What happened

Shares of Ollie's Bargain Outlet Holdings (OLLI 1.30%) dropped on Wednesday following the monthly retail report and disappointing financial results from Target. Ollie's stock closed the day down 8.5% but had been down as much as 10% earlier.

So what

Ollie's acquires its merchandise at closeout prices and then sells it cheap to its customers. Its in-stock inventory can be unpredictable, as can its financial results. But generally speaking, investors lump Ollie's stock in with the bigger basket of retail stocks.

Target stock plummeted today even though its sales were up slightly year over year. However, its profits fell, in part because it marked down prices to move inventory -- this had an impact on many retail stocks. Investors may also fear that by discounting merchandise, Target is getting too close to Ollie's discount turf.

Now what

The monthly U.S. retail report also came out today, showing sales were up 8.3% year over year -- more than economists projected. However, these numbers don't adjust for inflation. And it's clear that consumers are funding their spending growth with debt. According to a report this week from the New York Federal Reserve, consumer credit card debt is up sharply.

The rise in consumer credit card debt suggests that consumer budgets are strained, which would theoretically be good for a discount chain like Ollie's. For the entire year, management is guiding for a small decline in same-store sales. But maybe value-minded consumers are increasingly turning to Ollie's. Or perhaps they're shopping at stores like Target instead, since these retailers are also discounting merchandise.

For now, it's all just speculation on investors' part. Investors will have to await more concrete takeaways when Ollie's reports third-quarter financial results, which are expected in December.