BLOOMSBURG, PENNSYLVANIA, UNITED STATES - 2025/06/01: The logo of Ollie's Bargain Outlet is seen on ... More the exterior of its store at the former Columbia Mall. (Photo by Paul Weaver/SOPA Images/LightRocket via Getty Images)SOPA Images/LightRocket via Getty Images Note: Ollie’s FY 2024 ended Feb 2025.Ollie’s Bargain Outlet Holdings’ stock (NASDAQ: OLLI) may be known for selling closeout merchandise, but its stock is priced anything but low. Trading at approximately $114 per share, OLLI appears significan ...

I give a buy rating for Ollie's Bargain Outlet Holdings, Inc. (NASDAQ: OLLI ) as the setup for growth is clear. Management is executing well across multiple fronts: new store growth is ahead of schedule, SSSG is driven byI’m a fundamental, valuation-driven investor with a strong focus on identifying businesses that have the potential to scale over time and unlock massive terminal value. My investment approach centers around understanding the core economics of a business—its competitive moat, unit economics, ...

Group 1: Company Performance - Ollie's Q1 sales reached $576.77 million, a 13% increase from $508.82 million year-over-year, exceeding estimates by 2% [2] - HealthEquity's Q1 sales were $330.84 million, up 15% from $287.6 million in the previous year, surpassing estimates by 3% [3] - Ollie's Q1 earnings per share (EPS) were $0.75, beating expectations of $0.70 by 7% and increasing 3% from the prior period [2] - HealthEquity's Q1 EPS was $0.97, a 21% increase from $0.80 year-over-year, exceeding expectations by nearly 20% [3] Group 2: Strategic Initiatives - Ollie's opened 25 new stores in Q1, marking a record for any period in its history, and has over 500 stores across 32 states [4][5] - The company capitalized on retail store closures and supply chain disruptions to acquire new locations, particularly through bankruptcy auctions of former Big Lots stores [5][7] - HealthEquity's growth was driven by its enrollment and contribution strategy, which focuses on helping employers reduce healthcare costs while empowering employees [8] Group 3: Market Position and Outlook - Ollie's stock has remained virtually flat for the year but has increased over 400% since its IPO in 2015 [7] - HealthEquity's Health Savings Accounts (HSA) assets grew 15% year-over-year to a record $31.27 billion, contributing to a stock rally that reached new 52-week highs [9] - Both companies are expected to achieve double-digit EPS growth in fiscal years 2026 and 2027, making them attractive investment opportunities amid economic uncertainty [13]

Key Takeaways OLLI posted Q1 adjusted EPS of $0.75 on $576.8M in sales, beating estimates and rising year over year. Comparable store sales rose 2.6%, supported by increased transactions and strong value-driven demand. OLLI opened 25 new stores in Q1 and plans 75 net openings in fiscal 2025 to drive continued expansion.Ollie's Bargain Outlet Holdings, Inc. (OLLI) posted first-quarter fiscal 2025 results, wherein the top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. ...

Store Operations and Growth Strategy - Ollie's operates 584 stores across 32 states as of May 3, 2025, with a growth strategy focused on opening new stores and acquiring locations from distressed retailers[83]. - The company targets new store sales of approximately $4.0 million in their first full year of operations, with an average initial cash investment of about $1.0 million per store[85]. - The addition of a fourth distribution center in Princeton, IL, is expected to support up to 750 stores, enhancing distribution capabilities[84]. - The company opened 25 new stores in Q1 fiscal 2025, compared to 4 new stores in Q1 fiscal 2024[112]. - Capital expenditures for fiscal 2025 are planned to be approximately $83 to $88 million, primarily for the opening of 75 new stores[129]. Financial Performance - Net sales increased to $576.8 million in Q1 fiscal 2025 from $508.8 million in Q1 fiscal 2024, a growth of $67.9 million or 13.4%[118]. - Comparable store sales rose by 2.6% in Q1 fiscal 2025 compared to a 3.0% increase in Q1 fiscal 2024, driven by an increase in the number of transactions[119]. - Gross profit increased to $237.0 million in Q1 fiscal 2025, with a stable gross margin of 41.1%[120]. - Net income increased to $47.6 million in Q1 fiscal 2025 from $46.3 million in Q1 fiscal 2024, a rise of $1.2 million or 2.6%[126]. - Adjusted EBITDA rose to $72.2 million in Q1 fiscal 2025 from $69.4 million in Q1 fiscal 2024, an increase of $2.7 million or 3.9%[127]. Expenses and Cost Management - The company expects SG&A expenses to increase in future periods as the store base and net sales grow, while maintaining strict discipline in monitoring these expenses[103]. - SG&A expenses rose to $164.8 million in Q1 fiscal 2025 from $142.4 million in Q1 fiscal 2024, an increase of $22.4 million or 15.7%[121]. - Pre-opening expenses increased to $6.7 million in Q1 fiscal 2025 from $2.7 million in Q1 fiscal 2024, representing 1.2% of net sales compared to 0.5%[122]. Cash Flow and Financial Position - As of May 3, 2025, the company had $369.5 million in cash and cash equivalents, with $91.9 million available to borrow under its Revolving Credit Facility[128]. - Net cash provided by operating activities was $28.7 million in Q1 fiscal 2025, down from $40.2 million in Q1 fiscal 2024, primarily due to changes in working capital[138]. - Net cash used in investing activities decreased to $18.3 million in Q1 fiscal 2025 from $68.5 million in Q1 fiscal 2024, attributed to reduced net investment[139]. - Net cash used in financing activities was $16.5 million in Q1 fiscal 2025, a decrease from $25.7 million in Q1 fiscal 2024, mainly due to lower share repurchases[140]. - The net decrease in cash and cash equivalents was $6.1 million in Q1 fiscal 2025, compared to a decrease of $54.0 million in Q1 fiscal 2024[137]. Market Position and Consumer Behavior - Ollie's business model has shown consistent growth during various economic cycles, benefiting from offering products at prices 20% to 70% below traditional retailers[82]. - Ollie's anticipates that consumer spending habits, influenced by macroeconomic conditions, will impact its sales performance, but believes it is less affected by economic downturns due to its value proposition[94]. - The company plans to leverage its Ollie's Army database marketing strategies to drive sales growth and enhance customer engagement[87]. Share Repurchase and Debt Management - The Company repurchased 159,757 shares of common stock for $17.1 million in Q1 fiscal 2025, compared to 336,934 shares for $25.0 million in Q1 fiscal 2024[135]. - As of May 3, 2025, the Company had $315.5 million remaining under its share repurchase authorization[135]. - The Company had no outstanding variable rate debt as of May 3, 2025, indicating no current interest rate risk exposure[145]. - The Company’s cash flow from operating activities was impacted by the timing of merchandise payments, despite higher net income year over year[138]. Investment Activities - The Company’s purchases of investments in Q1 fiscal 2025 were $119.0 million, offset by maturities of $127.4 million[139]. - There have been no material changes to the Company’s contractual obligations as disclosed in the Annual Report[141].

Core Viewpoint - Ollie's Bargain Outlet has shown solid revenue growth driven by the acquisition of vacated Big Lots locations, but profit margins are under pressure due to increased costs, impacting the profit outlook [1][4][6]. Financial Performance - Revenue grew by 13.4% in Q1, exceeding consensus estimates by 190 basis points, with a 13.2% year-over-year increase in store count [4]. - Comparable store sales increased by 2.4%, attributed to transaction volume [4]. - Adjusted net income and earnings increased by approximately 3%, despite margin contraction being less than expected [6]. Growth Strategy - The company is focusing on expanding its footprint by utilizing vacant Big Lots locations, which is expected to enhance operating leverage as unused square footage is utilized [2]. - Loyalty membership has increased by 9%, indicating potential for long-term growth as new stores are added [5]. Balance Sheet Strength - The balance sheet remains robust, with cash, investments, inventory, and total assets all increasing, while long-term debt has declined [7]. - Total liabilities are low, approximately 0.35 times equity, which has increased by 13% [7]. Shareholder Returns - Currently, Ollie's does not pay dividends but is positioned to accelerate capital returns in the future [8]. - The stock forecast indicates a 12-month price target of $124.07, representing a 12.65% upside [9]. Analyst Sentiment - Analysts rate Ollie's as a Moderate Buy based on 14 ratings, with a consensus price target forecasting a 10% upside [10]. - Institutional ownership is nearly 100%, with institutions buying on balance this year, providing strong support for the stock [11].

Core Insights - BAD BEAT Investing, led by Quad 7 Capital, has been providing investment opportunities for nearly 12 years, focusing on both long and short trades [1] - The team is recognized for their February 2020 recommendation to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The investment strategy emphasizes short- and medium-term investments, income generation, special situations, and momentum trades [1] Group 1 - The company comprises a team of 7 analysts with diverse expertise in business, policy, economics, mathematics, game theory, and sciences [1] - BAD BEAT Investing aims to educate investors to become proficient traders through a comprehensive playbook, providing in-depth research with clear entry and exit targets [1] - The firm has a proven track record of success in its investment strategies [1] Group 2 - Benefits of BAD BEAT Investing include understanding market dynamics, executing well-researched trade ideas weekly, and access to multiple chat rooms [2] - Subscribers receive daily summaries of key analyst upgrades and downgrades, along with learning opportunities in basic options trading and access to extensive trading tools [2]

Financial Performance - Ollie's Bargain Outlet reported revenue of $576.77 million for the quarter ended April 2025, reflecting a 13.4% increase year-over-year [1] - Earnings per share (EPS) for the quarter was $0.75, up from $0.73 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $564.69 million by 2.14% [1] - The company delivered an EPS surprise of 7.14%, with the consensus EPS estimate being $0.70 [1] Key Metrics - Comparable store sales increased by 2.6%, surpassing the average estimate of 1.4% from six analysts [4] - The total number of stores at the end of the period was 584, compared to the average estimate of 580 based on four analysts [4] - The company opened 25 new stores, exceeding the average estimate of 21 from four analysts [4] - The average net sales per store was $1.01 million, slightly above the three-analyst average estimate of $1 million [4] Stock Performance - Shares of Ollie's Bargain Outlet have returned 0.9% over the past month, while the Zacks S&P 500 composite increased by 4.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Group 1: Earnings Performance - Ollie's Bargain Outlet reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.70 per share, and showing an increase from $0.73 per share a year ago, representing an earnings surprise of 7.14% [1] - The company posted revenues of $576.77 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 2.14%, and up from $508.82 million in the same quarter last year [2] Group 2: Stock Performance and Outlook - Ollie's Bargain Outlet shares have increased approximately 2% since the beginning of the year, outperforming the S&P 500's gain of 0.9% [3] - The current consensus EPS estimate for the upcoming quarter is $0.89 on revenues of $654.15 million, and for the current fiscal year, it is $3.72 on revenues of $2.57 billion [7] Group 3: Industry Context - The Consumer Products - Staples industry, to which Ollie's Bargain Outlet belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, indicating potential challenges in performance compared to higher-ranked industries [8]

Financial Data and Key Metrics Changes - Net sales increased by 13% to $577 million, driven by new store openings and an increase in comparable store sales growth [19][22] - Adjusted net income was $46.1 million, with adjusted earnings per share at $0.75 [22] - Adjusted EBITDA was $72.2 million, with an adjusted EBITDA margin of 12.5% for the quarter [22] - Gross margin remained flat at 41.1%, slightly ahead of expectations [21][22] - SG&A expenses as a percentage of sales increased by 60 basis points to 28.6% due to higher medical and casualty claims and new store growth [21] Business Line Data and Key Metrics Changes - Comparable store sales increased by 2.6%, driven by an increase in transactions [20] - The best-performing categories included food, hardware, electronics, domestics, and housewares [20] - Ollie's Army membership grew by over 9% to 15.5 million members, with sales to members representing over 80% of total sales [20] Market Data and Key Metrics Changes - The company opened 25 new stores in the first quarter, a record for any period in its history, ending with a total of 584 stores, a 13% year-over-year increase [19][20] - The closeout market remains fluid, with significant retail store closures creating excess inventory opportunities [9][11] Company Strategy and Development Direction - The company is focused on aggressive market share acquisition through accelerated store growth, enhanced digital marketing, and the Ollie's Army loyalty program [11][12] - The company aims to maintain its value proposition and price gaps, especially on brand-name items, while reducing reliance on Chinese imports [43][125] - The company is investing in its people and enhancing customer acquisition and retention strategies [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic environment and reaffirmed the financial outlook for the fiscal year [15][25] - The company anticipates continued strong deal flow due to retail store closures and supply chain disruptions [9][11] - Management expects second quarter comparable store sales to be at the lower end of the 1% to 2% range, with strong core comp trends in non-seasonal categories [26][99] Other Important Information - The company completed the initial rollout of a co-branded credit card, seeing strong spending and shopping frequency [13] - A new private shopping event for Ollie's Army members is planned, enhancing the loyalty program [14][68] Q&A Session Summary Question: State of closeout availability and impact of tariffs - Management noted strong deal flow and a 16% increase in inventory, with expectations for more product availability due to supply chain disruptions and retail bankruptcies [32][33] Question: Traffic trends and confidence in second quarter comps - Traffic has been strong, with a core comp running in the low to mid single-digit range, despite some seasonal impacts [35][36] Question: Impact of tariffs on supplier negotiations and pricing - Management emphasized maintaining value propositions and price gaps while working closely with vendors to mitigate tariff impacts [41][42] Question: Real estate opportunities and store openings - The pipeline for new store openings is strong, with expectations for above-average growth in 2026 [50][51] Question: Impact of Big Lots closures on comps - The liquidation of Big Lots stores had a 50 basis point impact on comps, but stores that closed prior to Christmas are seeing low to mid single-digit lifts [55][56] Question: Cadence of comps and Ollie's Army Night - Comps improved significantly in March, and the new Ollie's Army Night is expected to enhance customer loyalty and drive sales [65][68] Question: Gross margin expectations and tariff impacts - Management expects gross margins to follow a seasonal flow, targeting 40% for the year, with some tariff impacts already included [70][71] Question: Pricing strategy amidst competition - The company is committed to maintaining price gaps and is actively sourcing products to ensure value for customers [75][76] Question: Ollie's Army membership growth and performance - Newer stores are seeing higher conversion rates to Ollie's Army membership, benefiting from customer familiarity with loyalty programs [87][88]