Highly rated discount retailer Ollie's Bargain Outlet (OLLI) reported second-quarter earnings after the close Wednesday that topped expectations, and the company elevated its full-year earnings and sales outlook. But shares slid after hours.
Ollie's Bargain Outlet Earnings
Estimates: A 37% jump in earnings per share to 37 cents. Wall Street expected revenue to climb 12% to $285 million. Consensus Metrix forecast a 1.2% same-store sales gain.
Results: Net sales rose 13.1% to $288.1 million, driven by a higher store count and a 4.4% same-store sales gain. EPS jumped 48% to 40 cents.
Outlook: Ollie's boosted its sales and earnings forecast for the full year.
The company said it expects full-year net sales of between $1.222 billion and $1.227 billion, above Wall Street expectations for $1.221 billion. That compares to the $1.207 billion to $1.215 billion Ollie's said it expected in June.
Ollie's was targeting full-year EPS of $1.73-$1.76, better than consensus for $1.73. In June, the company said it expected $1.69-$1.72.
The company also forecast same-store sales growth of 2.5%-3.0%, up from a prior forecast for a 1%-2% gain.
"Our philosophy of buying cheap and selling cheap, coupled with tight expense control and successful new store growth, has driven our business for 36 years and we feel very good about our ability to continue executing against our strategic growth initiatives this year and beyond," Mark Butler, Ollie's CEO, said in a statement.
Ollie's Stock
Shares fell 1.7% to to 97 in the stock market today. Ollie's stock is extended from a flat base with a 77.60 buy point. Shares have risen for 12 straight sessions coming into Wednesday.
Ollie's stock has a best-possible Composite Rating of 99. Other retail stocks have staged similar rebounds from a rough 2017, as tax cuts help lift their fortunes. Discounters in general have also cut into department stores' sales but are seen as more-insulated from Amazon.com (AMZN) and other online retailers.
Closeout retailer Big Lots (BIG) rose 0.8%, but after crashing 14% last week. Five Below (FIVE), which reports second-quarter earnings after the close on Thursday, skidded 4.1% after Wednesday's record high.
Ollie's Bargain Outlet sells a wide range of products in its warehouselike stores — including food, beauty and health care products, along with toys and electronics.
As Wells Fargo analyst Edward Kelly notes, Ollie's, since its 2015 IPO, has gained on its efforts to "drive more customer frequency with core household essentials," such as coffee, along with health and beauty products. But he says the market has "more than rewarded the company for its performance," sending its stock to increasingly delicate heights.
Toys 'R' Us Collapse
Ollie's earnings report follows toy-store chain Toys 'R' Us' plans to liquidate U.S. stores. Management for Ollie's, which also sells toys, said in June that it was "excited about the Toys 'R' Us opportunity."
Management said then that it was looking at "a handful" of former Toys 'R' Us locations that were up for auction, adding that it wasn't interested in property whose sizes or locations didn't work.
Credit Suisse said in a July research note that Toys 'R' Us' demise could shift market share over to Ollie's as well as teen- and tween-focused discount retailer Five Below (FIVE). A Credit Suisse analysis said that 47% of Five Below stores and 17% of Ollie's locations had "some overlap" with Toys 'R' Us stores within a five-mile radius.
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The post Ollie's Bargain Outlet Second-Quarter Earnings Beat Estimates appeared first on Investor's Business Daily.
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