Ollie's Bargain Outlet Holdings, Inc. (OLLI Quick QuoteOLLI - Free Report) has not only navigated through market challenges but also demonstrated remarkable resilience and growth potential. Based in Harrisburg, PA, the company has defied industry trends, with its stock rallying by an impressive 34.3% in the past year, while the industry faced a 27.5% decline.

Ollie's success story hinges on a simple yet effective mantra — 'buy cheap, sell cheap.' This core principle is further fortified by prudent cost management and an unwavering commitment to enhancing store efficiency. Ollie's has also expanded its customer loyalty program, known as Ollie's Army, which has further sharpened its competitive edge.

The Zacks Consensus Estimate predicts a robust 14.9% increase in current fiscal-year sales and an impressive 74.7% surge in earnings compared to the previous year. These figures underscore the company's inherent potential and promising outlook.

Market Expansion Initiatives

Ollie's Bargain's commitment to offering value-driven merchandise assortments has made it a formidable player in the marketplace. The continued success of Ollie's Army has played a vital role in driving sales. With a consistently growing membership, Ollie's Bargain ended the third quarter of fiscal 2023 with 13.7 million active Ollie's Army members, accounting for slightly more than 80% of sales.

The company's performance has been bolstered by the favorable response to its deals and product offerings, which resonate with a wide customer base. Ollie's Bargain's ability to offer appealing and diverse products has been a key driver of its success. Additionally, the company's strong vendor relationships have played a crucial role in further cementing its position in the market.

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Markedly, Ollie's Bargain's results depend on the availability of brand-name and closeout merchandise at compelling price points. The company remains steadfast in its commitment to delivering superior deals, enhancing operating margins and expanding its store network.

Store Growth & Distribution Network

Ollie's Bargain remains committed to its long-term expansion strategy, aiming to have 1,050 stores or more, with an annual target of opening 50-55 new stores. The company has consistently expanded its store network, achieving an impressive CAGR of 11.5%, growing from 303 stores in fiscal 2018 to 468 stores in fiscal 2022. In the preceding two fiscal years, Ollie's Bargain opened 40 and 46 stores, respectively.

The company achieved a significant milestone by opening a record 23 new stores during the quarter, surpassing the 500-store mark. Looking at fiscal 2023, the company plans to open 45 stores, offset by one closure, and remodel approximately 35 stores. Importantly, Ollie's Bargain's new store real estate model prioritizes flexibility and focuses on the store size between 25,000 and 35,000 square feet.

Ollie's is strategically expanding its distribution network, with plans to open a fourth distribution center in Illinois in fiscal 2024. This expansion will support the company's growth in the Midwest, providing the capacity to service an additional 150 to 175 stores. The recently completed expansion of the Pennsylvania distribution center is already showing benefits in throughput and operating efficiency.

Final Thoughts

Ollie's Bargain’s strategic endeavors position the stock firmly for growth. With promising factors such as enhanced closeout opportunities, a growing trend of consumers trading down and ample room for expanding its store network, this Zacks Rank #2 (Buy) stock appears poised for a bright future.

Management has set ambitious targets for fiscal 2023, with net sales projected between $2.097 billion and $2.104 billion, marking a significant increase compared to the $1.827 billion reported in fiscal 2022. Ollie's Bargain also anticipates a robust improvement in comparable store sales in the range of 5.3-5.6%, a noteworthy turnaround from the 3% decline reported in the previous fiscal year. These promising outlooks underscore Ollie's Bargain's potential for dynamic growth and value creation.

3 More Stocks Looking Red Hot

Here, we have highlighted three other top-ranked stocks, namely Ingredion Incorporated (INGR Quick QuoteINGR - Free Report) , Sysco Corporation (SYY Quick QuoteSYY - Free Report) and Casey's General Stores (CASY Quick QuoteCASY - Free Report) .

Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, holds a Zacks Rank #2. INGR delivered a positive earnings surprise of 23.9% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ingredion Incorporated’s current financial-year sales and earnings suggests growth of around 5% and 24.7%, respectively, from the year-ago reported numbers.

Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.

The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.

Casey's, the third-largest convenience retailer and the fifth-largest pizza chain, currently carries a Zacks Rank #2. Casey's has a trailing four-quarter earnings surprise of 17.8%, on average.

The Zacks Consensus Estimate for Casey's current financial-year earnings suggests growth of 9% from the year-ago reported numbers.