10-K: Ollies Bargain Outlet Reports Strong Fiscal 2024 Results, Expands Store Base

Ollies Bargain Outlet Holdings, Inc. reports an increase in net sales and store count for fiscal year 2024, driven by new store openings and comparable store sales growth.

Summary

• Ollies Bargain Outlet Holdings, Inc. reported its financial results for the fiscal year ended February 1, 2025.
• The company expanded its store base from 388 stores in 2020 to 559 stores in 2024.
• Net sales increased from $1.809 billion in 2020 to $2.272 billion in 2024.
• Comparable store sales grew by 2.0% per year on average from 2020 to 2024.
• In 2024, net sales increased to $2.272 billion from $2.103 billion in 2023, an increase of 8.0%.
• Comparable store sales increased 2.8% in 2024 compared to a 5.7% increase in 2023.
• Gross profit increased to $914.5 million in 2024 from $832.4 million in 2023, an increase of 9.9%.
• Gross margin increased to 40.3% in 2024 from 39.6% in 2023.
• SG&A expenses increased to $612.4 million in 2024 from $562.7 million in 2023, an increase of 8.8%.
• Net income increased to $199.8 million in 2024 from $181.4 million in 2023, an increase of 10.1%.
• Adjusted EBITDA increased to $313.1 million in 2024 from $275.2 million in 2023, an increase of 13.8%.
• The company plans to open 75 new stores in 2025.
• Capital expenditures for 2025 are planned to be approximately $83 to $88 million.
• As of February 1, 2025, the company had $428.7 million in cash and short-term investments and $85.8 million available under its Revolving Credit Facility.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and expansion plans. While risks are acknowledged, the overall tone is optimistic and confident.

Positives

• The company has a proven portable, flexible, and highly profitable store model.
• The company has a strong customer loyalty program, Ollies Army, with 15.1 million members as of February 1, 2025.
• The company has a strong balance sheet with $428.7 million in cash and short-term investments and $85.8 million available under its Revolving Credit Facility.
• The company has a disciplined buying approach that has produced consistent gross margins.
• The company has a highly experienced and passionate management team.
• The company is committed to providing market-competitive compensation and benefits to its employees.

Negatives

• The company is subject to risks associated with laws and regulations generally applicable to retailers and the risks associated with failing to comply with these laws and regulations.
• The company may fail to maintain the security of information it holds relating to personal information or payment card data of its customers, employees, and suppliers.
• The company may not adequately prepare for, or respond to, existing and future privacy legislation.
• The company may not be able to timely or adequately maintain or upgrade its technology systems needed for operations.
• The company is subject to risks associated with international trade.
• The company faces litigation risks from customers, associates, suppliers, stockholders, and other third parties in the ordinary course of business.

Risks

• The company may not be able to execute its opportunistic buying strategy.
• Fluctuations in comparable store sales and results of operations could cause the business performance to decline substantially.
• Consumer confidence and spending may be reduced in light of factors beyond the company's control.
• Competition may increase in the retail market.
• The company is a brick and mortar only retailer and lacks an online shopping option.
• The company may not be able to develop and operate its distribution centers in an efficient or effective manner.
• The loss or disruption of one or more of the company's distribution centers or disruption of its supply chain could make it difficult to timely receive or distribute merchandise to its stores.
• External economic pressures, including inflation, cost increases, and energy prices, may reduce the company's profitability.
• Shrinkage or the loss or theft of inventory and/or inventory management may result in material negative impacts on the company's results of operations.
• The company may not be able to hire and retain the right people to run its stores and distribution centers.

Future Outlook

The company plans to continue to drive growth in sales and profitability by growing its store base, increasing its offerings of great bargains, and leveraging and expanding Ollies Army. The company expects to open 75 new stores in 2025.

Management Comments

• The company plans to achieve continued net sales growth, including comparable stores sales, by adding stores to its store base and by continuing to provide quality merchandise at a value for its customers as it scales and gains more access to purchase directly from major manufacturers.
• The company also plans to leverage and expand its Ollies Army database marketing strategies.
• In addition, the company plans to continue to manage its selling, general, and administrative expenses (SG&A) by continuing to make process improvements and by maintaining its standard policy of reviewing its operating costs.

Industry Context

The closeout industry is large, highly fragmented, and growing. Fueling the growth is the consolidation of retailers and manufacturers around the globe. The retail side of the closeout industry is highly fragmented, with many independent operators and small format stores.

Comparison to Industry Standards

• Ollies competes with a diverse group of retailers, including discount, closeout, mass merchant, department, grocery, drug, convenience, hardware, variety, online, and other specialty stores.
• Competitors such as Dollar General, Dollar Tree, and Big Lots also operate in the discount retail space.
• Ollies differentiates itself by offering an ever-changing selection of brand name products at compelling price points in an exciting shopping environment.
• The company's focus on closeout merchandise and its treasure hunt shopping experience set it apart from more traditional retailers.

Management Changes

Legal Proceedings

• From time to time we are involved in claims and legal actions that arise in the ordinary course of our business.
• We cannot predict the outcome of any litigation or suit to which we are a party.
• However, we do not believe that an unfavorable decision of any of the current claims or legal actions against us, individually or in the aggregate, will have a material adverse effect on our financial position, results of operations, liquidity or capital resources.

Related Party Transactions

• During fiscal year 2024, the Company purchased inventory of $0.6 million from a subsidiary of Hillman Solutions, Inc., of which John Swygert, Executive Chairman of Ollies, is a member of the Board of Directors.

Stakeholder Impact

• The company's performance and growth plans are expected to benefit shareholders through increased stock value.
• Employees may benefit from career development opportunities and market-competitive compensation.
• Customers will continue to have access to a wide selection of merchandise at extreme values.
• Suppliers will have opportunities to expand their relationships with the company as it grows.
• The company's commitment to ethical business conduct and community involvement is expected to positively impact the communities in which it operates.

Next Steps

• The company plans to open 75 new stores in 2025.
• The company plans to continue to enhance its supplier relationships and develop additional sources to acquire brand name closeout products for its customers.
• The company plans to continue to leverage the data gathered from its proprietary database of Ollies Army members to better segment and target its marketing initiatives and increase shopping frequency.
• The company plans to roll out its co-branded Visa credit card across all stores by the end of fiscal 2025.

Key Dates

Keywords

Ollies Bargain Outlet, closeout merchandise, retail, discount, stores, sales, inventory, EBITDA, growth, bargain