Ollie’s Earnings Call Highlights Growth Amid Challenges

Ollie’s Bargain Outlet Holdings Inc. ((OLLI)) has held its Q1 earnings call. Read on for the main highlights of the call.

The latest earnings call from Ollie’s Bargain Outlet Holdings Inc. reflected a generally positive sentiment, underscored by significant growth and strategic expansions. The company celebrated record store openings and a robust loyalty program, although it acknowledged challenges such as rising SG&A costs and the impact of competitor liquidations. Overall, the positive aspects of growth and strong financial positioning slightly outweighed the challenges faced.

Record Store Openings and Growth

Ollie’s Bargain Outlet Holdings Inc. set a new record by opening 25 new stores in the first quarter of 2025, surpassing their plan by four stores. This expansion contributed to a 13% increase in net sales, reaching $577 million. The strategic decision to open stores in former Big Lots locations played a significant role in this growth.

Comparable Store Sales Increase

The company reported a 2.6% increase in comparable store sales for the first quarter, driven by a rise in transactions. Categories such as food, hardware, electronics, domestics, and housewares showed strong performance, contributing to this positive outcome.

Strong Financial Position

Ollie’s demonstrated a strong financial position with cash, cash equivalents, and short-term investments totaling $370 million, and no significant long-term debt. The company also reaffirmed its financial outlook for the fiscal year 2025, highlighting its stable financial footing.

Loyalty Program Expansion

The Ollie’s Army loyalty program saw a 9% increase in membership during the first quarter, reaching 15.5 million members. These members account for over 80% of sales and tend to spend nearly 40% more per visit, underscoring the program’s importance to the company’s sales strategy.

SG&A Cost Pressure

Despite the positive growth, Ollie’s faced pressure from SG&A expenses, which increased by 60 basis points to 28.6% of sales. This rise was attributed to higher medical and casualty claims, as well as costs associated with new store growth.

Impact of Big Lots Liquidations

The liquidation of approximately 200 Big Lots stores in the first quarter created a 25 basis point headwind on the total comparable sales for the quarter. This external factor posed a challenge to Ollie’s sales performance.

Weather Impact on Seasonal Sales

Unseasonable weather conditions affected the sales of seasonal categories, contributing to some softness in overall sales performance. This highlights the vulnerability of certain product categories to external environmental factors.

Forward-Looking Guidance

Looking ahead, Ollie’s Bargain Outlet Holdings Inc. provided robust forward-looking guidance. The company plans to open 75 new stores in fiscal year 2025, with projected net sales between $2.579 to $2.599 billion. Comparable sales growth is expected to range from 1.4% to 2.2%, and adjusted net income is forecasted to be between $225 to $232 million. These projections reflect the company’s confidence in its growth strategy and financial health.

In summary, Ollie’s Bargain Outlet Holdings Inc.’s earnings call conveyed a generally positive outlook, with significant growth achievements and strategic expansions. While challenges such as rising SG&A costs and competitor liquidations were noted, the company’s strong financial position and forward-looking guidance underscore its resilience and potential for continued success.