Ollie’s Bargain Outlet Holdings, Inc. OLLI is one of the go-to destinations for budget-conscious shoppers. With its compelling "buying cheap and selling cheap" business model, the company has become a household name for those seeking incredible deals on brand-name products. This strategic positioning has fueled a remarkable 31.7% surge in its stock price over the past six months, outpacing the industry’s rise of 10%.
Ollie’s Bargain Winning Formula
Ollie’s Bargain core business model is uniquely positioned to thrive in the current scenario. By sourcing overstock and closeout goods from brand-name suppliers, Ollie’s offers high-quality products at lower prices, attracting a broad spectrum of cost-conscious consumers. This model has proven effective as economic uncertainty drives more customers to seek value.
The company's performance has been bolstered by favorable responses to its deals and product offerings, which resonate with a wide customer base. The company's strong vendor relationships have played a crucial role in further cementing its position in the market.
Ollie’s Bargain has streamlined its costs and enhanced store efficiency, allowing it to maintain solid profit margins even in a volatile market. The company has also leveraged its customer loyalty program, Ollie's Army, to bolster its market position further. The company ended the second quarter of fiscal 2024 with 14.5 million active Ollie's Army members, accounting for more than 80% of sales.
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OLLI Committed to Expand Store Footprint
Ollie’s commitment to expanding its store footprint remains a key pillar of its growth strategy. The company has consistently expanded its store network, achieving an impressive CAGR of 10.4%, growing from 345 stores in fiscal 2019 to 512 stores in fiscal 2023. The company has set an ambitious goal, aiming to open 50 new locations in fiscal 2024 with a long-term target to reach 1,300 stores across the United States.
This robust expansion plan is supported by a flexible real estate model that focuses on opening stores between 25,000 and 35,000 square feet. By keeping costs manageable while targeting strategic locations, Ollie’s is well-positioned to capitalize on growth opportunities in underpenetrated markets. The company targets new store sales of about $4 million in the first full year of operations.
Ollie’s Bargain is set to enhance its footprint with seven former Big Lots store leases, which were won through a recent bankruptcy auction. This acquisition comes as part of the ongoing restructuring efforts of Big Lots, which included the closure of 143 stores.
What makes these stores an ideal choice is that they are of the required size, situated in prime trade areas and align with OLLI’s commitment to serving value-oriented customers. Not only this, these stores are located in the Midwest, a region where OLLI sees significant growth potential.
Similar to the “99 Cents Only” stores acquisition, OLLI’s primary focus is on opening the acquired Big Lots stores while adjusting the schedule for other planned store openings in its pipeline to optimize productivity and reduce pre-opening costs.
Here’s How Consensus Estimates Stack Up for Ollie's Bargain
Reflecting the positive sentiment around Ollie's Bargain, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 60 days, analysts have increased their estimates for the current fiscal year by 0.3% to $3.28 per share and for the next fiscal year by 1.1% to $3.72 per share. The current and next year's estimates indicate year-over-year growth rates of 12.7% and 13.4%, respectively. The numbers reinforce confidence in the stock.
Should You Lock in Gains or Stay Bullish on OLLI?
Ollie’s Bargain is positioned for continued success, with a robust business model, aggressive growth plans, and a favorable operational environment. As the company expands its store network and continues to deliver on its value proposition, the stock is set to benefit. For investors seeking a resilient, growth-oriented stock, now is the opportune time to buy into Ollie’s Bargain and capitalize on this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 More Stocks Looking Red Hot
The Chefs' Warehouse CHEF is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently carries a Zacks Rank #2. CHEF has a trailing four-quarter earnings surprise of 33.7%, on average.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
The Kroger Co. KR, which operates as a food and drug retailer in the United States, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of nearly 8.2%, on average.
The Zacks Consensus Estimate for Kroger’s current quarter’s sales and earnings indicates growth of 1% and 3.2%, respectively, from the year-ago reported numbers.
Flowers Foods, Inc. FLO, one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO delivered an earnings surprise of 1.9% in the last reported quarter.
The Zacks Consensus Estimate for Flowers Foods’ current financial year’s sales and earnings implies growth of 1% and 5%, respectively, from the year-ago reported numbers.
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