Ollie's Bargain Outlet (OLLI) comparable-sales trends appear to have "stabilized," while easing macro pressures and merchandising initiatives support confidence in the retailer's long-term growth prospects, RBC Capital Markets said in a report emailed Tuesday, after touring the company's Old Bridge, New Jersey, store with management.
The company's management reflected a positive outlook on Halloween sales, citing an early start to the season. They also reported relatively strong initial Christmas sales. Promotional activity also appears "more normal" after recent pressure from unfavorable weather, higher gas prices and higher promotional levels in home improvement and club channels, according to the report.
Ollie's is also being proactive in improving merchandising, including replacing lower-productivity flooring space with value furniture, reworking store layouts and upgrading planning and allocation systems, according to the note. Management sees an opportunity to rework about 20% of store space, analysts said.
Ollie's is shifting more spending from print media toward "top-of-funnel marketing," including influencers, YouTube and connected TV, while strong consumer packaged goods closeout availability could provide a more sustainable sourcing opportunity, according to the report. Today, print gets about 40% to 50% of the ad spend, versus around 70% in the past.
RBC has an outperform rating on Ollie's Bargain Outlet with a price target of a $124.
Price: 88.32, Change: +1.88, Percent Change: +2.17
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