Here's Why Ollie's Bargain (OLLI) Is Marching Ahead of Industry
Ollie's Bargain Outlet Holdings, Inc. OLLI 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 71.3% year to date, while the industry faced a 25.9% 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 14.2% increase in current fiscal-year sales and an impressive 67.9% 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 second quarter of fiscal 2023 with 13.5 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.
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.
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Store Growth Strategy
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.
Looking at fiscal 2023, the company plans to open 45 new stores, offset by one closure, and remodel 30 to 40 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. The company targets new store sales of about $4 million in the first full year of operations.
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 $2.076 billion and $2.091 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 4-4.5%, 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 Hot
Here, we have highlighted three other top-ranked stocks, namely The TJX Companies TJX, Ross Stores ROST and Walmart WMT.
TJX Companies, which operates as an off-price apparel and home fashion retailer, currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 7.5% and 19.6%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings indicates growth of 7.1% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 5% and 2.4%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report
