Ollie’s Bargain Outlet Expands Rapidly After Big Lots Bankruptcy
Ollie’s Bargain Outlet (NASDAQ: OLLI) has seized a significant opportunity following Big Lots’ bankruptcy, positioning itself for rapid expansion. The company has already secured over 60 location leases and is set to accelerate its store openings, with a 50% increase in expected 2025 store openings to 75, marking a 13% growth in its long-term outlook as an off-price retailer.
- Ollie’s operated 559 stores in 31 states by the end of fiscal 2024.
- The company aims to double its size in the coming years by expanding into new territories and deepening its presence in existing ones.
- This regional operator is on track for nationwide expansion, positioning itself alongside retail giants like Walmart and TJX Companies.
Ollie’s Shows Resilience Despite Tepid Results
While Ollie’s recent financial results were modest compared to analyst expectations, they do not hinder the potential for higher stock prices. Revenue slightly missed consensus estimates, but earnings met expectations, although the bar was set high due to revision and a challenging comparison against 53 weeks.
- Net revenue of $667.1 million increased by 2.8% reported and 8.5% adjusted, outperforming competitors like Target, Walmart, and TJX Companies in Q4.
- The company’s margin remains strong, with adjusted EPS of $1.19, supporting its growth strategy.
- Ollie’s robust cash flow and fortified balance sheet have allowed for a $300 million buyback authorization to bolster stock price.
The company’s balance sheet reflects the acquisition of Big Lots leases, with increased liabilities offset by gains in cash, investments, and inventory. Ollie’s net cash position and overall assets have seen growth, with manageable long-term debt.
Institutional Support and Analyst Sentiment Drive Ollie’s Market
Ollie’s market outlook is positive, supported by institutional buying activity hitting multi-year highs and analysts’ optimistic ratings. The stock shows potential for significant upside based on analyst forecasts and institutional ownership nearing 100% despite a 5% short interest.
- Analysts maintain a Moderate Buy rating and predict a 20% upside, with potential for a new all-time high.
- Post-release price action indicates support at moving averages, with resistance targets set at $105, $110, and $115.
With strengthening indicators and rising trading volume, Ollie’s market is poised for further growth, attracting investors looking for value opportunities.