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Ollie's Bargain (OLLI) to Post Q1 Earnings: Factors to Note

Ollie's Bargain Outlet Holdings, Inc. OLLI is likely to register a decline in the top line when it reports first-quarter fiscal 2022 numbers on Jun 8, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $416 million, indicating a decline of 8.1% from the prior-year quarter.

The bottom line of this extreme value retailer of brand name merchandise is anticipated to decline year over year. We note that the Zacks Consensus Estimate for first-quarter earnings per share has slid by a couple of cents to 30 cents over the past 30 days. The figure suggests a sharp decline of 62.5% from the year-ago period.

The company has a trailing four-quarter negative earnings surprise of 3.4%, on average. In the last reported quarter, this Harrisburg, PA-based company’s bottom line beat the Zacks Consensus Estimate by 1.5%.

Key Factors to Note

Ollie's Bargain is navigating an uncertain and highly inflationary environment while lapping record government stimulus a year ago. It has been facing persistent higher transportation, product and labor costs. These factors are likely to have adversely impacted the company’s first-quarter performance. On its last earnings call, management guided a 14-15% decline in comparable store sales for the quarter under discussion. It projected first-quarter net sales in the bracket of $417-$422 million, down from $452.5 million reported in the year-ago period.

Again, a rise in supply chain costs, higher import and trucking costs, and increased wage rates in the distribution centers may have weighed on margins. The company had guided first-quarter gross margin to be approximately 35.8%. This suggests a contraction from gross margin of 40.4% reported in the year-ago period.

We note that SG&A expenses have been increasing for quite some time now. In the last reported quarter, SG&A expenses increased due to higher selling expenses associated with 43 net additional stores and escalating wage rates in select markets. Certainly, lower gross margin and deleveraging of SG&A expenses might have hurt operating income. The company had projected first-quarter operating income between $26.5 million and $28 million, down from $71.2 million reported in the prior-year quarter.

Evidently, the aforementioned factors are likely to get reflected in the company’s bottom line. Ollie's Bargain had guided first-quarter adjusted earnings in the range of 31-33 cents a share, down from adjusted earnings of 80 cents reported in the year-ago quarter.

Nonetheless, the company’s operating model of “buying cheap and selling cheap,” cost-containment efforts, focus on store productivity and expansion of customer reward program — Ollie's Army might have provided some cushion. It has been making an effort to create an alignment between value-driven merchandise and customer demand.

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

Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
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 the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Ollie's Bargain this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ollie's Bargain has a Zacks Rank #4 (Sell) and an Earnings ESP of -3.04%.

3 Stocks With Favorable Combination

Here are three companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Marriott International MAR currently has an Earnings ESP of +9.47% and a Zacks Rank #1. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.54 suggests an increase of 94.9% from the year-ago reported number.

Marriott International’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.04 billion, which indicates growth of 60% from the prior-year quarter. MAR has a trailing four-quarter earnings surprise of 36.2%, on average.

Kroger KR currently has an Earnings ESP of +1.65% and a Zacks Rank #2. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of $1.27 suggests growth of 6.7% from the year-ago quarter’s reported figure.

Kroger’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $43.57 billion, indicating an increase of 5.5% from the year-ago quarter. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Lithia Motors LAD currently has an Earnings ESP of +3.31% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $11.85 suggests an increase of 6.6% from the year-ago reported number.

Lithia Motors’ top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $7.49 billion, which indicates an improvement of 24.7% from the prior-year quarter. LAD has a trailing four-quarter earnings surprise of 30.5%, on average.

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