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Ollie's Bargain (OLLI) Rides on Business Model, Customer Reach
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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 the expansion of the customer loyalty program — Ollie's Army — reinforce its position in the industry. Favorable responses to deals, with product offerings appealing to a broader customer base, have been contributing to Ollie's Bargain’s performance. No wonder, the company’s favorable vendor relationships are also its strength.
Business Model Resonates Well With Customers
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. The company ended the first quarter of fiscal 2023 with more than 13.3 million active Ollie's Army members, which accounted for slightly more than 80% of sales.
The company’s results depend 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 2022 merchandise purchases.
Undoubtedly, Ollie's Bargain remains committed to offering better deals, improving operating margins and increasing the store count. The company should benefit from a favorable closeout environment and trade-down activity.
Image Source: Zacks Investment Research
Store Growth Strategy
As far as Ollie's Bargain’s store growth strategy is concerned, management aims for more than 1,050 stores in the long run, with a goal to open 50 to 55 stores annually. Ollie's Bargain increased its store base at a CAGR of 11.5% from 303 stores in fiscal 2018 to 468 stores in fiscal 2022.
We note that the company opened 46 and 40 stores in fiscal 2021 and 2022, respectively. It now intends to open 45 new stores, less one closure in fiscal 2023. In addition to opening new outlets, Ollie's Bargain is also remodeling stores. The company plans to remodel 30 to 40 stores and has so far completed 11 remodels. Ollie's Bargain also continues to invest in the distribution network to support store growth.
Taking a cue from the past, we noticed that net sales surged at a CAGR of 10.2% from $1.241 billion in fiscal 2018 to $1.827 billion in fiscal 2022.
Solid Q1 Highlights Potential
Ollie's Bargain registered a stellar first-quarter fiscal 2023 performance, wherein the top line beat the Zacks Consensus Estimate, while the bottom line met the same. Markedly, both metrics grew year over year.
The company posted adjusted earnings of 49 cents a share, which came in line with the Zacks Consensus Estimate and increased meaningfully from 20 cents reported in the year-ago quarter. Net sales of $459.2 million jumped 12.9% year over year due to a comparable store sales increase and new store unit growth. The top line came ahead of the consensus mark of $451 million and marked the second straight beat.
Robust first-quarter results and continued momentum in the business prompted management to lift the fiscal 2023 view.
Management now envisions fiscal 2023 net sales between $2.052 billion and $2.067 billion, suggesting an increase from $1.827 billion reported in fiscal 2022. Ollie’s Bargain now anticipates comparable store sales to rise in the band of 2-2.8% against the comparable store sales decline of 3% reported last fiscal year.
Management now foresees fiscal 2023 adjusted earnings in the range of $2.56-$2.65 per share, up from the adjusted earnings of $1.62 reported last fiscal. The company had earlier projected adjusted earnings between $2.49 and $2.58 per share.
Conclusion
Ollie's Bargain’s strategic endeavors position the stock firmly for growth. We believe that improved closeout opportunities, increased trade down from consumers and significant room for increasing the store count should support this Zacks Rank #3 (Hold) stock. Shares of this Harrisburg, PA-based company have rallied 36.6% so far in the year against the industry’s decline of 7.1%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 2.6% and 6.9%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.
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Ollie's Bargain (OLLI) Rides on Business Model, Customer Reach
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 the expansion of the customer loyalty program — Ollie's Army — reinforce its position in the industry. Favorable responses to deals, with product offerings appealing to a broader customer base, have been contributing to Ollie's Bargain’s performance. No wonder, the company’s favorable vendor relationships are also its strength.
Business Model Resonates Well With Customers
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. The company ended the first quarter of fiscal 2023 with more than 13.3 million active Ollie's Army members, which accounted for slightly more than 80% of sales.
The company’s results depend 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 2022 merchandise purchases.
Undoubtedly, Ollie's Bargain remains committed to offering better deals, improving operating margins and increasing the store count. The company should benefit from a favorable closeout environment and trade-down activity.
Image Source: Zacks Investment Research
Store Growth Strategy
As far as Ollie's Bargain’s store growth strategy is concerned, management aims for more than 1,050 stores in the long run, with a goal to open 50 to 55 stores annually. Ollie's Bargain increased its store base at a CAGR of 11.5% from 303 stores in fiscal 2018 to 468 stores in fiscal 2022.
We note that the company opened 46 and 40 stores in fiscal 2021 and 2022, respectively. It now intends to open 45 new stores, less one closure in fiscal 2023. In addition to opening new outlets, Ollie's Bargain is also remodeling stores. The company plans to remodel 30 to 40 stores and has so far completed 11 remodels. Ollie's Bargain also continues to invest in the distribution network to support store growth.
Taking a cue from the past, we noticed that net sales surged at a CAGR of 10.2% from $1.241 billion in fiscal 2018 to $1.827 billion in fiscal 2022.
Solid Q1 Highlights Potential
Ollie's Bargain registered a stellar first-quarter fiscal 2023 performance, wherein the top line beat the Zacks Consensus Estimate, while the bottom line met the same. Markedly, both metrics grew year over year.
The company posted adjusted earnings of 49 cents a share, which came in line with the Zacks Consensus Estimate and increased meaningfully from 20 cents reported in the year-ago quarter. Net sales of $459.2 million jumped 12.9% year over year due to a comparable store sales increase and new store unit growth. The top line came ahead of the consensus mark of $451 million and marked the second straight beat.
Robust first-quarter results and continued momentum in the business prompted management to lift the fiscal 2023 view.
Management now envisions fiscal 2023 net sales between $2.052 billion and $2.067 billion, suggesting an increase from $1.827 billion reported in fiscal 2022. Ollie’s Bargain now anticipates comparable store sales to rise in the band of 2-2.8% against the comparable store sales decline of 3% reported last fiscal year.
Management now foresees fiscal 2023 adjusted earnings in the range of $2.56-$2.65 per share, up from the adjusted earnings of $1.62 reported last fiscal. The company had earlier projected adjusted earnings between $2.49 and $2.58 per share.
Conclusion
Ollie's Bargain’s strategic endeavors position the stock firmly for growth. We believe that improved closeout opportunities, increased trade down from consumers and significant room for increasing the store count should support this Zacks Rank #3 (Hold) stock. Shares of this Harrisburg, PA-based company have rallied 36.6% so far in the year against the industry’s decline of 7.1%.
Stocks Looking Red Hot
Here we have highlighted three better-ranked stocks, namely Kroger (KR - Free Report) , The TJX Companies (TJX - Free Report) and Walmart (WMT - Free Report) .
Kroger, a supermarket operator, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 6%. 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 revenues and EPS suggests growth of 2.6% and 6.9%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 9.8%, on average.
TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.