Sales slipped at Ollie’s Bargain Outlet Holdings in the second quarter, as the company lowered its full-year revenue outlook but raised its earnings expectations after net income topped a Wall Street estimate.
An analyst consensus estimate published by Zacks Investment Research pegged earnings at $1.14 per diluted share and revenues at $757.9 million.
Comparable store sales slipped 1.8% in the quarter year over year, driven by a decrease in average basket size and flat transactions, Ollie’s noted. Net sales were $741.3 million versus $679.6 million in the prior-year period. Operating income was $108.5 million versus $77 million in the year-earlier quarter.
Among highlights of the quarter, Ollie’s opened 15 new stores and closed one because of storm damage, ending the quarter operating 686 locations in 36 states.
Ollie’s updated its full-year outlook to reflect sales trends and $28.3 million in IEEPA tariff refunds received in the second quarter, which the company plans to reinvest in pricing to strengthen its competitive position. Ollie’s now expects net sales of $2.93 billion to $2.94 billion, down from the previous range of $2.98 billion to $3 billion. Comparable store sales are expected to range from flat to up to 0.5%, versus a previous projection of 2% growth, while adjusted diluted EPS is expected to range from $4.57 to $4.65, up from $4.45 to $4.55.
Eric van der Valk, Ollie’s president and CEO, said on a conference call that the company continues to see shoppers seeking value. Lower-income customers are delaying discretionary spending, he said, but higher-income consumers are trading down, benefiting Ollie’s.
The company intends to continue opening stores to its full-year target of 75 new locations.
“We are all about growth,” he said.
Seasonal décor and living room furniture were among the company’s strongest-performing product segments during the second quarter.
Despite some weakness in the second quarter, van der Valk said Ollies remains well-positioned for success in the current economy as value-seeking consumers look to the company to help them manage their personal finances.
“Value always wins,” he asserted.
In announcing the financial results, van der Valk said, “We delivered strong earnings growth in the second quarter and continued to execute against our key strategic initiatives. Comparable store sales declined 1.8% against a challenging multi-year stack. We believe our sales results were negatively impacted by the combination of less favorable weather, continued economic pressure on the consumer and an elevated promotional environment, which all led to a more challenging backdrop than we originally expected. Consumers continue to seek value and many of the same pressures affecting our customers are creating buying opportunities across the closeout market. We continue to see strong deal flow and remain committed to reinvesting in price and strengthening our competitive position.”
