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Here's Why Ollie's Bargain (OLLI) is Staying Ahead of the Curve
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Ollie's Bargain Outlet Holdings, Inc.’s (OLLI - Free Report) business operating model of “buying cheap and selling cheap,” cost-containment efforts, focus on store productivity and expansion of customer loyalty program — Ollie's Army, reinforce its position in the industry. Shares of this Harrisburg, PA-based company have exhibited a decent run on the bourses in the past three months. In the said period, the stock has risen 31.8% against the industry’s decline of 7.9%.
Let’s Introspect
Ollie's Bargain’s focus on value-driven merchandise assortments positioned it well to capitalize on opportunities in the marketplace and effectively meet consumer demand. Ollie's Army continued to be a major sales driver, with membership increasing continuously. In first-quarter fiscal 2022, Ollie's Army grew 7.7%, ending the period with more than 12.9 million active members.
On its first-quarter earnings call, 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. 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.
Image Source: Zacks Investment Research
Fact Checks
Ollie's Bargain’s results are dependent on the availability of the brand name and closeout merchandise at compelling prices. Brand name and closeout merchandise represented about 65%, and non-closeout goods and private label products collectively accounted for roughly 35% of fiscal 2021 merchandise purchases.
As far as the company’s store growth strategy is concerned, management aims for a store count of at least 1,050 in the long run. Ollie's Bargain has increased its store base at a CAGR of 12.6%, from 268 stores in fiscal 2017 to 431 stores in fiscal 2021. We note that the company has opened 42 stores in fiscal 2019 and 46 stores in both fiscal 2020 and 2021. The company intends to open 46-48 new stores, including two relocations, in fiscal 2022.
Taking a cue from the past, we noticed that net sales have surged at a CAGR of 13% from $1.077 billion in fiscal 2017 to $1.753 billion in fiscal 2021, while net income has soared from $127.6 million to $157.5 million during the aforementioned period.
Wrapping Up
Quite apparent, Ollie's Bargain strategic endeavors position the stock firmly for growth. While the company faces supply chain headwinds and high labor costs, we believe that improved closeout opportunities, increased trade down from consumers and significant room for increasing store count should support the stock.
Ollie's Bargain currently carries a Zacks Rank #3 (Hold).
Dollar Tree, which operates discount variety retail stores, sports a Zacks Rank #1 (Strong Buy) at present. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago reported numbers. DLTR has an expected EPS growth rate of 15.5% for three-five years.
Sysco Corporation, which is engaged in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy). 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 32.5% and 124.3%, respectively, from the year-ago period. SYY has an expected EPS growth rate of 9% for three-five years.
Kroger, the renowned grocery retailer, carries a Zacks Rank of 2 at present. KR has an expected EPS growth rate of 11.3% for three-five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 6.7% and 6.3%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 20.3%, on average.
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Here's Why Ollie's Bargain (OLLI) is Staying Ahead of the Curve
Ollie's Bargain Outlet Holdings, Inc.’s (OLLI - Free Report) business operating model of “buying cheap and selling cheap,” cost-containment efforts, focus on store productivity and expansion of customer loyalty program — Ollie's Army, reinforce its position in the industry. Shares of this Harrisburg, PA-based company have exhibited a decent run on the bourses in the past three months. In the said period, the stock has risen 31.8% against the industry’s decline of 7.9%.
Let’s Introspect
Ollie's Bargain’s focus on value-driven merchandise assortments positioned it well to capitalize on opportunities in the marketplace and effectively meet consumer demand. Ollie's Army continued to be a major sales driver, with membership increasing continuously. In first-quarter fiscal 2022, Ollie's Army grew 7.7%, ending the period with more than 12.9 million active members.
On its first-quarter earnings call, 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. 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.
Image Source: Zacks Investment Research
Fact Checks
Ollie's Bargain’s results are dependent on the availability of the brand name and closeout merchandise at compelling prices. Brand name and closeout merchandise represented about 65%, and non-closeout goods and private label products collectively accounted for roughly 35% of fiscal 2021 merchandise purchases.
As far as the company’s store growth strategy is concerned, management aims for a store count of at least 1,050 in the long run. Ollie's Bargain has increased its store base at a CAGR of 12.6%, from 268 stores in fiscal 2017 to 431 stores in fiscal 2021. We note that the company has opened 42 stores in fiscal 2019 and 46 stores in both fiscal 2020 and 2021. The company intends to open 46-48 new stores, including two relocations, in fiscal 2022.
Taking a cue from the past, we noticed that net sales have surged at a CAGR of 13% from $1.077 billion in fiscal 2017 to $1.753 billion in fiscal 2021, while net income has soared from $127.6 million to $157.5 million during the aforementioned period.
Wrapping Up
Quite apparent, Ollie's Bargain strategic endeavors position the stock firmly for growth. While the company faces supply chain headwinds and high labor costs, we believe that improved closeout opportunities, increased trade down from consumers and significant room for increasing store count should support the stock.
Ollie's Bargain currently carries a Zacks Rank #3 (Hold).
3 Hot Stocks to Consider
We have highlighted three better-ranked stocks, namely Dollar Tree (DLTR - Free Report) , Sysco Corporation (SYY - Free Report) and Kroger (KR - Free Report) .
Dollar Tree, which operates discount variety retail stores, sports a Zacks Rank #1 (Strong Buy) at present. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago reported numbers. DLTR has an expected EPS growth rate of 15.5% for three-five years.
Sysco Corporation, which is engaged in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy). 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 32.5% and 124.3%, respectively, from the year-ago period. SYY has an expected EPS growth rate of 9% for three-five years.
Kroger, the renowned grocery retailer, carries a Zacks Rank of 2 at present. KR has an expected EPS growth rate of 11.3% for three-five years.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and EPS suggests growth of 6.7% and 6.3%, respectively, from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 20.3%, on average.