Ollie's Bargain Outlet Holdings, Inc. (OLLI Quick QuoteOLLI - Free Report) reported second-quarter fiscal 2024 results, wherein the top line beat the Zacks Consensus Estimate, while the bottom line met the same. Both the metrics increased year over year. This Harrisburg, PA-based company also witnessed an uptick in comparable store sales, marking the ninth straight quarter of growth.

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 impressive performance prompted management to lift the sales and earnings view for fiscal 2024.

Here’s How OLLI’s Top & Bottom Lines Fared

This extreme-value retailer of brand-name merchandise posted adjusted earnings of 78 cents a share, which came in line with the Zacks Consensus Estimate and increased from 67 cents reported in the year-ago quarter.

Net sales of $578.4 million jumped 12.4% 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 $562 million.

We note that comparable store sales rose 5.8% in the quarter under discussion compared with the 7.9% increase registered in the prior year period. The reported figure also fared far better than our expectation of 1.5% growth.

What Margins Have to Say About Ollie's Bargain

The gross profit grew 11.4% to $219 million during the quarter. The gross margin shrunk 30 basis points to 37.9% due to a reduced lower merchandise margin. We had anticipated 50 basis points of gross margin expansion.

Selling, general, and administrative expenses (SG&A) expenses shot up 8.2% to $145.7 million from the prior-year quarter’s level due to an increase in selling expenses associated with the new store openings. As a percentage of net sales, SG&A decreased 100 basis points to 25.2%. We had anticipated a leverage of 30 basis points.

The operating income surged 15.6% to $60.8 million, while the operating margin expanded 30 basis points to 10.5%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) advanced 16.4% to $74.5 million during the quarter under review. The adjusted EBITDA margin increased 50 basis points to 12.9%. We had expected 90 and 100 basis points of expansion in the operating margin and EBITDA margin, respectively.

OLLI’s Store Expansion Plans

During the quarter, Ollie’s Bargain opened nine new stores, bringing the total count to 525 stores in 31 states at the end of the period. This reflected an increase of 8.9% in the store count on a year-over-year basis. The company plans to open a net 48 stores in fiscal 2024.

Ollie's Bargain’s Financial Snapshot

Ollie’s Bargain ended the quarter with cash and cash equivalents of $170.6 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $89 million of availability under the facility as of the end of the quarter. 

During the quarter, the company incurred capital expenditures of $38.3 million. For fiscal 2024, management projected capital expenditures of $104 million.

During the quarter under discussion, Ollie’s Bargain repurchased 81,340 shares worth $6.4 million. The company had $54.2 million remaining under its share repurchase program.

What to Expect From OLLI in Fiscal 2024?

Management now envisions fiscal 2024 net sales between $2,276 million and $2,291 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 2.7-3.2% compared with the comparable store sales increase of 5.7% reported last fiscal year.

Earlier, the company had guided net sales between $2,257 million and $2,277 million and comparable store sales in the range of 1.5-2.3%.

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 $252-$259 million for fiscal 2024, up from $227.8 million reported in fiscal 2023. 

Management now foresees fiscal 2024 adjusted earnings in the range of $3.22-$3.30 per share, up from the adjusted earnings of $2.91 reported last fiscal. The company had earlier projected adjusted earnings between $3.18 and $3.28 per share. 

Shares of this Zacks Rank #3 (Hold) company have advanced 10.1% in the past six months compared with the industry’s rise of 11.2%.

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