OLLI Q3 Deep Dive: Store Expansion and Loyalty Drive Growth Amid Retail Consolidation

Discount retail company Ollie’s Bargain Outlet (NASDAQ:OLLI) met Wall Streets revenue expectations in Q3 CY2025, with sales up 18.6% year on year to $613.6 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $2.65 billion at the midpoint. Its non-GAAP profit of $0.75 per share was 2.4% above analysts’ consensus estimates.

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StockStory’s Take

Ollie's third quarter results aligned with Wall Street expectations, underpinned by significant store growth and strong customer engagement. Management credited the opening of a record 32 new stores and an expanded Ollie’s Army loyalty program for driving higher sales and transaction volumes. CEO Eric VanderVlok emphasized the company’s ability to attract new customer segments, particularly younger and higher-income shoppers. He highlighted the firm’s flexible buying model and growing presence in seasonal categories as key contributors to the quarter’s performance, stating that “customers are prioritizing their spending around their needs and are looking for value.”

Looking forward, Ollie’s guidance reflects confidence in continued unit expansion and customer acquisition, supported by investments in supply chain and digital marketing. Management sees ongoing opportunity in capturing market share as retail consolidation accelerates and distressed locations become available. VanderVlok noted that the company’s long-term target remains 1,300 stores, with the infrastructure in place to sustain at least 10% annual unit growth. CFO Robert Helm cautioned that while supply chain and medical costs remain headwinds, the company expects to leverage its scale and optimize SG&A as store openings are front-loaded next year, stating, “We are positioning the business not for next year, but for the next five to ten years.”

Key Insights from Management’s Remarks

Management attributed third-quarter results to accelerated new store openings, strong customer acquisition through Ollie’s Army, and a strategic shift toward digital marketing, which together drove sales and engagement higher.

• Record store expansion: The company opened 32 new stores during the quarter—an all-time high for Ollie’s—capitalizing on the availability of second-generation retail sites, particularly from distressed or bankrupt competitors. This expansion was enabled by enhanced supply chain and project management infrastructure, allowing all openings to be completed before the holiday season.
• Ollie’s Army loyalty growth: Membership in the Ollie’s Army loyalty program grew 12% year over year, with a notable increase in younger (ages 18-34) and higher-income cohorts. These members shop more frequently and spend over 40% more per visit than nonmembers, supporting higher transaction counts and engagement.
• Shift to digital marketing: The company accelerated its transition from print to digital-first marketing, reallocating spend based on data-driven media mix analysis. This resulted in greater targeting efficiency and contributed to October being the strongest sales month of the quarter, even as print campaigns were reduced.
• Product mix optimization: Ollie’s leveraged its flexible buying model to increase focus on consumables and seasonal categories, responding to consumer demand for value in staple goods and capitalizing on closeout opportunities. The seasonal category, in particular, outperformed due to expanded assortments and a combination of direct-sourced and closeout merchandise.
• Margin management amid cost pressures: Gross margin was steady year over year despite higher supply chain costs and tariffs, offset by lower markdown rates and improved merchandise margins. Management stressed that maintaining price gaps to mainstream retailers remains central to their pricing approach.

Drivers of Future Performance

Ollie’s outlook for the coming quarters centers on continued store growth, evolving customer acquisition strategies, and further investment in digital and supply chain capabilities.

• Accelerated store openings: The company plans to maintain a rapid pace of new store launches, targeting 75 openings next year, with a focus on acquiring former Big Lots locations. Management believes this approach will continue to drive top-line growth and capture market share from other distressed retailers.
• Digital engagement and marketing: Ongoing investment in digital marketing is expected to further enhance customer acquisition and retention, as Ollie’s reallocates more of its advertising budget away from traditional print. The company expects this digital-first strategy to drive higher sales productivity and engagement, especially among younger demographics.
• Cost management and margin resilience: While elevated supply chain and medical costs present ongoing challenges, management expects increased scale and operational efficiencies to support stable margins. The shift to front-loaded store openings and reduced reliance on print marketing are anticipated to create SG&A leverage, though tariffs and variable costs remain potential headwinds.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will track (1) the pace and performance of new store openings, especially conversions of former Big Lots locations, (2) progress in digital marketing effectiveness and the impact on customer acquisition and sales, and (3) resilience in gross margin and SG&A leverage amid ongoing cost pressures. We will also watch for shifts in consumer spending patterns and the company’s ability to capitalize on closeout deal flow.

Ollie's currently trades at $115.08, down from $118.80 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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