Ollie’s Bargain Outlet Hits Rock-Bottom in Q4: Buy the Dip?

Core Viewpoint - Ollie's Bargain Outlet is experiencing significant growth and is expected to outperform its guidance in the upcoming quarters, despite a recent stock price pullback [2][5]. Financial Performance - The company reported a record quarterly net revenue of $613.6 million, representing an 18.6% increase year-over-year (YOY) [3]. - The growth was driven by an 18% YOY increase in new stores and a 3.3% increase in comparable sales, attributed to higher transaction volume [3]. - Operating income grew at an accelerated pace of 24.5%, with adjusted earnings per share (EPS) at 75 cents, up 30% YOY, exceeding expectations by 270 basis points [4]. Margin Analysis - Gross margin contracted by 10 basis points, but this was offset by a 50-basis-point improvement in selling, general and administrative (SG&A) expenses, resulting in a 40-basis-point increase in operating margin [4]. - The overall operational quality and leverage improvements contributed positively to the financial results, despite higher input costs associated with new store openings [4]. Growth Outlook - Management has increased targets for store count growth, revenue, and earnings, with the low end of the revenue range above previous highs and the earnings midpoint improved by 100 basis points [4]. - The company is expected to continue its robust growth trajectory, claiming market share and accelerating on a YOY basis [3][5]. Market Sentiment - Analysts and institutions are accumulating Ollie's stock, indicating strong market support, and the December price pullback is viewed as a sign of market capitulation, likely leading to a rebound in early 2026 [5].