Ollie's Bargain Outlet Holdings, Inc. (OLLI Quick QuoteOLLI - Free Report) announced its third-quarter fiscal 2024 results, revealing a mixed performance. While the top line fell short of the Zacks Consensus Estimate, the bottom line beat the same. Both metrics improved year over year.

The Harrisburg, PA-based company witnessed a decline in comparable store sales, breaking a streak of nine consecutive quarters of growth. As a result, management revised its fiscal 2024 guidance, lowering the sales forecast and narrowing the projected range for comparable store sales growth. However, the company maintained its full-year earnings view.

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

This extreme-value retailer of brand-name merchandise posted adjusted earnings of 58 cents a share, which came a penny ahead of the Zacks Consensus Estimate and increased from 51 cents reported in the year-ago quarter.

Net sales of $517.4 million jumped 7.8% year over year due to new store unit growth, partly offset by a decline in comparable store sales. The top line missed the consensus mark of $518.6 million.

Comparable store sales for this Zacks Rank #4 (Sell) company decreased 0.5% in the quarter under discussion against a 7% increase registered in the prior-year period. The reported figure fell short of our expectation of 0.3% growth.

What Margins Have to Say About Ollie's Bargain

The gross profit grew 10.5% year over year to $214.5 million during the quarter. The gross margin expanded 100 basis points to 41.4%, driven by favorable supply-chain costs. However, this was partly offset by a lower merchandise margin due to the higher mix of consumables. We had anticipated 60 basis points of gross margin expansion.

Selling, general and administrative expenses (SG&A) expenses shot up 9% to $154.5 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 increased 40 basis points to 29.9%. We anticipated SG&A expenses to deleverage by 20 basis points.

The operating income surged 14% to $44.5 million, while the operating margin expanded 50 basis points to 8.6%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) advanced 17% to $59.8 million during the quarter under review. The adjusted EBITDA margin increased 100 basis points to 11.6%. We had expected 40 and 60 basis points of expansion in the operating margin and EBITDA margin, respectively.

OLLI’s Store Expansion Plans

During the quarter, Ollie’s Bargain opened 24 new stores and closed three outlets, including two permanent closures and one temporary closure related to Hurricane Helene, bringing the total count to 546 stores in 31 states at the end of the period. This reflected an increase of 8.1% in the store count on a year-over-year basis. The company plans to open a net 47 stores in fiscal 2024.

Ollie's Bargain’s Financial Snapshot

Ollie’s Bargain ended the quarter with cash and cash equivalents of $128.7 million. The company had no borrowings outstanding under its $100 million revolving credit facility and $92.1 million of availability under the facility as of the end of the quarter. 

During the quarter, the company incurred capital expenditures of $31 million. For fiscal 2024, management projected capital expenditures of $104 million.

During the quarter under discussion, Ollie’s Bargain repurchased 169,359 shares worth $15.8 million. The company had $38.4 million remaining under its share repurchase program.

What to Expect From OLLI in Fiscal 2024?

Management now envisions fiscal 2024 net sales between $2,270 million and $2,280 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% compared with the comparable store sales increase of 5.7% reported last fiscal year.

Earlier, the company had guided net sales between $2,276 million and $2,291 million and comparable store sales in the range of 2.7-3.2%.

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 $251-$258 million for fiscal 2024, up from $227.8 million reported in fiscal 2023. 

Management continues to envision 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.

Shares of Ollie’s Bargain have advanced 30.8% in the past six months compared with the industry’s rise of 3.4%.

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