Ollie's Bargain Outlet Holdings Inc. (Ollie's Bargain Outlet (OLLI)) had a bit of a mixed bag for its fiscal second quarter, and investors seemed to like it. The discount retailer reported adjusted earnings of $1.42 per share, beating the Street's $1.14 estimate. Sales, however, came in at $741.31 million, up 9.1% year over year but short of the $752.85 million analysts were looking for. The stock jumped over 7% on the news.
Ollie's Calls 2026 a 'Weird Year,' Eyes a Return to Form in 2027
MarketDash
Ollie's Bargain Outlet (OLLI) stock jumped 7% post-Q2 earnings. Earnings beat estimates at $1.42 per share, but sales missed expectations.
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Margins Expand On Tariff Refunds
One bright spot was gross margin, which expanded by 360 basis points to 43.5%. Lower supply chain costs helped, and so did tariff refunds under the International Emergency Economic Powers Act, which added 380 basis points to the quarter's gross margin. That's a nice little boost.
Ollie's ended the quarter with $507.1 million in total cash and investments, including $120.8 million in cash and cash equivalents. The company also spent $84 million to repurchase 1.11 million shares during the quarter, leaving $121.5 million under its buyback authorization.
Strong Deal Flow Supports Growth
CEO Eric van der Valk said consumer pressure and increased retail promotions are creating more closeout opportunities, describing deal flow as "extremely strong." But he was quick to note that deal availability wasn't the reason comparable-store sales declined. Instead, he blamed unfavorable weather, heavy promotions, and pressure on consumers.
Management is expanding into categories like protein and energy products, beverages, seasonal décor, living-room furniture, and decorative pillows. Ollie's tests new categories before committing significant inventory or store space, so it's a cautious approach.
The company also plans about $15 million in price investments this year, and management could spend more to protect Ollie's position as a low-price retailer.
Store Growth And Loyalty Program
Ollie's Army, the company's loyalty program, saw membership rise about 13% year over year to more than 18 million. Loyalty events also drove stronger customer acquisition and engagement, despite weather challenges.
Van der Valk noted that higher-income consumers continue to trade down, and Ollie's is gaining traction with shoppers ages 35 to 45, partly thanks to targeted digital marketing.
Meanwhile, the company remains confident in its 2027 store pipeline, with most of next year's locations already identified.
Ollie's Raises Profit Outlook, Cuts Sales Forecast
Looking ahead, Ollie's now expects fiscal 2026 adjusted earnings of $4.57 to $4.65 per share, up from its prior forecast of $4.45 to $4.55 per share. The analyst estimate stands at $4.47 per share, so the company is guiding above expectations.
However, the sales forecast was trimmed to between $2.928 billion and $2.941 billion, down from the previous $2.98 billion to $3 billion range. Analysts were expecting $2.983 billion. The retailer now projects comparable-store sales growth of zero to 0.5%, down from about 2% previously. It still plans to open 75 stores during the fiscal year ending Jan. 30, 2027.
CFO Robert Helm said the company lowered its second-half sales assumptions to reflect recent trends. Still, van der Valk expressed more confidence in the fourth quarter, citing Black Friday, Ollie's Army events, and strong holiday deal flow.
During the earnings call, management called 2026 a "weird year," pointing to unfavorable weather, elevated fuel prices, and aggressive retail promotions. But they expect those pressures to ease, and they believe the closeout model can drive a return to more typical comparable sales growth in 2027 and beyond.
OLLI Price Action: Ollie's Bargain Outlet shares rose 7.22% to $77.56 on Wednesday at the time of publication.
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