HARRISBURG - Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) has announced its successful bid to acquire seven store leases from the recently bankrupt Big Lots (NYSE:BIG), Inc. Six of these store locations have already received the green light from the United States Bankruptcy Court for the District of Delaware, while the seventh awaits final approval.
John Swygert, the CEO of Ollie’s, expressed satisfaction with the acquisition, noting that the stores are well-situated and have historically catered to cost-conscious consumers. He highlighted the strategic significance of the stores' locations, particularly in the Midwest, which aligns with Ollie’s growth plans and the recent establishment of a new distribution center in the region.
Swygert also drew parallels to the company’s earlier purchase of 99 Cents Only stores, emphasizing the intention to prioritize the opening of the new Big Lots locations. This strategic move is expected to optimize new store productivity while minimizing opening expenses. Despite these acquisitions, Ollie’s maintains its objective to inaugurate 50 new stores, netting 48 after two planned closures, in the 2024 fiscal year.
Ollie’s, known as America's largest retailer of closeouts and excess inventory, operates 541 stores across 31 states. The company offers a broad range of brand-name products at discounted prices in various departments such as housewares, food, and health and beauty aids.
This expansion comes amidst a backdrop of competitive retail challenges, including the necessity for brick-and-mortar stores like Ollie’s to navigate consumer demand, supply chain issues, and the evolving retail landscape. The company’s approach reflects a focus on strategic growth through physical retail presence, particularly in regions where they see untapped potential.
This announcement is based on a press release statement and should be considered in the context of the risks outlined by the company, including market conditions and the ability to manage inventory effectively. Investors are encouraged to consult further disclosures by Ollie’s in public announcements and SEC filings for a comprehensive understanding of the company's future plans and potential risks.
In other recent news, Ollie's Bargain Outlet has been making significant strides in the retail sector. Following the announcement of Big Lots' bankruptcy and store closures, Ollie's has been identified as a potential beneficiary due to its proximity to the closing Big Lots locations. Analysts from BofA Securities have upgraded the price target for Ollie's to $115, maintaining a Buy rating. Similarly, Loop Capital has reaffirmed its Buy rating with a price target of $110, while KeyBanc Capital Markets raised their price target to $105.
Ollie's has also posted robust financial results for the second fiscal quarter of 2024, with net sales increasing by 12% to $578 million and a 5.8% increase in comparable store sales. These positive developments led to an upgrade in the company's sales and earnings guidance for the year.
Analysts from firms like Loop Capital and Piper Sandler have highlighted the potential bankruptcy of Big Lots as a unique opportunity for Ollie's to enhance its market presence. Despite management's projection of flat comparable store sales for the third fiscal quarter of 2024, Loop Capital suggests this forecast may be conservative, reflecting their belief in Ollie's ability to deliver consistent sales growth. These recent developments provide an insight into the ongoing progress and strategic positioning of Ollie's in the retail market.
InvestingPro Insights
Ollie's Bargain Outlet Holdings' recent acquisition of seven store leases from Big Lots aligns well with its growth strategy and financial performance. According to InvestingPro data, Ollie's has demonstrated strong revenue growth, with a 14.15% increase in the last twelve months as of Q2 2023. This expansion move could further boost the company's top line and market presence.
The company's financial health appears robust, as indicated by an InvestingPro Tip stating that Ollie's "operates with a moderate level of debt" and "liquid assets exceed short term obligations." This financial stability positions the company well for its expansion plans, including the goal of opening 50 new stores in fiscal year 2024.
Ollie's stock performance has been noteworthy, with InvestingPro data showing a 30.94% price total return over the past six months. This aligns with an InvestingPro Tip highlighting a "large price uptick over the last six months." The market seems to be responding positively to Ollie's growth strategy and financial performance.
For investors considering Ollie's potential, it's worth noting that the company is "trading at a low P/E ratio relative to near-term earnings growth," according to another InvestingPro Tip. This could suggest that the stock may be undervalued relative to its growth prospects.
InvestingPro offers 11 additional tips for Ollie's Bargain Outlet Holdings, providing a more comprehensive analysis for those interested in delving deeper into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.