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Ollie's Bargain Outlet Holdings, Inc. (OLLI)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 results were resilient: net sales $667.1M (+8.5% ex-53rd week), comps +2.8%, adjusted EPS $1.19; gross margin rose 20 bps to 40.7% on lower supply chain costs .
  • Against Wall Street: EPS was in line, revenue and EBITDA were modest misses, while gross margin materially beat consensus; management flagged transitory pre-opening/dark rent expenses tied to accelerated store growth and Big Lots conversions as near-term headwinds but 2026 earnings power should strengthen .
  • 2025 guidance initiated: ~75 new stores, net sales $2.564–$2.586B, comps +1–2%, gross margin ~40%, operating income $283–$292M, adj. EPS $3.65–$3.75; includes $5M dark rent ($0.06 EPS) and ~$21M pre-opening expenses; capex $83–$88M .
  • Strategic catalysts: acquisition of 40 former Big Lots leases (63 total to-date) and a new $300M share repurchase authorization; in overlapping markets, early reads show stronger comps vs non-overlap stores; addressable market share opportunity estimated at ~$2.7B ex-furniture .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded to 40.7% (+20 bps YoY) on supply chain improvement; management expects a stable supply chain and sees potential mid-year/back-half closeout benefits if tariffs disrupt full-price retailers .
    • Comps +2.8% driven by balanced transactions and basket; best categories included housewares, food/candy, electronics and room air; December was the strongest month despite a compressed holiday season .
    • Strategic positioning: accelerated new store pipeline (75 in 2025), warm-box conversions (Big Lots, 99 Cents Only) with below-market rents and long-term leases enabling outsized profitability; share buyback expanded by $300M, backed by $429M cash/short-term investments and no revolver borrowings .

  • What Went Wrong

    • SG&A delevered on growth investments and earlier timing of openings; one-time $5.5M equity award modification for Executive Chairman lifted reported SG&A (adj. SG&A +50 bps to 24.6% of sales) .
    • Liquidations at Big Lots created near-term sales headwinds in Jan/Feb, compounded by severe weather and some delay in tax refunds; management did not embed potential comp benefit from closures into 2025 guidance given timing uncertainty .
    • Consumables mix weighed modestly on merchandise margin; management chose to reinvest margin above the 40% algo back into price to drive loyalty rather than hold higher gross margin; shrink remains planned at a higher but stabilizing level .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$578.4 $517.4 $667.1
Diluted EPS ($USD)$0.79 $0.58 $1.11
Gross Margin (%)37.9% 41.4% 40.7%
Operating Margin (%)10.5% 8.6% 13.2%
Comparable Store Sales (%)+5.8% −0.5% +2.8%
Q4 2025 Actual vs EstimatesActualConsensus
Revenue ($USD Millions)$667.1 $674.5*
Adjusted EPS ($USD)$1.19 $1.195*
Adjusted EBITDA ($USD Millions)$109.4 $108.0*
Gross Margin (%)40.7% 39.85%*

Values with asterisks retrieved from S&P Global.

Q4 YoY ComparisonQ4 2024Q4 2025
Revenue ($USD Millions)$648.9 $667.1
Diluted EPS ($USD)$1.23 $1.11
Adjusted EPS ($USD)$1.23 $1.19
Gross Margin (%)40.5% 40.7%
Comparable Store Sales (%)+3.9% +2.8%

KPIs

KPIQ4 2025
Ollie’s Army Members (M)15.1
% Sales to Ollie’s Army>80%
Stores (End of Q4)559
New Stores (Q4)13
Pre-opening Expenses ($M)$4.8
Adjusted EBITDA ($M)$109.4
Adjusted EBITDA Margin (%)16.4%
Cash + ST Investments ($M, FY end)$428.7
Inventory ($M, FY end)$552.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
New Store OpeningsFY 2025N/A~75 New
Net Sales ($USD Billions)FY 2025N/A$2.564–$2.586 New
Comparable Store Sales (%)FY 2025N/A+1% to +2% New
Gross Margin (%)FY 2025N/A~40% New
Operating Income ($USD Millions)FY 2025N/A$283–$292 New
Adjusted Net Income ($USD Millions)FY 2025N/A$225–$232 New
Adjusted EPS ($USD)FY 2025N/A$3.65–$3.75 New
Annual Effective Tax Rate (%)FY 2025N/A25% New
Diluted Shares (M)FY 2025N/A~62 New
Capital Expenditures ($USD Millions)FY 2025N/A$83–$88 New
Pre-opening Expenses ($USD Millions)FY 2025N/A~$21 (incl. ~$5 dark rent) New
Interest Income ($USD Millions)FY 2025N/A~$17 New
Share Repurchase AuthorizationMulti-year$32.7M remaining prior plan New $300M authorization (through 3/31/2029) Raised Capital Return Capacity

Quarterly Comp Cadence (qualitative): 1H comps at lower end of +1–2%; 2H comps toward mid/high end as Big Lots closures ease and weather normalizes .

Earnings Call Themes & Trends

TopicQ2 2025 (Previous Mentions)Q3 2025 (Previous Mentions)Q4 2025 (Current Period)Trend
Supply ChainDC Princeton IL startup driving capability; margin mix headwind in Q2; investments to support growth Gross margin +100 bps on lower supply chain costs; DC capacity to 750 stores Gross margin +20 bps; supply chain stable; benefit from DC “burn-in” Favorable, stabilizing
Tariffs/MacroMonitoring tariffs; flexible buying model Tariff disruption could create closeout opportunities; price follower stance Short-term small impact; expect back-half buying opportunity; ~50% DI exposure to China; maintain price gaps Near-term headwind, medium-term opportunity
Product PerformanceMix shifts impacted gross margin Strength in consumables; seasonal softness from warm weather; Black Friday strong Best categories: housewares, food/candy, electronics, room air; big-ticket softer Consumables strength persists
Regional Expansion—Midwest focus leverages Princeton DC Wisconsin conversions strong; warm-box advantage Accelerating in Midwest
Consumer Behavior—Younger cohort growth; loyalty >80% sales Consumer under pressure; trade-down continues; higher-income retention Value seeking intensifies
Big Lots Closures/Conversions—~550 closures announced; ~50 bps comp headwind; acquired 17+7 leases Acquired 40 more leases (63 total); comps stronger in overlap markets; ~$2.7B addressable opportunity ex-furniture Major share gain runway
Private Label Credit Card—Pilot in ~70 PA stores; higher spend, approvals strong Rolled to most stores; chainwide by end of Q1; higher basket for cardholders Rollout accelerating

Management Commentary

  • “Selling good stuff cheap has been our purpose since our founding over 42 years ago, and this remains our passion and motivation to this day.” — Eric van der Valk, CEO .
  • “Our current plan is to open approximately 75 new stores this year… The dark rent is expected to be around $5 million for the year or $0.06 to adjusted earnings per share.” — Robert Helm, CFO .
  • “We think there is a unique opportunity to take on some of these assets in a manner that strengthens our competitive positioning, broadens our footprint, and bolsters shareholder returns for years to come.” — Eric van der Valk on market closures .

Q&A Highlights

  • Consumer and comps cadence: Q1 started sluggish amid weather, Big Lots liquidation, and tax refund timing; momentum improved into March; 1H comps near low end of +1–2%, 2H toward mid/high end .
  • Big Lots liquidation impact: Larger-than-planned liquidation created headwinds in Jan/Feb; post-liquidation comps stepped up; overlap markets comping low-to-mid single-digits better; ~$2.7B addressable share excluding furniture with ~80–85% fleet overlap .
  • Gross margin/SG&A: Reinvest margin above 40% into price; supply chain flattish; shrink softening; SG&A leverage near midpoint at ~+1–2% comp; wage pressures easing .
  • Pre-opening/dark rent: Expect ~$21M pre-opening in FY25 with ~2/3 in 1H; dark rent $5M ($0.06 EPS); Big Lots bankruptcy leases bear ~4 months average dead rent per store .
  • Credit card: Chainwide rollout by end of Q1; cardholders show materially higher basket than standard loyalty customers .

Estimates Context

  • Q4 2025: EPS in line ($1.19 actual vs $1.195 consensus); revenue miss ($667.1M vs $674.5M), EBITDA miss ($109.4M vs $108.0M consensus, actual modestly above), gross margin beat (40.7% vs 39.85%). Bold outcomes: EPS in line, Revenue miss, Gross margin beat. Values retrieved from S&P Global and company filings .
  • FY 2025 setup: Guidance implies low double-digit adjusted earnings growth framework longer term, with front-loaded openings and dark rent suppressing near-term flow-through; consensus adjustments likely to reflect lighter 1H EPS and stronger 2H on easing comps and potential share capture from closures .

Key Takeaways for Investors

  • Gross margin resilience and price reinvestment strategy sustain the 40% algo while supporting traffic and loyalty; shrink pressures appear to be easing on recent counts .
  • Near-term EPS headwinds from pre-opening and dark rent are transitory; accelerated growth and warm-box conversions (Big Lots, 99 Cents Only) should lift 2026 EPS growth to mid/high teens potential per CFO framing .
  • Big Lots closures present a unique share gain opportunity; early overlap markets show comp uplift; management sizes addressable sales at ~$2.7B ex-furniture; OLLI’s ~80–85% geographic overlap enhances capture odds .
  • Balance sheet optionality (cash/short-term investments $428.7M; no revolver borrowings) plus the new $300M buyback underpin capital returns alongside growth investments — a constructive setup for both offense and defense .
  • Consumables strength continues driving frequency; big-ticket categories are softer; expect category mix to weigh modestly on merch margin, offset by supply chain/process productivity .
  • Tariffs and disruption are potential tailwinds to deal flow in the back half; the flexible “price follower” model mitigates near-term import cost risk while positioning OLLI to source compelling closeouts .
  • Trading implications: Watch 1H comp cadence at low end, flow-through impacts from dark rent/pre-opening, and conversion ramp timing; stock catalysts include proof of comp acceleration in overlap markets, conversion unit productivity, and gross margin stability against tariff headlines .
Notes: Non-GAAP adjustments include a one-time $5.5M accelerated equity award expense in Q4 impacting reported SG&A and operating income; adjusted EPS excludes this and excess tax benefits related to stock-based compensation **[1639300_d79802b38aed4a2ca3144804d438dc95_2]** **[1639300_d79802b38aed4a2ca3144804d438dc95_15]**.