Ollie's Bargain (OLLI) Store Count Crosses the 300 Mark
Ollie's Bargain Outlet Holdings, Inc. OLLI, one of the nation’s leading closeout retailers, opens its 300th store in Glen Burnie, Maryland. The company opened its first store in Mechanicsburg, PA. With slew of other openings on Nov 14, the company currently operates 303 stores in 23 states.
Management believes that there is still a significant room to increase its store count to more than 950. The company has increased its store base, at a CAGR of 14.8%, from 154 stores in fiscal 2013 to 268 stores in fiscal 2017. We note that the company has opened 28, 31 and 34 stores in fiscal 2015, 2016 and 2017, respectively. Further, management plans to open 36-38 stores and relocate one during fiscal 2018.
Notably, Ollie's Bargain’s efforts to offer great deals to its customers and sell "Good Stuff Cheap" are commendable. Ollie's Bargain’s business model of “buying cheap and selling cheap”, cost-containment efforts, decent comparable-store sales (comps) performance and customer reward program, Ollie's Army, further fortifies its position. The company’s results are highly dependent on the availability of closeout merchandise at compelling prices, as the same represents roughly 70% of goods purchased. Moreover, it sells merchandise at prices up to 70% lower than the department and fancy stores, and up to 20-50% lower than mass-market retailers.
Cumulatively, these afore-mentioned factors have positioned the stock to augment both top- and bottom-line performance in the long run. Net sales have increased at a CAGR of 18.8% from $540.7 million in fiscal 2013 to $1.077 billion in fiscal 2017. Meanwhile, net income has increased from $19.5 million to $127.6 million during the said period. Management now envisions fiscal 2018 net sales in the band of $1.222-$1.227 billion and adjusted earnings in the range of $1.73-$1.76 per share.
These apart, the company’s comps performance exhibited a decent run. Comps have increased 6%, 3.2% and 3.3% in fiscal 2015, 2016 and 2017, respectively. In second-quarter fiscal 2018, the metric improved 4.4%, marking the 17th straight quarter of comps growth. For fiscal 2018, the company anticipates comps growth of 2.5-3%.
In the past three months, shares of this Zacks Rank #2 (Buy) stock have rallied approximately 24% against the industry’s and S&P 500 index’s decline of 3.7% and 5.3%, respectively.
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