On Thursday, Craig-Hallum maintained a Buy rating on Ollie’s Bargain Outlet (NASDAQ:OLLI) and raised its price target to $100 from $98. The firm noted the retailer’s strong fourth-quarter results, which showed better-than-expected same-store sales (SSS) and earnings per share (EPS), driven by improved gross margin (GM).
Ollie’s Bargain Outlet’s fourth-quarter performance was notable for beating SSS forecasts and achieving higher EPS due to higher GM. The company’s fiscal 2024 guidance assumes a full return to its long-term growth pattern, expecting comparable store sales to increase 1% to 2% in addition to a significant decline in fiscal 2023.
In addition, Ollie’s plans to open 50 new stores, although openings will be more concentrated in the second half of 2024, pushing the sales forecast slightly below consensus.
The company’s momentum in SSS not only continues, but is forecast to exceed the high end of full-year guidance in the first quarter. Ollie’s also increased the number of long-term stores from 1,050 to 1,300. This expansion strategy represents the potential for 2.5 times the current number of stores and adds more than $1 billion to its long-term annual sales forecast.
Craig-Hallum’s position on Ollie’s Bargain Outlet is that it remains a growth leader in the retail sector. The firm expects SSS’s continued momentum and commitment to a long-term growth model to lead to an increase in the stock’s multiple.
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