Retail Store Bankruptcies Benefit Ollie's Bargain Outlet, Stock Soars On Q4 Performance

Ollie’s Bargain Outlet Holdings, Inc. OLLI shares are trading higher on Wednesday.

The company reported fourth-quarter adjusted earnings per share of $1.19, in line with the analyst consensus estimate. Quarterly sales of $667.1 million (up 2.8% year over year) missed the analyst consensus estimate of $674.5 million.

Comparable store sales increased 2.8% from the prior year’s increase of 3.9%.

“With so many retailers closing stores or going bankrupt in the past year, there are a considerable number of abandoned customers, merchandise, real estate, and talent in the marketplace,” said Eric van der Valk, President and Chief Executive Officer.

The company opened 13 new stores, ending the quarter with 559 stores in 31 states, an increase of 9.2% year-over-year.

Also Read: Pillsbury Maker General Mills Cautions About Economic Uncertainty After Q3 Revenue Dip

Adjusted EBITDA in the quarter under review decreased to $109.355 million from $110.586 million. Adjusted EBITDA margin decreased 60 basis points to 16.4% in the fourth quarter from 17.0% in the same period last year.

Gross margin increased 20 basis points to 40.7% in the fourth quarter from 40.5% in the fourth quarter of fiscal 2023, driven by lower supply chain costs.

The company’s cash and equivalents and short-term investments were $428.7 million. Inventories as of the end of fiscal 2024 increased 9.2% to $552.5 million.

In a separate release, Ollie’s Bargain Outlet announced a new $300 million share repurchase authorization through March 31, 2029.

The company may buy back shares through open market or private transactions based on market conditions. Since 2019, Ollie’s has repurchased nearly $414 million worth of shares or 5.5 million shares.

Outlook: The company is accelerating new store openings during fiscal 2025 to 75 stores from 50 in fiscal 2024. Comparable store sales is expected to increase 1% to 2%.

Ollie’s Bargain outlet sees FY25 sales of $2.564 billion – $2.586 billion versus the $2.572 billion estimate.

The company projects adjusted EPS of $3.65 to $3.75 versus the $3.78 estimate.

Price Action: OLLI shares are trading higher by 10.3% to $109.30 at last check Wednesday.

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