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Ollie's Bargain Posts Robust Holiday Sales, Raises FY18 View

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Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Free Report) recently came out with sturdy holiday season performance, which, in turn, led management to raise fiscal 2018 outlook. Let’s take a closer look at this development.

Strong Comps Add Cheer

The company witnessed a stellar holiday season, backed by strength in toy and houseware categories. Also, solid performance during the annual Ollie’s Army night aided the season’s results. This was mainly driven by the company’s strategic operating model of “buying cheap and selling cheap.”

Such upsides led comparable store sales (comps) for the nine-week period ending Jan 5, 2019 to grow 7.1% year over year, reflecting a substantial improvement from the prior year’s holiday comps growth of 3.9%. Moreover, net sales for the reported holiday season increased 16.6% year over year.

Earlier, the company’s comparable-store sales have increased 6%, 3.2% and 3.3% in fiscal 2015, 2016 and 2017, respectively. During the third quarter of fiscal 2018, the metric rose 4.6%, marking the 18th straight quarter of growth, with toys, housewares, electronics, floor coverings and automotive being the best performing categories.

Steady growth in comps reflects that the company’s strategic initiatives have been lucrative. Moreover, the company is striving to enhance its store count, which is likely to add greater impetus to sales growth.

Raised View

Encouraged by the solid holiday comps and sales results, management raised the top and bottom-line projections for fiscal 2018 ending Feb 2, 2018. The company now expects net sales of nearly $1.245 billion, up from the previous view of $1.226-$1.231 billion.

Further, the company anticipates roughly 4.4% rise in comps, highlighting an increase from the earlier projection of 3-3.5%. Adjusted earnings are projected to be $1.81 per share for the said time period compared with $1.74-$1.77 guided earlier.

Moving on, Ollie’s Bargain has paid off the remaining amount of its outstanding term loan of roughly $19 million as of Dec 18, 2018. Additionally, the company announced plans to report fourth-quarter fiscal 2018 results in the second half of March 2019.

All said, we expect the company’s endeavors to boost sales and continue driving performance. We note that this Zacks Rank #2 (Buy) company has gained 16.7% in the past month, outperforming the industry’s growth of 2.3%.


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