Ollie's Bargain Issues Q2 View, Expects Comps Growth of 40%
Ollie's Bargain Outlet Holdings, Inc.’s OLLI business operating model of “buying cheap and selling cheap”, cost-containment efforts, focus on store productivity and expansion of customer reward program — Ollie's Army, reinforce its position in the Consumer Staples sector. These factors position the company well to augment both top and bottom-line performance despite the pandemic. Based on quarter-to-date trends, this Harrisburg, PA-based company issued second-quarter fiscal 2020 outlook.
Management expects net sales of approximately $515 million for the second quarter ending Aug 1, 2020. This indicates a sharp increase of 54.2% from the prior-year period’s figure of $333.9 million. Also, the projected figure showcases a sequential increase of 47.4%.
Additionally, Ollie's Bargain anticipates comparable-store sales growth of roughly 40% for second-quarter fiscal 2020. This indicates a far better performance compared with the year-ago quarter, when the metric decreased 1.7%. We also note that in first-quarter fiscal 2020, comparable-store sales had declined 3.3%.
However, management highlighted that the second-quarter comparable-store sales growth rate has decelerated in recent weeks, and is now tracking in the mid-teens. The company anticipates growth rate to continue to moderate in the third and fourth quarters of fiscal 2020.
Nonetheless, we believe that Ollie's Bargain’s endeavors have aided it in capitalizing on growing consumer demand for essentials and other daily purchases. John Swygert, CEO, said, “Our ability to keep pace with the spike in demand and deliver outstanding comparable store sales growth and operating margins is a testament to our organization’s ability to execute at extraordinary levels.” The company forecast gross margin of approximately 39% and operating margin of about 16% for the second quarter.
Wrapping up
It’s quite apparent that Ollie's Bargain strategic endeavors and long-term prospects place the stock firmly on growth trajectory. Notably, shares of this Zacks Rank #1 (Strong Buy) company has soared 64.4% in the past three months against the industry’s decline of 6.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Impressively, the Zacks Consensus Estimate for second-quarter fiscal 2020 earnings has moved north by 56.7% to 47 cents over the last 60 days. The Zacks Consensus Estimate indicates an improvement of 34.3% from the year-ago period reported figure of 35 cents.
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Big Lots BIG, a Zacks Rank #1 stock, has a trailing four-quarter earnings surprise of 62.2%, on average.
Sprouts Farmers Market SFM has a long-term earnings growth rate of 9.2%. Currently, it sports a Zacks Rank #1.
Kroger KR, a Zacks Rank #1 stock, has a long-term earnings growth rate of 5.5%.
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