Uniqueness Helping Brick-And-Mortar Ollie's Bargain Outlet Fend Off The E-Commerce Offensive

Ollie’s Bargain Outlet Holdings Inc OLLI significantly outperformed retailers within the last quarter and the company’s fourth quarter earnings release this week supported that strength. The latest earnings report has reiterated the thesis that discount retailers continue to remain untouched from e-commerce pressure, while outperforming traditional brick-and-mortar retail counterparts.

Analyst Commentary

MKM Partners has reiterated a Buy on the company and raised its price target to $39, up from $34 following the company’s earnings and sales beat on Tuesday.

“Ollie’s significantly outperformed most retailers in the quarter with solid same-store sales growth and mid-20 percent EPS growth even as the company cycled some of the toughest comparison — comps up 5.0 percent LY, EPS up 29 percent,” said MKM Partners.

“The strong performance leaves us incrementally confident that Ollie’s is well positioned to withstand some of the major structural challenges affecting most retailers, and we continue to see sustained 20 percent annual EPS growth.”

Higher prices elsewhere could further enhance Ollie’s value proposition moving forward, given the companies 25–60 percent price gap compared to traditional outlets. Analysts are predicting 1–2 percent comp growth for the year and are seeing Ollie’s as a compelling long-term growth story.

MKM believes the company can go from its current 235-store count to as many as 950 stores across the country; current distribution channels can support 375–400 stores.

Shares of Ollie’s Bargain Outlet are up nearly 17 percent year-to-date.

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