest merchandising format in the fiscal year.
Other Financial Aspects
Ollie’s Bargain ended the quarter with cash and cash equivalents of $205.5 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $90.9 million of availability under the facility as of the first quarter.
As of Apr 30, 2022, its total borrowings (consisting solely of finance lease obligations) were $1.1 million. Inventories, as of the end of the first quarter, increased 45.6% to $517.0 million.
During the quarter, the company incurred capital expenditures of $9.7 million, primarily for new and existing stores. For fiscal 2022, management projected capital expenditures in the band of $53-$58 million, principally for new outlets, the expansion of the company’s York, PA distribution center, store-level initiatives, and IT projects.
Subsequent to the first quarter, Ollie’s Bargain repurchased 238,485 shares worth $10 million. The company has $170.0 million remaining under its current share repurchase program.
Outlook
Management envisions fiscal 2022 total net sales between $1.870 billion and $1.900 billion, suggesting an increase from $1.753 billion reported in fiscal 2021. Ollie’s Bargain anticipates comparable store sales to be flat to down 2% compared with comparable store sales decrease of 11.1% reported last fiscal year.
Ollie’s Bargain envisions gross margin rate in the bracket of 36.5% to 36.7% for fiscal 2022. The company had reported a gross margin of 38.9% in the last fiscal year. The company anticipates operating income in the range of $155 million to $168 million for fiscal 2022, down from $204.2 million reported in fiscal 2021.
The company guided fiscal 2022 adjusted earnings in the range of $1.83 to $1.98 per share, down from adjusted earnings of $2.36 reported last fiscal.
Management envisions second-quarter total net sales in the bracket of $450-$460 million, up from $415.9 million reported in the year-ago period. It envisions comparable store sales to be flat to up 3%. The company had registered a comparable store sales decline of 28% in second-quarter fiscal 2021.
Ollie’s Bargain anticipates second-quarter fiscal 2022 gross margin to be approximately 34.5% compared with 39.2% in second-quarter fiscal 2021. It guided operating income between $27 million and $30 million compared with $45.7 million in the prior-year quarter. The company projected second-quarter adjusted earnings in the range of 32-35 cents a share, down from adjusted earnings of 52 cents reported in the year-ago quarter.
Shares of this Zacks Rank #4 (Sell) company have fallen 37.5% in the past year compared with the industry’s decline of 34.1%.
3 Picks You Can’t Miss Out On
We have highlighted three better-ranked stocks, namely Kroger (KR - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sysco Corporation (SYY - Free Report) .
Kroger, the renowned grocery retailer, carries a Zacks Rank #2 (Buy) at present. The company has an expected EPS growth rate of 9.9% for three-five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 3.7% and 4.4%, respectively, from the year-ago reported numbers. KR has a trailing four-quarter earnings surprise of 22.1%, on average.
Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2. The company has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.3% and 10.6%, respectively, from the year-ago period. TSCO has a trailing four-quarter earnings surprise of 12.4%, on average.
Sysco Corporation, the leading global foodservice distribution company, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 9.1%, on average.
The Zacks Consensus Estimate for Sysco Corporation’s current financial year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the year-ago period. Sysco has an expected EPS growth rate of 11% for three-five years.