Ollie’s Bargain Outlet Holdings Inc. ((OLLI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Ollie’s Bargain Outlet Holdings Inc. reported a strong performance in their latest earnings call, showcasing significant sales growth, successful store expansion, and improvements in gross margin. The company highlighted the growth in their Ollie’s Army loyalty program and maintained a robust balance sheet. However, challenges such as increased SG&A expenses and preopening costs were also noted.
Strong Financial Performance
Ollie’s Bargain Outlet demonstrated impressive financial results with net sales increasing by 18% to $680 million. Comparable store sales rose by 5%, and adjusted earnings per share saw a notable increase of 26.9% to $0.99. This strong performance underscores the company’s effective strategies and market position.
Successful Store Expansion
The company successfully opened 29 new stores in the second quarter, bringing their total to 613 stores. This marks a 17% year-over-year increase, reflecting Ollie’s commitment to expanding its footprint and reaching more customers across various regions.
Ollie’s Army Loyalty Program Growth
Ollie’s Army loyalty program saw a significant increase of 10.6%, reaching 16.1 million members. The revamped Ollie’s Days event contributed approximately 100 basis points to comparable store sales, highlighting the program’s effectiveness in driving customer engagement and sales.
Gross Margin Improvement
The company achieved a gross margin increase of 200 basis points to 39.9%. This improvement was driven by lower supply chain costs and higher merchandise margins, indicating efficient operational management and cost control.
Strong Balance Sheet
Ollie’s reported a strong balance sheet with total cash and investments increasing by over $100 million to $460 million. The company maintained no meaningful long-term debt, providing financial flexibility for future growth initiatives.
Increased SG&A Expenses
The earnings call highlighted a rise in SG&A expenses, which increased by 60 basis points to 25.8% of net sales. This was primarily due to higher medical and casualty claims, presenting a challenge that the company aims to address moving forward.
Preopening Expenses and Dark Rent
Preopening expenses amounted to $9 million, with dark rent from acquired stores contributing $2.3 million to year-over-year increases. These costs are associated with the company’s aggressive expansion strategy.
Forward-Looking Guidance
Looking ahead, Ollie’s Bargain Outlet has revised its full-year outlook positively. The company plans to open 85 new stores, with net sales projected between $2.631 billion and $2.644 billion, and comparable store sales growth expected to be between 3% and 3.5%. Adjusted net income is anticipated to range from $233 million to $237 million, with adjusted earnings per share between $3.76 and $3.84.
In summary, Ollie’s Bargain Outlet Holdings Inc. delivered a robust earnings call, reflecting strong sales growth, strategic expansion, and operational improvements. Despite facing challenges with increased expenses, the company’s forward-looking guidance remains optimistic, indicating continued growth and success in the coming quarters.