Ollie’s Bargain Outlet plans to open 10 additional stores this year, totaling 85, ahead of schedule. Ollie’s Army, comprising over 16 million members, drives 80% of sales. A revamped Ollie’s Days event exclusively for members saw great success, boosting sales and earnings while celebrating the company’s milestones.

In the second quarter, Ollie’s Bargain Outlet exceeded expectations in new store openings, comparable store sales, total sales, and earnings. The loyalty program, Ollie’s Army, saw a 10.6% increase to 16.1 million members. Net sales rose by 18% to $680 million, driven by new store openings and comparable store sales growth.

Strong demand for consumer staples and seasonal items boosted Ollie’s Bargain Outlet’s second-quarter results. Gross margin increased to 39.9%, driven by lower supply chain costs and higher merchandise margins. Adjusted net income was $61 million, with adjusted earnings per share up 26.9% to $0.99, and adjusted EBITDA increased 26% to $94 million.

Ollie’s Bargain Outlet emphasizes maintaining a strong balance sheet for strategic advantage. Total cash and investments increased by over $100 million to $460 million, with no significant long-term debt at quarter-end. Inventories rose by 20% year-over-year, reflecting store growth and higher in-transit inventory. Capital expenditures for the quarter totaled $26 million, with the majority spent on new store openings, bankruptcy-acquired store build-out, and supply chain investments. $12 million worth of common stock was bought back in the quarter, with $304 million remaining for repurchase. Fiscal year 2025 outlook raised with net sales of $2.631 to $2.644 billion and gross margin of 40.3%.

Updated guidance includes 85 new store openings, net sales forecast of $2.631 to $2.644 billion, and comparable store sales growth of 3% to 3.5%. Operating income projected at $292 to $298 million, adjusted net income of $233 to $237 million, and adjusted earnings per share of $3.76 to $3.84. Assumptions include depreciation expenses, preopening costs, and a 25% tax rate.

Third quarter comparable store sales growth expected to be above long-term algorithm of 1% to 2%. Fourth quarter numbers remain unchanged, with new store openings mainly in the third quarter. Market share gains expected through unit growth and Ollie’s Army program enhancements. Positioning for strong shareholder returns emphasized.

Ollie’s is experiencing strong deal flow due to market disruptions like tariffs and retail bankruptcies, resulting in additional buying opportunities. Abandoned product from bankruptcies and store closures, as well as new relationships and product pipelines, contribute to increased inventory levels. Quarterly comps saw acceleration in June and strongest performance in July.

Ollie’s Army Night in Q2 exceeded expectations, driving record customer engagement and Ollie’s Army acquisitions. The event outperformed traditional December Ollie’s Army Night, providing valuable learnings for future events. Record-setting results in customer engagement and membership acquisition were achieved. Ollie’s Army members enjoyed a private shopping event with long lines at most stores, exceeding sales expectations by driving 100 points of comp to the quarter. Customer acquisition was up nearly 60%, with sales surpassing the December night event.

The company plans to maintain 10% annual unit growth and potentially accelerate growth in the future. Earnings power is expected to benefit from higher and earlier store openings, potential SG&A leverage in the back half of the year, and improving trends in medical and casualty costs.

The quarter saw changes in long-standing practices at Ollie’s, reflecting a willingness to explore new opportunities. The company remains focused on executing its core marks, including the value proposition, store openings, accelerated growth, and customer acquisition, despite unforeseen costs like medical and casualty expenses. Ollie’s Bargain Outlet reports higher costs in the first half of the year, but remains confident in meeting full-year guidance. The company plans to leverage and make tweaks to its business model to stay relevant and enhance the Ollie’s Army program for customer retention and acquisition.

New store economics for Ollie’s Bargain Outlet remain strong, with consistent payback periods and above-plan performance for the current cohort of stores. The company plans to expand distribution centers in Texas and Illinois to accommodate store growth, with a fifth building expansion expected within the next 3 to 4 years.

Customer acquisition at Ollie’s Bargain Outlet’s Ollie’s Army Night did not show significant differences from the rest of the quarter. New customers reflect a mix of mid to upper-income levels, indicating a trade-down trend. The company continues to focus on enhancing the Ollie’s Army program for customer retention and acquisition. Ollie’s is experiencing a shift towards younger customers due to successful digital strategies. CEO Eric van der Valk credits supply chain enhancements for business strength, highlighting efficiency and automation in distribution centers. The organization’s culture emphasizes serving budget-conscious customers, driving success across all segments. Gross margins have improved above pre-pandemic levels.

Stores in markets where Big Lots closed are showing positive trends, with overlapping stores outperforming. New store performance is strong, with most exceeding expectations. The impact of acquired stores on the reverse waterfall process is being monitored. Third-quarter performance is expected to be around 3%, reflecting positive momentum and solid exit rates from Q2.

The quarter-to-date performance shows steady improvement, with an exit rate in the high single-digit to low double-digit range. The company maintains a conservative approach to guidance, aiming for a 1% to 2% long-term growth rate. Gross margins have increased above the 40% baseline, driven by improved supply chain costs post-pandemic.

Overall, Ollie’s is seeing positive trends in customer demographics, store performance in Big Lots markets, and gross margins. The company’s focus on efficient supply chain management, strong culture, and customer service ethos are driving growth and success across all segments. Big Lots reports impressive results despite higher supply chain costs, citing size and scale for improved margins. Distribution centers and store execution also contribute to lower supply chain costs and positive shrink trend. Company sees lasting positive consequences from consolidation of closeout market.

Q2 shows record gross margin for Big Lots, attributed to size and scale driving better deals and access to goods. Strength of consumables business and focus on great deals lead to increased frequency of visits and sales. Company benefits from consolidation of closeout market, establishing new relationships and expanding existing ones.

Big Lots sees no noticeable difference in sales capture between warm boxes and organic openings, with potential lift due to warm dynamic. Operating margins are better due to lower rents in Big Lots locations. Ollie’s Army sign-ups show accelerated growth in new stores, with majority coming from former Big Lots customers. Big Lots is seeing success in their Ollie’s conversion stores, with familiar deep discount offerings resonating with customers. Strong comp store growth is outpacing new stores, making sales easier. Higher merch margin is attributed to strong deal flow and lower shrink. Broad-based strength in comps across all store cohorts.

There is some planned deceleration in gross margin in the second half of the year for Big Lots. The company aims to underpromise and overdeliver, leaving room to invest in price if needed. They plan to maintain their value proposition despite potential impacts from tariffs, adjusting their product mix accordingly.

Big Lots remains committed to offering the right value to customers amid tariff uncertainty. They plan to adjust their sourcing and product mix to maintain their value proposition. The closeout import mix has not changed significantly, and the company continues to navigate the situation one step at a time to ensure they meet shareholder expectations. A company reveals its strategy of buying products based on price, retail value, and financial obligations. They remain opportunistic in sourcing items and find stability in vendor relationships for long-term success.

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Please note that the transcript of the conference call may contain errors or inaccuracies, and readers are encouraged to do their research. The Motley Fool does not assume responsibility for the content and recommends independent verification through additional sources.

This article was originally published by The Motley Fool and recommends Ollie’s Bargain Outlet. For more information, readers can access the full earnings call transcript for Ollie’s (OLLI) Q2 2025.

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