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Ollie’s Bargain Outlet Shares Rise Following an Upbeat Outlook

By Rhian Hunt – Updated Jul 22, 2020 at 1:22PM

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Comps are said to be up approximately 40% ahead of full Q2 results on Aug. 27.

The stock price of Ollie's Bargain Outlet Holdings (OLLI 9.78%) skyrocketed over 10% in Wednesday morning trading, following a positive press release on Tuesday about the discount chain's second-quarter sales and revenue. The retailer will report its full second-quarter results on Aug. 27, but Tuesday's teaser gave investors reason to be optimistic.

Various metrics pointed to Ollie's posting strong gains in an era of coronavirus bargain shopping. That comes after an initial dip in which the retailer lost ground in tune with the rest of the market, though to a lesser degree. Tuesday's information confirmed the picture, with the company predicting approximate 40% gains in comparable-store sales and net sales of roughly $515 million for fiscal Q2, which ends Aug. 1.

A rising arrow behind a gold dollar sign.

Image source: Getty Images.

Operating margin at 16% improved from the first quarter's 12.3% and the previous fourth-quarter operating margin of approximately 12.4%. Gross margin, at 39%, slipped from 40.2% in the first quarter, which was itself 70 basis points lower than the previous quarter's figure.

CEO John Swygert said Ollie's "ability to keep pace with the spike in demand and deliver outstanding comparable-store sales growth and operating margins is a testament to our organization's ability to execute at extraordinary levels." Swygert also expressed confidence about the longer term, saying "we remain very well positioned to benefit from the continued disruption in the marketplace," and that the retailer is positioned to exploit "long-term opportunities as we continue to leverage the agility of our unique closeout business model and execute our strategic growth plans."

Ollie's Bargain Outlet Holdings' current share price, more than $108, is its highest ever.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Ollie's Bargain Outlet Holdings. The Motley Fool has a disclosure policy.

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