Industry Overview - The Zacks Consumer Products – Staples industry is facing challenges due to rising living costs, which are straining household budgets and leading to cautious consumer spending, thereby impacting sales across the industry [1][5] - Companies are also dealing with increased raw material costs and elevated selling, general and administrative (SG&A) expenses, which are compressing profit margins [1][4] Demand and Strategic Responses - Despite the challenges, demand for essential consumer products remains favorable, with industry leaders like Procter & Gamble, Church & Dwight, Ollie's Bargain Outlet, and Grocery Outlet leveraging innovation, cost efficiency, and digital transformation to sustain growth [2][4] - Companies are pursuing restructuring initiatives and cost-cutting measures to enhance operational efficiency and maintain profitability in a demanding environment [4][7] Economic and Market Trends - The industry is experiencing heightened spending volatility due to an uncertain macroeconomic backdrop, with rising living costs and declining personal savings affecting consumer behavior, particularly among lower-income households [5] - Currency fluctuations pose a risk for many companies in the industry, particularly due to their exposure to international markets and the potential impact of a stronger U.S. dollar [6] Performance Metrics - The Zacks Consumer Products – Staples industry currently holds a Zacks Industry Rank of 163, placing it in the bottom 33% of over 245 Zacks industries, indicating dim near-term prospects [8][10] - Over the past six months, the industry has lost 4.5%, underperforming the broader Zacks Consumer Staples sector, which declined by 0.5%, while the S&P 500 Index advanced by 17.5% [12] Valuation Insights - The industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 20.07X, compared to the S&P 500's 23.02X and the sector's 16.96X, reflecting a historical range of 18.96X to 23.38X over the past five years [15] Company Highlights - **Ollie's Bargain Outlet**: This company operates on a "buy cheap, sell cheap" model and has seen a 26.8% increase in shares over the past six months, with a consensus EPS estimate of $3.79 indicating a 15.6% year-over-year growth [18][19] - **Grocery Outlet**: Focused on improving store performance and enhancing site selection, the company has experienced a 43.2% share price increase in the past six months, with a current EPS estimate of 78 cents, reflecting a 1.3% growth from the previous year [21][22] - **Procter & Gamble**: The company has a current EPS estimate of $6.99, suggesting a 2.3% growth year-over-year, although shares have declined by 6.5% in the past six months [24] - **Church & Dwight**: With a focus on innovation and digital expansion, the company has a current EPS estimate of $3.47, indicating a 0.9% growth from the previous year, while shares have declined by 14.7% in the past six months [29]

Company Performance - Ollie's Bargain Outlet (OLLI) has gained approximately 18.2% year-to-date, significantly outperforming the average gain of 2.8% in the Consumer Staples sector [4] - The Zacks Consensus Estimate for OLLI's full-year earnings has increased by 2.5% over the past quarter, indicating improved analyst sentiment and a stronger earnings outlook [4] - Ollie's Bargain Outlet holds a Zacks Rank of 2 (Buy), suggesting it is positioned to outperform the broader market in the near term [3] Industry Context - Ollie's Bargain Outlet is part of the Consumer Products - Staples industry, which consists of 37 individual stocks and currently ranks 163 in the Zacks Industry Rank [6] - Stocks within the Consumer Products - Staples industry have experienced an average decline of about 4.8% year-to-date, highlighting OLLI's relative strength in this group [6] - Unilever PLC, another stock in the Consumer Staples sector, has also shown strong performance with a year-to-date return of 10.7% and a Zacks Rank of 2 (Buy) [5]

Group 1 - TimesSquare Capital Management's "U.S. Small Cap Growth Strategy" reported a gross return of 11.28% and a net return of 11.02% for Q2 2025, compared to the Russell 2000 Growth Index's return of 11.97% [1] - The fund's performance was attributed to double-digit returns in equities driven by positive global economic activity [1] - Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) was highlighted as a key stock, with a one-month return of -1.65% and a 52-week gain of 32.16%, closing at $129.73 per share with a market capitalization of $7.954 billion on September 10, 2025 [2] Group 2 - Ollie's Bargain Outlet Holdings, Inc. reported better-than-expected results, with favorable same-store sales comparisons and successful acquisitions of former Big Lots locations [3] - The number of hedge funds holding Ollie's increased from 25 to 32 in the second quarter, indicating growing interest, although it is not among the 30 most popular stocks among hedge funds [4] - Despite the potential of Ollie's as an investment, some analysts suggest that certain AI stocks may offer greater upside potential with less downside risk [4]

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research in sectors with strong secular tailwinds [1] Investment Philosophy - The investor is self-educated and has been active in the investment field for 10 years, currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to provide valuable analysis and receive feedback from other investors [1] - The focus is on helping readers understand the drivers of long-term equity value and ensuring that analysis is both analytical and accessible [1]

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents Ollie's unaudited condensed consolidated financial statements and management's discussion [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Ollie's Bargain Outlet Holdings, Inc. and its subsidiaries for the thirteen and twenty-six weeks ended August 2, 2025, and August 3, 2024, including statements of income, balance sheets, stockholders' equity, and cash flows, along with accompanying notes - **Financial statements are unaudited** and prepared in accordance with U.S. GAAP for interim financial information and SEC rules[21](index=21&type=chunk) - The Company's business is **seasonal**, and interim results are not necessarily indicative of full-year operating results[21](index=21&type=chunk) [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the company's financial performance through condensed consolidated statements of income Condensed Consolidated Statements of Income (Thirteen Weeks Ended) | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------ | | Net sales | $679,556 | $578,375 | +17.5% | | Gross profit | $271,338 | $219,031 | +23.9% | | Operating income | $76,974 | $60,759 | +26.7% | | Net income | $61,310 | $48,982 | +25.2% | | Basic EPS | $1.00 | $0.80 | +25.0% | | Diluted EPS | $0.99 | $0.79 | +25.3% | Condensed Consolidated Statements of Income (Twenty-six Weeks Ended) | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (YoY) | | :--------------------------------- | :----------------------------- | :----------------------------- | :------------ | | Net sales | $1,256,323 | $1,087,193 | +15.6% | | Gross profit | $508,369 | $428,389 | +18.7% | | Operating income | $133,160 | $117,256 | +13.6% | | Net income | $108,870 | $95,324 | +14.2% | | Basic EPS | $1.77 | $1.55 | +14.2% | | Diluted EPS | $1.76 | $1.54 | +14.3% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheets (in thousands) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :------------------------- | :------------- | :--------------- | :------------- | | Total current assets | $967,818 | $993,791 | $895,430 | | Total assets | $2,801,852 | $2,561,145 | $2,374,293 | | Total current liabilities | $368,366 | $304,341 | $297,841 | | Total liabilities | $1,015,942 | $865,835 | $783,622 | | Total stockholders' equity | $1,785,910 | $1,695,310 | $1,590,671 | - Cash and cash equivalents **increased to $231.2 million** as of August 2, 2025, from **$170.6 million** as of August 3, 2024[11](index=11&type=chunk) - Inventories **increased to $637.2 million** as of August 2, 2025, from **$531.3 million** as of August 3, 2024[11](index=11&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section outlines changes in stockholders' equity, including net income, share repurchases, and compensation - Net income contributed **$108.9 million** to stockholders' equity for the twenty-six weeks ended August 2, 2025[14](index=14&type=chunk) - Shares repurchased amounted to **$(28.6 million)** for the twenty-six weeks ended August 2, 2025[14](index=14&type=chunk) - Stock-based compensation expense was **$6.5 million** for the twenty-six weeks ended August 2, 2025[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing Condensed Consolidated Statements of Cash Flows (Twenty-six Weeks Ended, in thousands) | Cash Flow Activity | August 2, 2025 | August 3, 2024 | | :--------------------------------- | :------------- | :------------- | | Net cash provided by operating activities | $109,414 | $84,059 | | Net cash used in investing activities | $(58,010) | $(159,398) | | Net cash used in financing activities | $(25,364) | $(20,323) | | Net increase (decrease) in cash and cash equivalents | $26,040 | $(95,662) | - Cash and cash equivalents at period end **increased to $231.2 million** as of August 2, 2025, from **$170.6 million** as of August 3, 2024[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the figures presented in the condensed consolidated financial statements, covering accounting policies, revenue recognition, earnings per share, leases, commitments, debt, income taxes, equity incentive plans, common stock, and segment reporting [(1) Basis of Presentation and Summary of Significant Accounting Policies](index=7&type=section&id=(1)%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section describes the basis of financial statement presentation and outlines significant accounting policies - **Ollie's operates 613 retail stores in 34 states** as of August 2, 2025[19](index=19&type=chunk) - The Company's business model focuses on **buying overproduced, overstocked, and closeout merchandise**, supplemented by private label products[18](index=18&type=chunk) - The Company is comprised of **one operating segment**[23](index=23&type=chunk) [(2) Net Sales](index=10&type=section&id=(2)%20Net%20Sales) This section details the company's revenue recognition policies, including net sales and loyalty program - **Revenue is recognized when merchandise is sold** and the customer takes possession, net of returns and sales tax[34](index=34&type=chunk) - Net sales also include revenue allocated to redeemed discounts from the Ollie's Army loyalty program and gift card breakage[34](index=34&type=chunk) Ollie's Army Loyalty Program Liability (in thousands) | Period | Beginning Balance | Revenue Deferred | Revenue Recognized | Ending Balance | | :----------------------- | :---------------- | :--------------- | :----------------- | :------------- | | Twenty-six weeks ended August 2, 2025 | $13,239 | $12,870 | $(11,220) | $14,889 | | Twenty-six weeks ended August 3, 2024 | $10,159 | $9,425 | $(8,164) | $11,420 | [(3) Earnings per Common Share](index=11&type=section&id=(3)%20Earnings%20per%20Common%20Share) This section provides basic and diluted earnings per common share calculations for the periods presented Earnings per Common Share (Thirteen Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :------------- | :------------- | :------------- | | Basic EPS | $1.00 | $0.80 | | Diluted EPS | $0.99 | $0.79 | Earnings per Common Share (Twenty-six Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :------------- | :------------- | :------------- | | Basic EPS | $1.77 | $1.55 | | Diluted EPS | $1.76 | $1.54 | - **Antidilutive stock options and restricted stock units were excluded** from the diluted EPS calculation[40](index=40&type=chunk)[41](index=41&type=chunk) [(4) Leases](index=12&type=section&id=(4)%20Leases) This section details the company's operating lease liabilities, cash payments, and lease terms - **Operating lease liabilities totaled $664.1 million** as of August 2, 2025, with a long-term portion of **$561.0 million**[48](index=48&type=chunk) - Cash paid for operating leases was **$68.3 million** for the twenty-six weeks

Core Viewpoint - Investors are seeking growth stocks that demonstrate above-average growth potential, with Ollie's Bargain Outlet identified as a strong candidate due to its favorable growth metrics and Zacks Rank [2][9]. Group 1: Earnings Growth - Ollie's Bargain Outlet has a historical EPS growth rate of 5.5%, but projected EPS growth for this year is expected to be 15.2%, significantly higher than the industry average of 2.7% [4]. - Double-digit earnings growth is preferred by growth investors as it indicates strong future prospects and potential stock price gains [3]. Group 2: Cash Flow Growth - The company currently exhibits a year-over-year cash flow growth of 14.3%, which surpasses the industry average of 0.5% [5]. - Over the past 3-5 years, Ollie's Bargain Outlet has maintained an annualized cash flow growth rate of 10.9%, compared to the industry average of 4.6% [6]. Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Ollie's Bargain Outlet, with the current-year earnings estimates increasing by 1.8% over the past month [7]. - A positive trend in earnings estimate revisions is correlated with near-term stock price movements, making it a significant factor for investors [7]. Group 4: Overall Assessment - Ollie's Bargain Outlet has achieved a Growth Score of B and a Zacks Rank of 2, indicating it is a solid choice for growth investors and a potential outperformer [9].

Core Viewpoint - Ollie's Bargain Outlet (OLLI) has emerged as a significant exception in a challenging year for many retailers, achieving a remarkable 46% gain [1] Company Summary - Ollie's operates as an "extreme value" retailer, purchasing branded products from retailers or suppliers at discounted prices [1]

Core Insights - Ollie's Bargain Outlet Holdings, Inc. (OLLI) reported strong second-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year improvement [1][9] - The company's value-driven model is resonating well with consumers, particularly in a challenging retail environment, leading to an increase in full-year guidance [1][14] Quarterly Performance - Adjusted earnings were reported at $0.99 per share, surpassing the Zacks Consensus Estimate of $0.91, and improving from $0.78 per share in the same quarter last year [2] - Net sales increased by 17.5% year over year to $679.6 million, driven by new store openings and a 5% rise in comparable store sales, exceeding the Zacks Consensus Estimate of $663 million [3] Margin Analysis - Gross profit rose by 23.9% to $271.3 million, with gross margin expanding by 200 basis points to 39.9%, benefiting from lower supply-chain costs [4] - Operating income grew by 26.7% to $77 million, with operating margin improving by 80 basis points to 11.3% [5] Store Expansion and Customer Engagement - Ollie's Bargain opened 29 new stores during the quarter, bringing the total to 613 stores across 34 states, reflecting a 16.8% year-over-year growth [6] - The Ollie's Army loyalty program grew by 10.6% to 16.1 million members, indicating strong consumer engagement [6] Financial Snapshot - The company ended the quarter with $460.3 million in total cash and investments, marking a 30.3% year-over-year increase, and remains debt-light [7] - Capital expenditures were $26.4 million, with $11.5 million worth of stock repurchased, demonstrating commitment to shareholder returns [7] Full-Year Outlook - Management raised the full-year guidance, projecting net sales in the range of $2,631-$2,644 million, up from $2,579-$2,599 million [10] - Comparable store sales growth is now forecasted at 3-3.5%, an increase from the previous estimate of 1.4-2.2% [10] Future Expectations - For the third quarter, comparable store sales growth is projected at around 3%, above the long-term algorithm of 1-2% [13] - The company plans to open most of its remaining new stores in the third quarter, which is expected to provide additional sales support [13]

Financial Data and Key Metrics Changes - The company reported a net sales increase of 18% to $680 million, driven by new store openings and comparable store sales growth [15][18] - Adjusted earnings per share increased by 26.9% to $0.99 for the quarter, with adjusted EBITDA rising by 26% to $94 million [18][20] - Gross margin improved by 200 basis points to 39.9%, attributed to lower supply chain costs and higher merchandise margins [16][18] Business Line Data and Key Metrics Changes - The company opened 29 new stores in the second quarter, bringing the total to 613 stores, a 17% year-over-year increase [14][18] - Comparable store sales increased by 5%, driven by an increase in transactions, with strong demand for consumer staples and seasonal items [15][16] Market Data and Key Metrics Changes - The company has seen a significant opportunity to gain market share due to the closure of several retailers, allowing for accelerated store openings [5][8] - Ollie's Army loyalty program members increased by 10.6% to 16.1 million, contributing to over 80% of total sales [10][15] Company Strategy and Development Direction - The company is focused on profitable growth through a flexible store model and plans to open 85 new stores in the fiscal year [9][21] - The strategy includes enhancing the Ollie's Army program to increase customer acquisition and retention, with a commitment to delivering value to consumers [10][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business momentum, raising the full-year sales and earnings outlook based on strong first-half results [13][20] - The company anticipates continued strong deal flow due to market disruptions from tariffs and retail bankruptcies, which provide additional buying opportunities [28][30] Other Important Information - The company celebrated its 43rd anniversary and its 10-year anniversary as a public company, noting its strong performance as a retail IPO [11][12] - The balance sheet remains strong, with total cash and investments increasing by 30% to $460 million and no meaningful long-term debt [19][20] Q&A Session Summary Question: Can you elaborate on the improving cadence of comp as the second quarter progressed? - Management noted that May was flat, June saw acceleration, and July was the strongest month of the quarter [32] Question: How did the Ollie's Army Night compare to traditional events? - The event exceeded expectations, driving record customer engagement and acquisition, with a 60% increase in new customer sign-ups [40] Question: What are the opportunities for gross margins over the next couple of years? - Management indicated that while they are guiding for above 40% gross margin this year, they are cautious about future projections [50] Question: How are new stores performing compared to prior cohorts? - New stores are performing above plan, with payback periods consistent with historical performance [64] Question: What is the impact of tariffs on product sourcing? - The company is navigating tariffs by maintaining price gaps and adjusting sourcing strategies as needed [121] Question: How meaningful are the differences in sales capture between warm boxes and existing stores? - There is not a noticeable difference in top-line performance, but better operating margins are observed in locations with lower rents [106] Question: What is driving the higher merchandise margin? - Strong deal flow and better margins on deals, along with lower shrink, contributed to the improved merchandise margin [113]

Financial Data and Key Metrics Changes - The company reported a net sales increase of 18% to $680 million, driven by new store openings and comparable store sales growth [15] - Adjusted earnings per share increased by 26.9% to $0.99 for the quarter, with adjusted net income reaching $61 million [18] - Adjusted EBITDA rose by 26% to $94 million, with an adjusted EBITDA margin of 13.8% for the quarter [18] Business Line Data and Key Metrics Changes - The company opened 29 new stores in Q2, bringing the total to 613 stores, a 17% year-over-year increase [14] - Comparable store sales increased by 5%, driven by an increase in transactions, with strong demand for consumer staples and seasonal items [15] - The top five performing categories included Lawn and Garden, Hardware, Food, Housewares, and Domestics [15] Market Data and Key Metrics Changes - The company has seen a 10.6% increase in Ollie's Army members, reaching 16.1 million, with members spending over 40% more per visit than non-members [9][15] - The company is capitalizing on market share opportunities due to retail bankruptcies and store closures, which have provided additional buying opportunities [6][30] Company Strategy and Development Direction - The company is committed to profitable growth and plans to open 85 new stores in total for the year, raising its new store target [8][21] - The Ollie's Army loyalty program is a key focus, with enhancements aimed at customer acquisition and retention [13][39] - The company aims for double-digit annual unit growth moving forward, leveraging a flexible store model adaptable to various geographies and demographics [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business momentum, raising the sales and earnings outlook for the fiscal year [13][20] - The company anticipates continued strong deal flow due to market disruptions from tariffs and retail bankruptcies, which are beneficial for its business model [28][30] - Management noted that the current economic environment presents unique opportunities for market share expansion [22] Other Important Information - The company celebrated its 43rd anniversary and its 10-year anniversary as a public company, highlighting its strong performance as a retail IPO [10][11] - The balance sheet remains strong, with total cash and investments increasing by 30% to $460 million and no meaningful long-term debt [19] Q&A Session Summary Question: Can you elaborate on the improving cadence of comp as the second quarter progressed? - Management noted that May was flat, June began to accelerate, and July was the strongest month of the quarter [32] Question: How did the Ollie's Army Night compare to traditional events? - The revamped Ollie's Army Night exceeded expectations, driving record customer engagement and acquisition, with sales surpassing previous events [36][39] Question: What are the opportunities for gross margins over the next couple of years? - Management indicated that while they are guiding for gross margins above 40%, they are cautious about long-term projections and plan to maintain flexibility in pricing [49][116] Question: How are new stores performing compared to prior cohorts? - New stores are performing above plan, with strong payback periods consistent with historical performance [62] Question: What is the impact of tariffs on product sourcing? - Management stated they are price followers and will adjust sourcing strategies to maintain value propositions despite tariff impacts [118] Question: How is the customer acquisition from former Big Lots stores? - The company is seeing accelerated acquisition in new stores, with many customers expressing familiarity with the deep discount model [105]