What happened

Shares of Ollie's Bargain Outlet (NASDAQ:OLLI) rose 34.7% in May, according to data from S&P Global Market Intelligence. While the discount retailer saw half its fiscal first quarter ended May 2 affected by coronavirus shutdowns, results reported at the end of the month showed better-than-expected results.

What's remarkable is that Ollie's had already appreciated a whopping 47% in April after the government passed the CARES stimulus act,  providing employment support, extra unemployment insurance, and various other measures to help the U.S. consumer through the COVID-19 outbreak. After the strong run in May, Ollie's is now up a stunning 219% since its 52-week intraday lows in March.

A sign draped in American flag colors saying Memorial Day Sale.

Image source: Getty Images.

So what

During the quarter, Ollie's posted 7.5% revenue growth on a 3.3% decline in comparable-store sales. While no one likes to see a decrease in comps, this was far, far better than the 8.5% decline anticipated by analysts. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also came in at $46.7 million, up slightly over last year and far better than the consensus of $37.1 million, and adjusted (non-GAAP) earnings per share of $0.49 beat expectations of only $0.34.

Management also noted that after a big decline, comparable-store sales turned positive, "coinciding with the arrival of stimulus checks in addition to our communications to customers that we remain open and have great deals on items they need. The inflection in our comp trend clearly demonstrates our ability to pivot quickly and respond to changing customer demands." CEO John Swygert also noted that "second quarter sales are off to a strong start."

Now what

As a discount retailer that sells both staples and discretionary items, Ollie's is part of a group that should benefit in this environment, as budget-conscious consumers look to make their dollars go further. Ollie's can potentially source goods from hurting vendors looking to offload inventory.

Ollie's is one retailer that should thrive in a recessionary environment, as long as consumers are able and willing to leave the house. With stimulus checks in people's hands and stay-at-home orders gradually lifting, it's no wonder Ollie's shares were rising last month.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.