Yahoo Finance Ollie's Bargain (OLLI) Q1 Earnings Beat Estimates, Guidance Up
Ollie's Bargain Outlet Holdings, Inc. OLLI reported first-quarter fiscal 2024 results, wherein both the top and bottom lines not only beat the Zacks Consensus Estimate but also increased year over year. This Harrisburg, PA-based company also witnessed an uptick in comparable store sales.
The company’s focus on value-driven merchandise assortments positioned it well to capitalize on opportunities in the marketplace and effectively meet consumer demand. The better-than-expected performance prompted management to lift the sales and earnings view for fiscal 2024.
Here’s How the Top & Bottom Lines Fared
This extreme-value retailer of brand-name merchandise posted adjusted earnings of 73 cents a share, which comfortably beat the Zacks Consensus Estimate of 65 cents and increased meaningfully from 49 cents reported in the year-ago quarter.
Net sales of $508.8 million jumped 10.8% year over year due to a comparable store sales increase and new store unit growth. The top line came ahead of the consensus mark of $506 million.
We note that comparable store sales rose 3% in the quarter under discussion compared with the 4.5% increase registered in the prior-year period. The reported figure also fared far better than our expectation of 2.2% growth.
Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise
Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote
A Look at Margins
The gross profit grew 17.2% to $209.4 million during the quarter. The gross margin expanded 220 basis points to 41.1% due to reduced supply-chain costs and a higher merchandise margin. We had anticipated 110 basis points of gross margin expansion.
SG&A expenses shot up 9.3% to $142.4 million from the prior-year quarter’s level due to an increase in selling expenses associated with the increased store count. As a percentage of net sales, SG&A decreased 40 basis points to 28%.
The operating income surged 46.6% to $56.5 million, while the operating margin expanded 270 basis points to 11.1%. Adjusted EBITDA advanced 40.3% to $69.4 million during the quarter under review. The adjusted EBITDA margin increased 280 basis points to 13.6%. We had expected a 150-basis point expansion in the EBITDA margin.
Store Update
During the quarter, Ollie’s Bargain opened four new stores, thereby bringing the total count to 516 stores in 30 states at the end of the period. This reflected an increase of 8.4% in the store count on a year-over-year basis. The company plans to open 50 new stores and close two stores in fiscal 2024.
Following the conclusion of the first quarter, Ollie’s Bargain entered into an asset purchase agreement to acquire 11 former 99 Cents Only Stores locations for $14.6 million as part of the 99 Cents Only Stores’ bankruptcy proceedings. Among these 11 locations, three are owned properties, and eight are leased properties.
Other Financial Aspects
Ollie’s Bargain ended the quarter with cash and cash equivalents of $212.3 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $92 million of availability under the facility as of the end of the quarter.
During the quarter, the company incurred capital expenditures of $26.9 million. For fiscal 2024, management projected capital expenditures of $90 million.
During the quarter under discussion, Ollie’s Bargain repurchased 336,934 shares worth $25 million. The company had $60.6 million remaining under its share repurchase program.
Guidance
Management now envisions fiscal 2024 net sales between $2,257 million and $2,277 million, which suggests an increase from $2,102.7 million reported in fiscal 2023. Ollie’s Bargain now anticipates comparable store sales to rise in the band of 1.5-2.3% compared with the comparable store sales increase of 5.7% reported last fiscal year.
Earlier, the company had guided net sales between $2,248 million and $2,273 million and comparable store sales in the range of 1-2%.
Ollie’s Bargain envisions the gross margin rate to be 40% for fiscal 2024 compared with 39.6%. The company now anticipates an operating income in the range of $250-$258 million for fiscal 2024, up from $227.8 million reported in fiscal 2023.
Management now foresees fiscal 2024 adjusted earnings in the range of $3.18-$3.28 per share, up from the adjusted earnings of $2.91 reported last fiscal. The company had earlier projected adjusted earnings between $3.10 and $3.20 per share.
Shares of this Zacks Rank #3 (Hold) company have advanced 9.5% in the past three months compared with the industry’s rise of 5.9%.
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The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 22.5% and 59.3%, respectively, from the year-ago reported numbers.
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The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings suggests growth of around 8% and 9.5%, respectively, from the year-ago reported numbers.
Tractor Supply Company, which operates as a rural lifestyle retailer, currently carries a Zacks Rank #2 (Buy). TSCO has a trailing four-quarter earnings surprise of 2.7%, on average.
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