Ollie's Bargain Q1 Earnings on Deck: Key Trends Investors Should Track

Ollie's Bargain Outlet is expected to report an 11% year-over-year increase in Q1 revenues to $564.7 million, driven by its loyalty program, store expansion, and vendor relationships; however, EPS is projected to decline 4.1% to $0.70 due to rising costs associated with expansion and a sluggish start to the quarter, leading to an anticipated 160 basis point contraction in operating margin. Despite the expected earnings decline, Zacks' model predicts an earnings beat based on a positive Earnings ESP of +4.29% and a Zacks Rank #3.

Analysis

Ollie's Bargain Outlet Holdings, Inc. (OLLI) is poised to report its first-quarter fiscal 2025 results with an anticipated 11% year-over-year increase in revenues to $564.7 million, primarily fueled by its robust customer loyalty program, Ollie's Army, which boasts over 15.1 million active members contributing to over 80% of sales, and an aggressive store expansion strategy, including the planned opening of 21 new stores in Q1. This top-line growth is also supported by strong vendor relationships and an expected comparable store sales growth of 1%. However, the company's bottom line is projected to contract, with earnings per share estimated at $0.70, a 4.1% decline from the prior year. This anticipated decrease in profitability is attributed to elevated pre-opening and dark rent expenses associated with its rapid expansion, rising SG&A costs, a sluggish start to the quarter, and challenging year-over-year comparisons, which are collectively expected to result in a 160 basis point contraction in the operating margin. Despite these headwinds, a Zacks model combining a positive Earnings ESP of +4.29% and a Zacks Rank #3 (Hold) suggests a higher probability of an earnings beat for OLLI. The company's ability to successfully integrate new locations, including former "99 Cents Only" and Big Lots stores, underscores the scalability of its business model, though near-term margin pressures remain a key concern.

Key Decisions for Investors

• Investors should monitor Ollie's upcoming Q1 earnings for confirmation of the projected 11% revenue growth and assess the actual impact of expansion costs on the operating margin, particularly against the anticipated 160 basis point contraction.
• Given the Zacks model prediction of an earnings beat (Earnings ESP +4.29%), consider the potential for a positive short-term reaction if earnings per share surpass the $0.70 estimate, despite the expected year-over-year decline.