Ollie's Bargain Outlet (US:OLLI)2025-12-09 21:16Store Operations and Expansion - Ollie's operates 645 retail stores across 34 states as of November 1, 2025[82] - The average store size is slightly above 32,000 square feet, with a target upfront cash investment of approximately $1 million per new store[83] - The company aims for new stores to achieve net sales of approximately $4 million and a four-wall profit margin in the mid-teens percentage rate[83] - Ollie's plans to expand its distribution capabilities to support up to approximately 750 stores with the addition of a fourth distribution center[84] - The growth strategy includes opening new stores and acquiring locations from distressed retailers, focusing on contiguous market expansion[82] - Ollie's anticipates that new store growth will be the primary driver of sales growth, with initial lease terms averaging seven years[92] - The company opened 32 stores in Q3 fiscal 2025, compared to 24 store openings in Q3 fiscal 2024, with 23 of the new stores being bankruptcy acquired leases[113] Financial Performance - Net sales increased by 18.6% to $613.6 million in Q3 fiscal 2025 from $517.4 million in Q3 fiscal 2024, driven by new store growth and an increase in comparable store sales[120] - Comparable store sales rose by 3.3% in Q3 fiscal 2025 compared to a 0.5% decrease in Q3 fiscal 2024, primarily due to an increase in the number of transactions[121] - Gross profit increased by 18.3% to $253.7 million in Q3 fiscal 2025, while gross margin decreased by 10 basis points to 41.3%[122] - Net sales increased 16.6% to $1.870 billion for the thirty-nine weeks ended November 1, 2025, compared to $1.605 billion for the same period in 2024[129] - Comparable store sales rose 3.7% in the thirty-nine weeks ended November 1, 2025, compared to a 2.8% increase in the prior year[130] - Gross profit increased 18.6% to $762.0 million, with gross margin rising 70 basis points to 40.8%[131] - Net income increased by 28.7% to $46.2 million in Q3 fiscal 2025 from $35.9 million in Q3 fiscal 2024[127] - Net income rose 18.2% to $155.0 million for the thirty-nine weeks ended November 1, 2025, compared to $131.2 million in the prior year[137] - Adjusted EBITDA rose to $72.9 million in Q3 fiscal 2025, an increase of 21.8% from $59.8 million in Q3 fiscal 2024[128] - Adjusted EBITDA increased 17.3% to $238.8 million for the thirty-nine weeks ended November 1, 2025[138] Expenses and Profitability - Selling, General, and Administrative (SG&A) expenses are expected to increase as the store base grows, with a focus on maintaining discipline in monitoring SG&A as a percentage of net sales[103] - SG&A expenses rose to $180.3 million in Q3 fiscal 2025, an increase of 16.7%, but decreased as a percentage of net sales to 29.4%[123] - SG&A expenses increased 17.6% to $520.6 million, representing 27.8% of net sales, up from 27.6%[132] - Pre-opening expenses increased by 3.2% to $7.4 million in Q3 fiscal 2025, driven by new store growth and dark rent associated with bankruptcy acquired stores[124] - Pre-opening expenses surged 58.9% to $23.0 million, driven by new store growth and dark rent expenses[133] Cash Flow and Capital Management - Net cash provided by operating activities was $114.2 million, up from $79.7 million in the prior year[148] - Capital expenditures for the thirty-nine weeks ended November 1, 2025, were $83.9 million, down from $96.2 million in the previous year[139] - The company repurchased 346,032 shares for $40.2 million during the thirty-nine weeks ended November 1, 2025[146] Tax and Interest - Income tax expense increased to $13.8 million in Q3 fiscal 2025, with an effective tax rate of 23.0% compared to 26.1% in Q3 fiscal 2024[126] - Interest income, net increased to $4.5 million in Q3 fiscal 2025 from $4.0 million in Q3 fiscal 2024, attributed to higher average cash and cash equivalent balances[125] Profitability Metrics - Gross profit is calculated as net sales minus cost of sales, with gross margin being a key performance indicator[98]