Ollie's Bargain Outlet (NASDAQ: OLLI) kicked off its fiscal year with a decisive beat and a raised outlook. The key question is whether the strength is structural or a matter of timing. Guidance suggests management believes at least part of the gain is durable.
Adjusted net income per diluted share hit $0.91, crushing the $0.71 consensus by 28% and climbing 21% from the year-ago $0.75. Revenue grew 14.2% year over year to $658.9 million, topping the $566.2 million consensus by 16%. The top-line performance came from a 1.7% comparable store sales lift and 27 new store openings, expanding the fleet to 672 locations across 35 states.
The margin story is the real surprise. Gross margin widened 80 basis points to 41.9%, exceeding the company's own forecast. Management credited lower supply chain costs and a modest bump in merchandise margin. This combination is telling. Supply chain costs are cyclical. Merchandise margin gains signal better buying or pricing power. Both moving together suggests the off-price model is delivering in a promotional retail landscape.
SG&A as a percentage of sales held steady at 28.6% despite opening 27 new stores. That's disciplined execution. Pre-opening expenses even fell 3.2% to $6.4 million, thanks to lower dark rent on bankruptcy-acquired locations. Adjusted EBITDA rose 21.8% to $87.9 million, with its margin expanding 80 basis points to 13.3%.
The guidance raise is modest but revealing. Full-year adjusted EPS guidance was lifted to $4.45–$4.55 from $4.40–$4.50, a $0.05 bump at the midpoint. Net sales guidance was trimmed slightly to $2.980–$3.000 billion. Comparable store sales growth was reiterated at ~2%. Gross margin guidance was raised to ~40.7% from ~40.5%. The slight revenue trim paired with a margin raise tells a clear story: management is betting on structural margin improvement, not top-line acceleration, to drive earnings.
Capital allocation was aggressive. The company repurchased $53.4 million worth of stock, 542,486 shares, more than triple the $17.1 million spent in last year's Q1. The full-year buyback target was raised to ~$125 million from ~$100 million. Diluted share count guidance was lowered to ~60.9 million from ~61.4 million. With $525.6 million in cash and no material debt, the balance sheet can handle this pace. The buyback acceleration is a credible signal of confidence, coming as ROIC improves, not declines.
Ollie's Army loyalty membership grew 12.6% to 17.5 million, a key indicator of repeat traffic. The 1.7% comp increase was driven by basket size, not traffic, a detail worth watching. Basket-driven comps can mean inflation pass-through or genuine unit volume growth; the release doesn't specify.
The outlook is straightforward. Ollie's is executing well in a choppy consumer environment. The beat is real, the margin expansion looks durable, and the guidance confirms management's conviction. The question is whether the comp pace can accelerate beyond 1.7% as new stores mature and 75 planned openings for the year come online. If basket growth holds and traffic improves, the full-year numbers could finish above the raised range.