Ollie's Bargain Outlet shares drop amid retail stock surge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 28 2024
0mins
Source: Business Insider
Ollie's Bargain Outlet shares fell 4.3% as the stock hit a 20-day low.
Despite the overall positive market reaction to the drop in oil prices, which boosted retail stocks, Ollie's experienced a decline. The Brent crude price fell over 5% due to the Iran peace deal, leading to increased disposable income for consumers and lower transportation costs for retailers. However, Ollie's performance diverged from the broader retail sector, which saw gains, indicating a potential sector rotation.
This decline may raise concerns about Ollie's competitive position in the retail market, especially as other discount retailers benefited from favorable market conditions.
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Analyst Views on OLLI
Wall Street analysts forecast OLLI stock price to rise
13 Analyst Rating
10 Buy
3 Hold
0 Sell
Strong Buy
Current: 69.170
Low
120.00
Averages
144.46
High
162.00
Current: 69.170
Low
120.00
Averages
144.46
High
162.00
About OLLI
Ollie's Bargain Outlet Holdings, Inc. operates as a retailer of closeout merchandise and excess inventory. The Company and its subsidiaries principally buys overproduced, overstocked, and closeout merchandise from manufacturers, wholesalers, distributors, brokers, and other retailers. In addition, it augments its name-brand closeout deals with private label products. It offers customers a selection of brand name products, including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys, and electronics. The Company operates over 645 stores in 34 states. The Company's retail locations are located in Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Sustained Productivity Gains: The company has consistently achieved a 6% gross productivity increase over the past two years, reaching this target again in Q1 of fiscal 2026, demonstrating its strong execution in cost management and operational efficiency, which helps mitigate rising input costs.
- Supply Chain Investment Progress: Kimberly-Clark is advancing its previously announced $2 billion investment in its North American supply chain as planned, aimed at supporting long-term operational priorities, which will enhance the company's overall operational capabilities and market competitiveness.
- High Contract Coverage: Approximately 80% of Kimberly-Clark's overall cost basket is covered through contractual arrangements and other cost management measures, which not only increases visibility into input costs but also supports a disciplined approach to cost management, ensuring the successful implementation of its long-term margin expansion plans.
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- Oil Price Impact: The Brent crude price fell over 5% due to the Iran peace deal, dropping from a peak of $126 to $83, which translates to increased disposable income for consumers, thereby boosting retail spending.
- Reduced Transportation Costs: The decline in oil prices not only alleviates consumer burdens but also lowers transportation and logistics costs for retailers, easing the margin pressures that have built up since the blockade, allowing retailers to operate in a more favorable cost environment for back-to-school and holiday inventory.
- Retail Stock Performance: Discount retailer Ollie's shares surged 4.6%, home improvement retailer Floor And Decor rose 3.5%, and home furniture retailer Arhaus increased by 4.7%, indicating a positive market reaction to the news.
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- Margin Improvement: Gross margin increased by 80 basis points to 41.9%, primarily due to lower supply chain costs and higher merchandise margins, which will enhance the company's profitability and support long-term financial health.
- Accelerated Store Openings: The company opened 27 new stores in the first quarter, increasing its total store count by over 15% to 672, reflecting Ollie's proactive strategy in expanding market coverage and enhancing customer touchpoints.
- Inventory Management Risks: Although inventory increased by 12% year-over-year, the expansion of new stores may pose risks if sales do not meet expectations, particularly as lower-income consumers are affected by high gas prices, which could challenge future performance.
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- Increased Cost Pressure: Kimberly-Clark indicated during its Q1 fiscal 2026 earnings call that if oil prices average $100 per barrel in the second half of fiscal 2026, it could face an additional gross input cost of approximately $150-$170 million, reflecting the company's cautious outlook amid ongoing uncertainties.
- Sustained Productivity Gains: The company has consistently achieved a 6% gross productivity increase over the past two years, reaching this target again in Q1 of fiscal 2026, demonstrating its strong execution in cost management and operational efficiency, which helps mitigate rising input costs.
- Supply Chain Investment Progress: Kimberly-Clark is advancing its previously announced $2 billion investment in its North American supply chain as planned, aimed at supporting long-term operational priorities, which will enhance the company's overall operational capabilities and market competitiveness.
- High Contract Coverage: Approximately 80% of Kimberly-Clark's overall cost basket is covered through contractual arrangements and other cost management measures, which not only increases visibility into input costs but also supports a disciplined approach to cost management, ensuring the successful implementation of its long-term margin expansion plans.
See More
Oil Price Drop Fuels Retail Stock Surge
- Oil Price Impact: The Brent crude price fell over 5% due to the Iran peace deal, dropping from a peak of $126 to $83, which translates to increased disposable income for consumers, thereby boosting retail spending.
- Reduced Transportation Costs: The decline in oil prices not only alleviates consumer burdens but also lowers transportation and logistics costs for retailers, easing the margin pressures that have built up since the blockade, allowing retailers to operate in a more favorable cost environment for back-to-school and holiday inventory.
- Retail Stock Performance: Discount retailer Ollie's shares surged 4.6%, home improvement retailer Floor And Decor rose 3.5%, and home furniture retailer Arhaus increased by 4.7%, indicating a positive market reaction to the news.
- Consumer Spending Resilience: Despite Arhaus's 34.7% decline since the beginning of the year, the stock's volatility suggests market significance regarding the current news, especially following strong earnings reports from retailers like Target and Lowe's, indicating that consumers are still spending despite inflation pressures.
See More
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- Strong Job Data: The May jobs report revealed an increase of 172,000 jobs, slightly down from the revised 179,000 but significantly above the expected 80,000, indicating robust economic recovery that may influence the Federal Reserve's monetary policy direction.
- Lululemon's Dim Outlook: The athletic apparel retailer cut its full-year guidance and provided a weak outlook for the current quarter, leading BTIG to downgrade its rating from buy to hold, resulting in an over 11% drop in premarket trading, reflecting market concerns about its future performance.
- CrowdStrike's Mixed Results: Despite reporting stronger-than-expected results and raising its full-year outlook, CrowdStrike's shares fell 4% as investors questioned why heightened attention to its AI model did not immediately translate into financial results, indicating cautious market sentiment regarding its growth potential.
- Chipotle's Valuation Opportunity: JPMorgan upgraded Chipotle from hold to buy, citing a “rare valuation opportunity” as it trades at levels not seen since 2021, although shares are down 24% year-to-date, analysts believe its quality growth merits attention.
See More
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- Chip Stock Decline: Broadcom's failure to raise guidance sufficiently led to a 15% drop in its stock, contributing to a lower open for the S&P 500, which is on track for its first down week in ten, reflecting growing investor concerns over tech stocks.
- CrowdStrike's Strong Quarter: Despite a nearly 10% drop in stock price, CrowdStrike reported a full-year guidance of 27.7% growth in net new annual recurring revenue, a 5.2 percentage point increase over prior guidance, indicating robust performance in the market, although the market reaction was tepid.
- Alphabet's Fundraising Plan: Alphabet plans to sell $85 billion in stock to fund its AI buildout to surpass Anthropic and OpenAI, a move that may prompt other tech giants like Microsoft and Amazon to follow suit, intensifying market fundraising pressures.
- Quantinuum's Successful IPO: Quantum computing company Quantinuum priced its IPO at $60 per share, raising nearly $1.7 billion and achieving a valuation of over $14 billion, demonstrating strong market interest in quantum technology despite the overall bearish market sentiment.
See More
Ollie's Reports Strong Quarterly Earnings Growth
- Significant Sales Growth: Ollie's Bargain Outlet reported a 14% increase in sales to $659 million, indicating strong performance in the retail market, which is expected to further drive market share growth in the future.
- Margin Improvement: Gross margin increased by 80 basis points to 41.9%, primarily due to lower supply chain costs and higher merchandise margins, which will enhance the company's profitability and support long-term financial health.
- Accelerated Store Openings: The company opened 27 new stores in the first quarter, increasing its total store count by over 15% to 672, reflecting Ollie's proactive strategy in expanding market coverage and enhancing customer touchpoints.
- Inventory Management Risks: Although inventory increased by 12% year-over-year, the expansion of new stores may pose risks if sales do not meet expectations, particularly as lower-income consumers are affected by high gas prices, which could challenge future performance.
See More
Quantum Computing Stocks Decline, GameStop Shares Rise
- Quantum Stocks Decline: Quantum computing stocks experienced a broad decline, with Rigetti Computing down 10%, D-Wave Quantum down 7%, and IonQ down 4%, indicating that investors opted to cash out after a rally in the previous session, leading to a weakened overall market sentiment.
- GameStop's Strong Earnings: GameStop reported first-quarter revenue of $835.3 million, reflecting a 14% year-over-year increase, and the board approved a $2 billion share repurchase authorization, which not only boosts investor confidence but may also enhance future shareholder returns.
- Energy Stocks Boosted by Oil Prices: Oil prices rose nearly 2% after Israeli Prime Minister Netanyahu indicated readiness to act against Iran, lifting energy stocks, with Exxon Mobil and Marathon Petroleum both gaining 3%, suggesting sustained market optimism regarding energy demand.
- Palo Alto Networks Stock Drop: Despite Palo Alto Networks posting stronger-than-expected revenue guidance, its stock fell nearly 6%, which may reflect market concerns about future growth, especially in light of the company's adjustments to its full-year revenue expectations.
See More
