Ollie's Bargain Q1 Earnings Top Estimates, Comps Up 2.6% Y/Y

Ollie's Bargain Outlet Holdings, Inc. OLLI posted first-quarter fiscal 2025 results, wherein the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. This Harrisburg, PA-based company witnessed an uptick in comparable store sales.

Ollie’s first-quarter results reflect strong performance, marked by accelerated store growth and better-than-expected sales and earnings. The company’s value-driven model continues to resonate with consumers, particularly in a challenging retail environment.

OLLI’s Quarterly Performance: Key Metrics & Insights

This extreme-value retailer of brand-name merchandise posted adjusted earnings of 75 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents per share. Also, the bottom line reflected an improvement from adjusted earnings of 73 cents per share reported in the year-ago period.

Net sales of $576.8 million rose 13.4% year over year, driven by new store unit growth and a comparable store sales increase. Net sales also beat the Zacks Consensus Estimate of $565 million.

Comparable store sales for the company increased 2.6% in the quarter under discussion compared with a 3% increase registered in the prior-year period. This growth was evenly driven by increases in transaction count. Our model predicted comps growth of 1% for the first quarter of 2025.

What Margins Have to Say About Ollie's Bargain

The gross profit grew 13.2% year over year to $237 million during the quarter. Gross margin remained flat at 41.1%, as lower supply chain costs were offset by a decline in merchandise margin due to changes in product mix.

As a percentage of net sales, SG&A increased 60 basis points to 28.6%, primarily driven by higher medical and casualty claims as well as new store growth. We anticipated SG&A expenses to increase 11.8%.

The operating income declined 0.6% to $56.2 million, while the operating margin contracted 140 basis points to 9.7%. We had expected 160 basis points of contraction in the operating margin.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 3.9% to $72.2 million during the quarter under review. The adjusted EBITDA margin decreased 110 basis points to 12.5%. We anticipated 120 basis points of contraction in the adjusted EBITDA margin.

OLLI’s Store Expansion Plans

During the quarter, Ollie’s Bargain opened 25 new stores, bringing the total count to 584 stores in 32 states at the end of the period. This reflected an increase of 13.2% in the store count on a year-over-year basis. The company plans to open a net of 75 stores in fiscal 2025.

Ollie's Bargain’s Financial Snapshot

Ollie’s maintained a strong financial position, ending the quarter with $369.5 million in cash, cash equivalents, and short-term investments, along with $45.4 million in long-term investments, bringing the total cash and investment position to $414.9 million, a 21.5% increase year over year. 

During the first quarter of 2025, the company incurred capital expenditures of $26.7 million. For fiscal 2025, management projected capital expenditures in the range of $83-$88 million.

During the quarter under discussion, Ollie’s invested $17.1 million to repurchase 159,757 shares of its common stock. The company had $315.5 million remaining under its share repurchase program.

What to Expect From OLLI in Fiscal 2025?

Ollie’s is reaffirming its previously provided earnings outlook for fiscal 2025, reflecting continued confidence in its business momentum and operating model. Management now expects net sales in the range of $2,579 to $2,599 million, up slightly from the prior range of $2,564 to $2,586 million. The company anticipates comp to increase between 1.4% and 2.2%, compared to the previous range of 1.0% to 2.0%.

OLLI envisions the gross margin rate to be 40% for fiscal 2025 compared with 40.3% reported in fiscal 2024. The company anticipates an operating income in the range of $283-$292 million for fiscal 2025, up from $249.5 million reported in fiscal 2024.

Management envisions fiscal 2025 adjusted earnings in the range of $3.65-$3.75 per share, in line with the earlier guidance and up from the adjusted earnings of $3.28 reported last fiscal. The outlook assumes an annual effective tax rate of approximately 25%, excluding excess tax benefits from stock-based compensation, and diluted weighted average shares outstanding of 62 million.

Shares of this Zacks Rank #2 (Buy) company rose 4.3% in the past three months against the industry’s decline of 2.2%.

OLLI Stock's Price Performance

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