Ollies Sales Jump 18 Percent in Q2

Key Points

• Net sales rose 17.5% year over year to $679.6 million in the fiscal second quarter 2025, beating expectations and prompting an increase in full-year guidance for fiscal 2025.

• Adjusted earnings per share (EPS) jumped 26.9% to $0.99 in the quarter, ahead of consensus estimates.

• Ollie's opened 29 new stores in the period, bringing the total to 613 and raising its annual new store target, but experienced increased pre-opening and SG&A expenses.

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Ollie's Bargain Outlet (NASDAQ:OLLI), a leading U.S. discount retailer known for its "Good Stuff Cheap" value proposition, reported results for the fiscal second quarter 2025 (ended Aug. 2, 2025) on Aug. 28, 2025. The company delivered robust growth across sales, margins, and store count, surpassing Wall Street expectations. Net sales reached $679.6 million, up 17.5% year over year, and adjusted EPS came in at $0.99, a 26.9% increase from the prior year. These figures topped both management’s internal targets and analyst estimates, leading the company to raise full-year guidance for most key metrics in fiscal 2025. New store openings accelerated during the quarter, although higher pre-opening and general operating costs remain a focus for future performance. Overall, the period reflected continued top-line strength, improving profitability, and further expansion of the company's retail footprint.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in the first quarter 2025 earnings report.

Business overview and key success drivers

Ollie's Bargain Outlet specializes in selling brand-name closeout merchandise at discounted prices. Its offerings span consumer staples, housewares, seasonal items, toys, and more, appealing to value-focused and budget-conscious shoppers. The company's strategy revolves around securing advantageous deals on branded products and passing savings directly to customers.

Recent business focus areas have included rapid expansion through new store openings, strengthening its Ollie's Army loyalty program, and leveraging its reputation for deep discounts. Key success factors remain its ability to source quality bargains, foster customer loyalty, and expand profitably by adding stores in new markets.

Quarter highlights and developments

During the quarter, Ollie's continued its aggressive growth strategy, opening 29 new stores and growing its total count to 613 across 34 states, representing a 16.8% year-over-year increase. This allowed the company to quickly secure attractive, ready-to-operate retail spaces. However, acquiring these stores led to a rise in pre-opening expenses, including "dark rent" -- rent paid before a location opens for business -- as reflected in the results. Pre-opening costs rose to $9.0 million, nearly doubling from last year, with $2.3 million specifically attributed to dark rent.

Financially, the company generated significant top-line gains, with net sales rising 17.5%. Comparable store sales -- a metric tracking performance at locations open at least 15 months -- increased 5.0%. This growth was driven by an increase in transactions. While this was a moderation from last year's 5.8% comparable store sales growth, it still positioned Ollie's ahead of its long-term growth algorithm and prior guidance, which anticipated 1.4% to 2.2% comparable store sales growth for fiscal 2025. With more than 16.1 million Ollie's Army loyalty members (up 10.6% year over year) as of period-end, exclusive events such as the revamped "Ollie’s Days" drew major engagement and higher transactions, helping drive a large share of sales across the chain.

Gross profit margins improved by 200 basis points year over year, reaching 39.9%. This improvement resulted from lower supply chain expenses and improved merchandise buying. Management noted that deals in consumer packaged goods and everyday essentials performed well, further strengthened by new partnerships following competitor store closures.

Operating expenses, classified as selling, general and administrative costs (SG&A), rose as a percentage of sales to 25.8%, up 60 basis points from a year ago. Higher insurance claims and increases in store labor spending were the main contributors, a trend also called out last quarter. Despite this, adjusted EBITDA margin climbed to 13.8%. Ollie's ended the period with $460.3 million in cash and short- and long-term investments, up 30.3% from a year earlier, and continued its strategy of investing in new stores and infrastructure. The company repurchased $11.5 million of its own shares during the quarter and maintained no significant long-term debt.

Product range and loyalty initiatives

Ollie's product assortment is broad, including branded consumer packaged goods, seasonal decor, home goods, toys, clothing, and electronics. Known for deep discounts on well-known brands, the company has capitalized on disruptions in the retail sector to source more branded inventory, especially in consumer packaged goods categories following the Big Lots bankruptcy. This not only diversified its range but also bolstered performance in staples and seasonally relevant categories.

The company continued to invest in customer loyalty programs. Membership in Ollie's Army loyalty program climbed to over 16 million, with these customers accounting for a significant majority of sales. Innovations such as the exclusive "Ollie’s Days" event and targeted promotions for loyalty members boosted in-store traffic.

Financial outlook and what to watch

Management raised guidance for fiscal 2025 across nearly every major financial measure. It now expects net sales between $2.631 billion and $2.644 billion for the year, up from the previous range of $2.579 billion to $2.599 billion. Adjusted EPS guidance is now $3.76 to $3.84 for fiscal 2025, compared to the prior range of $3.65 to $3.75, and comparable store sales are forecast to grow between 3.0% and 3.5% for the year, an increase over the earlier range of 1.4% to 2.2%. The company also raised its store opening target for fiscal 2025 to 85 new locations, up from 75 previously guided.

Key areas for investors to monitor for the rest of the year include whether new stores continue to perform to expectations, the sustainability of higher comparable sales given a more challenging retail environment ahead, and the impact of rising SG&A and pre-opening expenses. Margin trends will depend heavily on continued cost discipline and the company’s deal-sourcing capabilities as retail sector conditions evolve. Ollie's Bargain Outlet does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Ollie's Bargain Outlet. The Motley Fool has a disclosure policy.