Ollie's Bargain Beats on Q3 Earnings, Raises FY25 Outlook

Ollie’s Bargain Outlet Holdings, Inc. OLLI delivered mixed third-quarter fiscal 2025 results, with revenues coming shy of the Zacks Consensus Estimate but earnings surpassing the same. Encouragingly, both metrics improved year over year, with healthy comparable-store sales growth supported by strong new store performance, accelerating customer acquisition, and sustained traction in key consumable and seasonal categories. 

The company’s value-driven model continues to resonate with consumers against a still-challenging retail backdrop. This Harrisburg, PA-based closeout retailer also raised its full-year sales and earnings outlook, reflecting robust third-quarter momentum and a strong start to the final quarter.

OLLI’s Quarterly Performance: Key Metrics & Insights

Ollie’s Bargain delivered adjusted earnings of 75 cents a share, topping the Zacks Consensus Estimate of 71 cents. This also compared favorably with 58 cents earned in the prior-year period, marking a 29.3% year-over-year increase.

Net sales rose 18.6% to $613.6 million, driven by a record pace of new store openings and solid comparable-store performance. However, the top line came in slightly below the Zacks Consensus Estimate of $616 million. Comparable-store sales grew 3.3%, fueled by mid-single-digit growth in transactions, though partially offset by a lower average ticket price. We had projected comparable store sales growth of 3.2% for the quarter under review.

Food, seasonal, hardware, stationery, and lawn & garden were among the quarter’s top-performing categories. Management emphasized that ongoing retail consolidation and improved deal flow, especially in consumables, continue to bolster traffic and new customer acquisition.

Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote

What Margins Have to Say About Ollie's Bargain

The gross profit rose 18.3% to $253.7 million. However, gross margin dipped 10 basis points to 41.3%. The decline was attributable to higher supply-chain and tariff-related costs, partially offset by stronger merchandise margins. Despite the slight contraction, the result was better than management’s expectations. We had anticipated a 60-basis-point contraction in gross margin. 

SG&A expenses as a percentage of net sales leveraged 50 basis points to 29.4%, in sync with our projection. This improvement reflected lower professional fees, reduced stock-based compensation and continued optimization of marketing expenditures. 

Operating income rose 24.5% to $55.4 million, while the operating margin expanded 40 basis points to 9%. Adjusted EBITDA climbed 21.8% to $72.9 million, with the margin improving 30 basis points to 11.9%. We had anticipated a 30-basis-point expansion in the operating margin, while a 20-basis-point improvement in the adjusted EBITDA margin.

OLLI’s Store Expansion Plans

Ollie's Bargain opened 32 new stores during the quarter, bringing its total footprint to 645 stores, up 18.1% year over year. The company completed 86 store openings year to date, surpassing its initial target of 75 new stores and showcasing its ability to capitalize on abundant second-generation real estate opportunities, particularly from broad retail consolidation and bankruptcy-driven vacancies.

The company’s loyalty program, Ollie’s Army, continues to fuel engagement and retention. Membership grew 11.8% to 16.6 million members, with new member growth accelerating across younger and higher-income demographics. Management noted that strategic pricing investments in consumables, expanded seasonal assortments and strong digital marketing contributed meaningfully to customer growth.

Ollie's Bargain’s Financial Snapshot

Ollie's Bargain ended the quarter with $432.2 million in total cash and investments, marking a 42.2% year-over-year increase. The balance sheet remains debt-light, providing flexibility for growth investments and opportunistic share repurchases. Capital expenditures were $31 million during the quarter, with investment focused on new stores, former Big Lots conversions and supply-chain enhancements.

The company repurchased $12 million worth of stock, underscoring its commitment to shareholder returns, leaving $293 million under its current authorization.

What to Expect From OLLI in Fiscal 2025?

Net sales are now projected in the range of $2,648-$2,655 million, up from $2,631-$2,644 million earlier. Comparable store sales growth is now forecast at 3.2-3.5% compared to the prior 3-3.5%. The gross margin is expected at 40.3%.

Operating income is anticipated between $293 and $298 million compared with the earlier $292-$298 million range. Adjusted net income is forecast between $236 and $239 million, up from the prior-year estimate of $233-$237 million.

Management envisions fiscal 2025 adjusted earnings in the range of $3.81-$3.87 per share, above the previous outlook of $3.76-$3.84, and up from the adjusted earnings of $3.28 reported last fiscal. Capital expenditures are projected at $88 million. For the fourth quarter, management projects comparable store sales growth between 2% and 3% and gross margin in the mid-39% range. 

Shares of this Zacks Rank #2 (Buy) company have fallen 13.3% in the past three months compared with the industry’s decline of 13.9%.

3 More Key Picks

United Natural Foods, Inc. UNFI, North America’s premier grocery wholesaler, currently sports a Zacks Rank #1 (Strong Buy). UNFI has a trailing four-quarter earnings surprise of 52.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for United Natural Foods’ current financial-year sales and EPS calls for growth of 1% and 187.3%, respectively, from the year-ago reported numbers.

Boot Barn Holdings, Inc. BOOT, the nation’s leading lifestyle retailer of western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2 (Buy). BOOT has a trailing four-quarter earnings surprise of 5.4%, on average. 

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and EPS implies growth of 16.2% and 20.5%, respectively, from the year-ago reported numbers.

Dollar Tree, Inc. DLTR, one of North America’s largest value retailers, currently carries a Zacks Rank #2. DLTR has a trailing four-quarter earnings surprise of 29.1%, on average. 

The Zacks Consensus Estimate for Dollar Tree’s current financial-year EPS suggests growth of 11% from the year-ago reported numbers.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research