Ollie's (NASDAQ:OLLI) Q1 Earnings Results: Revenue In Line With Expectations

Max Juang /
2024/06/05 7:34 am EDT

Discount retail company Ollie’s Bargain Outlet (NASDAQ:OLLI) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 10.8% year on year to $508.8 million. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $2.27 billion at the midpoint. It made a non-GAAP profit of $0.73 per share, improving from its profit of $0.49 per share in the same quarter last year.

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Ollie's (OLLI) Q1 CY2024 Highlights:

  • Revenue: $508.8 million vs analyst estimates of $506.2 million (small beat)
  • EPS (non-GAAP): $0.73 vs analyst estimates of $0.65 (12.2% beat)
  • The company slightly raised its revenue and EPS (non-GAAP) guidance for the full year (EPS of of $3.23 at the midpoint in line with expectations of $3.22)
  • Gross Margin (GAAP): 41.1%, up from 38.9% in the same quarter last year
  • Locations: 516 at quarter end, up from 476 in the same quarter last year
  • Same-Store Sales rose 3% year on year (slight beat vs. expectations of up 2.7% year on year)
  • (4.5% in the same quarter last year)
  • Market Capitalization: $5.03 billion

John Swygert, Chief Executive Officer, stated, “We are extremely pleased with our performance this quarter. Our team is executing at a very high level, offering amazing deals to our customers, delivering consistent financial results, and investing in future growth. Our first quarter comparable store sales, total revenue, gross margin, and expenses were all better than expected, demonstrating the strength of our business. Consumers clearly remain under pressure and are seeking value in their purchases. Our unique business model is delivering exceptional values on the branded merchandise that our customers want and need, at prices 20 to 70 percent below the fancy stores. Everyone loves a Bargain and Bargain is our middle name.”

Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.

Discount Retailer

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

Sales Growth

Ollie's is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.

As you can see below, the company's annualized revenue growth rate of 10.8% over the last five years was decent as it opened new stores and grew sales at existing, established stores.

Ollie's Total Revenue

This quarter, Ollie's year-on-year revenue growth clocked in at 10.8%, and its $508.8 million in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 7.9% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

A company's same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.

Ollie's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 4.1% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Ollie's is reaching more customers and growing sales.

Ollie's Year On Year Same Store Sales Growth

In the latest quarter, Ollie's same-store sales rose 3% year on year. This growth was a deceleration from the 4.5% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.

Key Takeaways from Ollie's Q1 Results

It was good to see Ollie's beat analysts' EPS expectations this quarter on slightly higher same-store sales. It is also encouraging that the company raised its full year revenue and EPS outlook, even if the latter just came in-line with expectations. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is up 1% after reporting and currently trades at $83 per share.

Ollie's may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.