Ollie's Bargain Outlet Raises FY23 Outlook After Solid Q2 Earnings Beat

Ollie's Bargain Outlet Holdings Inc OLLI reported Q2 FY23 sales growth of 13.7% Y/Y to $514.5 million, beating the consensus of $499.0 million. 

Comparable store sales increased 7.9% compared to a 1.2% increase last year.

The company opened six new stores, ending the quarter with 482 stores (7.3% Y/Y) in 29 states.

Gross profit increased 37.0% to $196.7 million, and the margin increased 650 basis points to 38.2%, led by favorable supply chain costs and higher merchandise margins.

Operating income increased 217.5% to $52.5 million in Q2, while operating margin increased 650 basis points to 10.2%.

Adjusted EBITDA increased 146.7% Y/Y to $64.0 million in Q2, and the corresponding margin increased 670 basis points to 12.4%.

As of the end of Q2, inventories increased 0.8% to $498.3 million. The company exited the quarter with $310.2 million in cash and cash equivalents and short-term investments.

Adjusted EPS of $0.67 beat the analyst consensus of $0.61.

"Given the better than expected performance in the second quarter and continued momentum in our business, we are raising our full-year guidance and remain confident in our ability to return to our long-term algorithm of double-digit sales growth, 40% gross margin, and double-digit EBITDA growth," said John Swygert, President and CEO.

Repurchase: In Q2, OLLI repurchased shares worth $16.7 million and had $109.2 million of shares remaining capacity under its current share repurchase program as of quarter-end.

FY23 Outlook: Ollie's increased its net sales outlook to $2.076 billion - $2.091 billion from $2.052 billion-$2.067 billion vs. the consensus of $2.06 billion.

Ollie's Bargain raised its FY23 Adjusted EPS outlook to $2.65 - $2.74 from $2.56-$2.65 versus the consensus of $2.62.

Price Action: OLLI shares are trading higher by 6.44% at $79.70 on the last check Thursday.