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Why Is Ollie's Bargain Outlet (OLLI) Up 3.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Ollie's Bargain Outlet (OLLI - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ollie's Bargain Outlet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ollie's Bargain Outlet Holdings, Inc. reported first-quarter fiscal 2023 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line met the same. Markedly, both metrics grew year over year. This Harrisburg, PA-based company also registered an increase in comparable store sales.
Favorable responses to deals with product offerings appealing to a broader customer base have been contributing to Ollie's Bargain’s performance. Stellar first-quarter results and continued momentum in the business prompted management to lift the fiscal 2023 view.
Here’s How the Top & Bottom Lines Fared
This extreme-value retailer of brand-name merchandise 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 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.
We note that comparable store sales rose 4.5% in the quarter under discussion against a decline of 17.3% in the prior-year period. Consumables business was sturdy, while softness was seen in certain home-related categories. The company’s top-performing categories were food, candy, health and beauty, lawn and garden, and flooring.
A Look Into Margins
Gross profit grew 26.4% to $178.6 million during the quarter. The gross margin expanded 410 basis points to 38.9% due to favorable supply chain costs, partly offset by lower merchandise margin related to shrink and a higher mix of consumables.
SG&A expenses shot up 12% to $130.3 million from the prior-year quarter’s level due to higher selling expenses associated with new store openings and incentive compensation. As a percentage of net sales, SG&A expenses shrunk 20 basis points to 28.4%.
Operating income surged 124.8% to $38.5 million, while the operating margin expanded 420 basis points to 8.4%. Adjusted EBITDA jumped 88.5% to $49.5 million during the quarter under review. The adjusted EBITDA margin increased 430 basis points to 10.8%.
Store Update
During the quarter, Ollie’s Bargain opened nine new stores and shuttered one, bringing the total count to 476 stores in 29 states at the end of the period. This reflected an increase of 8.4% in in-store count on a year-over-year basis. The company plans to open 45 new stores, less one closure, in fiscal 2023. The company’s long-term target continues to be more than 1,050 stores with a goal to open 50-55 stores annually. The company plans to remodel 30 to 40 stores, and has so far completed 11 remodels. Management plans to open six new stores in the second quarter and the balance in the back half, with the third quarter expected to register largest number of openings.
Other Financial Aspects
Ollie’s Bargain ended the quarter with cash and cash equivalents of $135 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $91.6 million of availability under the facility as of the end of the first quarter.
As of Apr 29, 2023, Ollie’s Bargain’s total borrowings (consisting solely of finance lease obligations) were $1.5 million. Inventories, as of the end of the first quarter, declined 3.7% to $498 million.
During the quarter, the company incurred capital expenditures of $19 million. For fiscal 2023, management projected capital expenditures of $125 million.
During the quarter under discussion, Ollie’s Bargain repurchased 215,522 shares worth $12.3 million. The company had $125.9 million remaining under its share repurchase program.
Guidance
Management now envisions fiscal 2023 (which includes the 53rd week) 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.
The company had earlier guided net sales in the band of $2.036-$2.058 billion and comparable store sales growth of 1-2%.
Ollie’s Bargain currently envisions a gross margin rate in the bracket of 39.1-39.3% for fiscal 2023. The company had reported a gross margin of 35.9% in the last fiscal year. The company now anticipates an operating income in the range of $207-$215 million for fiscal 2023, up from $130 million reported in fiscal 2022.
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.
It foresees second-quarter comparable store sales in the range of 2% to 3%. With respect to gross margin, the company anticipates major year-over-year gross margin improvement in the second quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Ollie's Bargain Outlet has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ollie's Bargain Outlet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ollie's Bargain Outlet belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, RH (RH - Free Report) , has gained 22.8% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.
RH reported revenues of $739.16 million in the last reported quarter, representing a year-over-year change of -22.8%. EPS of $2.21 for the same period compares with $7.78 a year ago.
RH is expected to post earnings of $2.43 per share for the current quarter, representing a year-over-year change of -69.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for RH. Also, the stock has a VGM Score of D.
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Why Is Ollie's Bargain Outlet (OLLI) Up 3.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Ollie's Bargain Outlet (OLLI - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ollie's Bargain Outlet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ollie's Bargain Q1 Earnings Meet Estimates, View Raised
Ollie's Bargain Outlet Holdings, Inc. reported first-quarter fiscal 2023 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line met the same. Markedly, both metrics grew year over year. This Harrisburg, PA-based company also registered an increase in comparable store sales.
Favorable responses to deals with product offerings appealing to a broader customer base have been contributing to Ollie's Bargain’s performance. Stellar first-quarter results and continued momentum in the business prompted management to lift the fiscal 2023 view.
Here’s How the Top & Bottom Lines Fared
This extreme-value retailer of brand-name merchandise 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 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.
We note that comparable store sales rose 4.5% in the quarter under discussion against a decline of 17.3% in the prior-year period. Consumables business was sturdy, while softness was seen in certain home-related categories. The company’s top-performing categories were food, candy, health and beauty, lawn and garden, and flooring.
A Look Into Margins
Gross profit grew 26.4% to $178.6 million during the quarter. The gross margin expanded 410 basis points to 38.9% due to favorable supply chain costs, partly offset by lower merchandise margin related to shrink and a higher mix of consumables.
SG&A expenses shot up 12% to $130.3 million from the prior-year quarter’s level due to higher selling expenses associated with new store openings and incentive compensation. As a percentage of net sales, SG&A expenses shrunk 20 basis points to 28.4%.
Operating income surged 124.8% to $38.5 million, while the operating margin expanded 420 basis points to 8.4%. Adjusted EBITDA jumped 88.5% to $49.5 million during the quarter under review. The adjusted EBITDA margin increased 430 basis points to 10.8%.
Store Update
During the quarter, Ollie’s Bargain opened nine new stores and shuttered one, bringing the total count to 476 stores in 29 states at the end of the period. This reflected an increase of 8.4% in in-store count on a year-over-year basis. The company plans to open 45 new stores, less one closure, in fiscal 2023. The company’s long-term target continues to be more than 1,050 stores with a goal to open 50-55 stores annually. The company plans to remodel 30 to 40 stores, and has so far completed 11 remodels. Management plans to open six new stores in the second quarter and the balance in the back half, with the third quarter expected to register largest number of openings.
Other Financial Aspects
Ollie’s Bargain ended the quarter with cash and cash equivalents of $135 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $91.6 million of availability under the facility as of the end of the first quarter.
As of Apr 29, 2023, Ollie’s Bargain’s total borrowings (consisting solely of finance lease obligations) were $1.5 million. Inventories, as of the end of the first quarter, declined 3.7% to $498 million.
During the quarter, the company incurred capital expenditures of $19 million. For fiscal 2023, management projected capital expenditures of $125 million.
During the quarter under discussion, Ollie’s Bargain repurchased 215,522 shares worth $12.3 million. The company had $125.9 million remaining under its share repurchase program.
Guidance
Management now envisions fiscal 2023 (which includes the 53rd week) 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.
The company had earlier guided net sales in the band of $2.036-$2.058 billion and comparable store sales growth of 1-2%.
Ollie’s Bargain currently envisions a gross margin rate in the bracket of 39.1-39.3% for fiscal 2023. The company had reported a gross margin of 35.9% in the last fiscal year. The company now anticipates an operating income in the range of $207-$215 million for fiscal 2023, up from $130 million reported in fiscal 2022.
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.
It foresees second-quarter comparable store sales in the range of 2% to 3%. With respect to gross margin, the company anticipates major year-over-year gross margin improvement in the second quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Ollie's Bargain Outlet has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ollie's Bargain Outlet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Ollie's Bargain Outlet belongs to the Zacks Consumer Products - Staples industry. Another stock from the same industry, RH (RH - Free Report) , has gained 22.8% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.
RH reported revenues of $739.16 million in the last reported quarter, representing a year-over-year change of -22.8%. EPS of $2.21 for the same period compares with $7.78 a year ago.
RH is expected to post earnings of $2.43 per share for the current quarter, representing a year-over-year change of -69.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for RH. Also, the stock has a VGM Score of D.