Ollie’s Bargain Outlet earned $1.42 a share in its second fiscal quarter, 43.4% more than a year earlier and well above the $1.14 Zacks consensus. Net sales of $741.3 million, up 9.1%, still fell 1.5% short of the $753 million analysts expected.
Tariff relief explains the profit. IEEPA tariff refunds and lower tariff rates boosted earnings, and the refunds alone added 380 basis points to gross margin. Gross margin rose 360 basis points to 43.5%. Without the refund and related price investment, management said, it would have been about 40.3% to 40.4%.
Stores grow, shoppers spend less
New stores account for the sales growth. Ollie’s opened 15 and closed one that storm damage had hit, ending the quarter with 686 stores in 36 states, 11.9% more than a year before. It has opened 42 in the first half of the year.
Inside existing stores, sales slipped. Comparable-store sales fell 1.8% because the average basket shrank. Transactions were flat. The company cited less favorable weather, consumer pressure and a heightened promotional environment. Lawn and garden and room air conditioners cost more than 100 basis points of comp growth, and management said the broader drag was larger because those categories also bring people into stores. Toys, general merchandise, summer furniture, candy and seasonal decor sold best.
SG&A rose 80 basis points as a share of sales to 26.6%, as the negative comp left fixed costs spread thin and one extra merchandise flyer raised marketing spending. Pre-opening expenses dropped 42% to $5.2 million, with fewer openings and lower dark-rent costs.
Who is shopping
Lower-income customers, defined as households earning $65,000 or less, kept putting needs ahead of wants, shopping closer to need and making fewer trips. Households around $100,000 and above kept trading down in search of value.
The Ollie’s Army loyalty program grew 12.7% to 18.1 million members. Management reported more new customers and strength among shoppers aged 35 to 55, especially 35 to 45. Closeout deal flow stayed strong, which gives the chain room to adjust its category mix.
