Ollie's Bargain Outlet (OLLI) has likely been more pressured than other retailers by higher gas prices, in addition to weather headwinds, because its real estate strategy relies on "cheap rent" destination locations, and it lacks an e-commerce channel to help subsidize store visits, Truist Securities said in a research note Thursday.
Based on Truist card data, the brokerage lowered its Q2 comparable sales estimate to a 3% decline from 1% growth. Based on Q2 trends, it also modestly lowered its Q3 and Q4 comparable sales forecasts to approximately 1% from the low 2% range, according to the note.
Truist lowered its 2026 and 2027 EPS estimates to $4.30 and $4.95 from $4.50 and $5.15, respectively.
The company's Q1 and early Q2 were negatively impacted by unfavorable weather, given its heavy exposure to Lawn & Garden products during the late spring and early summer months, according to the note. However, weather has not historically affected the business to this extent and generally balances out over time, the brokerage said.
Given the spike in gas prices, it is reasonable to assume that some customers have been shopping elsewhere to reduce fuel costs, the brokerage added.
Truist kept a buy rating on Ollie's Bargain Outlet and lowered the price target to $80 from $112.
Price: 63.56, Change: +1.68, Percent Change: +2.71
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