Ollie's Bargain (OLLI) Thrives on Customer-Centric Endeavors
Ollie's Bargain Outlet Holdings, Inc. OLLI thrives on its distinctive business model, characterized by the strategy of "buying cheap and selling cheap." This strategy, complemented by initiatives to control costs, prioritize store productivity and expand its customer loyalty program, Ollie's Army, has firmly established the company's foothold in the market. The key to Ollie's success lies in its capability to provide attractive deals that strongly resonate with consumers. The company's favorable vendor relationships also play a pivotal role in its sustained growth.
Demand for Closeout Goods Persists
Ollie's Bargain's focus on value-centric merchandise assortments has positioned it strategically to seize opportunities in the market and effectively cater to consumer needs. The continuous growth of Ollie's Army, a pivotal sales driver, is evident through a steadily increasing membership base. As of the conclusion of the second quarter of fiscal 2023, Ollie's Bargain boasts an active Ollie's Army membership of 13.5 million, contributing to more than 80% of total sales.
The company's commitment to offering brand-name and closeout merchandise at attractive price points has garnered positive responses from customers, reflecting its dedication to delivering exceptional deals, enhancing operational margins and expanding its store network. Ollie's Bargain is well-positioned to capitalize on a favorable closeout environment and the rising trend of trade-down activity, aligning seamlessly with its growth objectives.
This Zacks Rank #2 (Buy) company 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.
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Store Expansion Strategy
In terms of store growth opportunities, Ollie's Bargain plans to have more than 1,050 stores in the long run, aiming to open 50 to 55 stores annually. Ollie's Bargain increased its store base at a CAGR of 11.5% 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. Management's strategy for the year includes opening 23 new stores in the third quarter.
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.
Wrapping Up
Ollie's Bargain’s strategic endeavors position the stock firmly for growth. Based in Harrisburg, PA, the company has defied industry trends, with its stock surging by an impressive 67% year to date against the industry's 24.4% decline.
3 More Stocks Looking Hot
Here, we have highlighted three other top-ranked stocks, namely Lamb Weston Holdings LW, The Kraft Heinz Company KHC and Kroger KR.
Lamb Weston, a leading supplier of frozen potato products to restaurants and retailers, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings indicates growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers. Lamb Weston has a trailing four-quarter earnings surprise of 46.2%, on average.
Kraft Heinz, which manufactures and markets food and beverage products, currently has a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 9.9%, on average.
The Zacks Consensus Estimate for Kraft Heinz’s current financial-year sales and earnings suggests growth of 1.1% and 6.5%, respectively, from the year-ago reported numbers.
Kroger, which operates as a food and drug retailer, currently carries a Zacks Rank #2. Kroger has a trailing four-quarter earnings surprise of 6.8%, on average.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and earnings suggests growth of 1.6% and 6.9%, respectively, from the year-ago reported numbers.
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