Ollie’s Bargain Outlet Says It Was Built for This Economy

As prices go up and people feel the pinch in their wallets due to inflation, Ollie’s Bargain Outlet is standing out as the go-to place for discounts.

“We are built for this environment,” said John Swygert, president and CEO of Ollie’s, during the company’s latest earnings call on Wednesday (Dec. 5).

Swygert explained that in the third quarter, Ollie’s sales and profit performance were above expectations. This success came from getting good deals, cutting costs in the supply chain, and keeping things running smoothly across the company.

During this time, sales in stores that have been around for a while went up by 7%, overall sales jumped by 14.8% to $480 million, and the adjusted earnings (EBITDA) rose to $51 million. The company also hit a milestone by opening 23 new stores, which were reported to be productive right from the start.

Thanks to the positive results in the third quarter and the way business is going, Ollie’s has updated its sales and earnings predictions for the whole year. This marks the sixth quarter in a row where sales in existing stores have gone up.

Over 60% of the product categories had positive results, with some top performers being candy, sporting goods, housewares, food, and toys. The good performance also extended to seasonal categories like summer furniture.

Swygert pointed out that even when people are feeling the squeeze, they are looking for ways to save money on popular brands. This has created more opportunities for Ollie’s to get great deals. The competition among manufacturers to get their products on store shelves has also worked in Ollie’s favor.

Additionally, Swygert highlighted Ollie’s commitment to providing brand-name products at much lower prices — 20% to 70% less than regular stores. With over 500 stores, Ollie’s has a big advantage in getting deals across many types of products and from different suppliers. Their pipeline of deals remains strong, emphasizing the importance of deals in driving Ollie’s business.

The Ollie’s Army membership program continues to grow, with a nearly 5% increase compared to the previous year, making up over 80% of sales in the quarter.

State of the Consumer

Despite positive Black Friday numbers showing consumers expanding their budgets for shopping, PYMNTS Intelligence data indicates that the rest of the holiday shopping season might see more moderate activity.

Inflation and economic uncertainty could prompt households to restrict their holiday spending. Reports warn about spending restraint in the coming months from various sources, including market analysts, brands and merchants.

Recent research from PYMNTS Intelligence anticipates a decrease in consumer spending in non-gift categories during this holiday season. However, there is an expected increase in gift expenditures by 2.2%.

Ollie’s by the Numbers

In the third quarter, Ollie’s Bargain Outlet reported total net sales increased by 14.8%, reaching $480.1 million. Comparable store sales increased by 7%, surpassing the previous year’s growth of 1.9%. The company expanded by opening 23 new stores, concluding the quarter with 505 stores across 30 states, showing a 9.1% year-over-year increase in store count.

Operating income increased by 32.3% to $39.1 million, and the operating margin increased by 100 basis points to 8.1%. Net income increased by 37.8% to $31.8 million, or $0.51 per diluted share, compared to the prior year’s net income of $23.1 million, or $0.37 per diluted share.

Adjusted net income and adjusted EBITDA also increased by 37.4% and 29.5%, respectively, contributing to the overall financial performance. The adjusted EBITDA margin increased by 120 basis points to 10.6%.