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Ollie's Bargain Outlet Is Putting Up Surprising Growth Numbers

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Will it expand into e-commerce?

Brick-and-mortar retailers have struggled throughout the pandemic, but Ollie's Bargain Outlet (OLLI 2.12%) has bucked the trend. Ollie's put up amazing numbers across the board last year, which would have been impressive even in a normal year. On a Fool Live episode recorded on April 28, Fool contributors Brian Feroldi, Brian Stoffel, and Brian Withers discuss the company's stellar results and whether it will dip its toe into e-commerce.

Brian Feroldi: Let's talk about Ollie's Bargain Outlet, ticker symbol OLLI. Not a company I look at very often. I do vividly remember David Kretzmann pitching this company on MarketFoolery a couple of years ago and I was like, that's a weird one. Turns out, it's done really well. This has been a great company to invest in.

This is a company that buys cheap discarded goods from other businesses and then sells them at a huge discount. It's like an ultra-cheap place to go and shop for goods. This company's most recent year and quarterly results are extremely impressive. Last year sales were up 28% to $1.8 billion. This is a company with stores -- physical retail stores that you walk into. Up 28% to $1.8 billion. Comp sales were up 15.6%. Gross margin expanded to 39.7% up 50 basis points. Adjusted net income up 61% to $208 million or $3.16 per share.

This is a company with $447 million in cash, zero debt. Even during a pandemic year, they still managed to open 46 new stores, bringing their total to 388, that's double-digit growth in 2020 for a retailer. Things are going so well this company recently authorized a new $100 million stock repurchase program. What can you say but, "Wow, hats off to you."

Brian Withers: Yeah, they almost seemed like a little bit like a Costco. The bargain-hunting opportunities for folks and you don't know what you're going to get when you go into the store. This one has missed my radar as well. Part of the reason is, I don't know if they have any online presence. Do they have an omnichannel strategy or they're just going all-in with their retail locations?

Feroldi: No omnichannel strategy whatsoever.

Brian Stoffel: That's the part.

Feroldi: It's a website that makes Berkshire Hathaway--. It looks like a website that Warren Buffett designed essentially. If you go to their website, it is their flyer and then how to get to their stores. That's it. There is no e-commerce presence here at all. But did you hear the results?

Withers: Yeah, that's amazing.

Feroldi: Think of this as a dollar store. Are you going to go to to buy things from the dollar store? No, they're impulse in-person purchases. This is one of the retailers that is probably never going to have an omni-channel presence, but man, it doesn't need it.

Withers: It would ruin the vibe I think.

Feroldi: Yeah.

Stoffel: That is the worst website I've ever seen.

Feroldi: [laughs] Have you been to

Stoffel: No. But I don't buy anything from Berkshire.

Feroldi: That is the worst website.

Brian Feroldi has no position in any of the stocks mentioned. Brian Stoffel has no position in any of the stocks mentioned. Brian Withers has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Costco Wholesale, and Ollie's Bargain Outlet Holdings. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short June 2021 $240 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Ollie's Bargain Outlet Holdings, Inc. Stock Quote
Ollie's Bargain Outlet Holdings, Inc.
$65.08 (2.12%) $1.35
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$296.47 (0.46%) $1.36
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$532.20 (-1.41%) $-7.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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