Ollie’s Bargain Outlet (NASDAQ: OLLI)

Sector: Food, drug and mass retailers Country of operation: The US Key product categories: Apparel, food and beverages, general merchandise, and health and beauty Annual Metrics [caption id="attachment_127946" align="aligncenter" width="725"] Fiscal year ends close to January 31[/caption]   Summary Founded in 1982 and headquartered in Harrisburg, Pennsylvania, Ollie’s Bargain Outlet is a value retailer of brand name merchandise. The company offers apparel and accessories, books and stationery, consumer electronics, food, health and beauty products, and houseware. Its products are sold under the brand names American Way, Commonwealth Classics, Good Stuff Cheap, Ollie’s, Ollie’s Bargain Outlet, Real Brands! Real Bargains!, Real Brands Real Cheap!, Sarasota Breeze and Steelton Tools. As of January 30, 2021, the company operates 388 retail locations across 25 states in the US. Company Analysis Coresight Research insight: Ollie’s Bargain Outlet offers a diverse range of merchandise at price points almost 70% below the average department store and up to 50% below mass-market retailers, according to the company. The retailer is able to maintain such low prices by opportunistically purchasing deeply discounted, branded or closeout merchandise, primarily from brokers, distributors, manufacturers and retailers. This merchandise includes buybacks, canceled orders, discontinued merchandise, excess inventory, package changes, and overstocks from retailers and major manufacturers. These purchases enable the company to offer consumers value while also recording higher than standard gross margins. Ollie’s Bargain Outlet has performed strongly amid the pandemic, with comparable store sales climbing 15.6% year over year in its fiscal 2021. The company is currently reluctant to move into e-commerce and is instead focusing on further consolidating its position offline. However, the rapid expansion of pandemic-driven online shopping will likely become more deeply ingrained into consumers’ buying habits well beyond the pandemic and we expect this to pose Ollie’s Bargain Outlet a significant challenge going forward.     

Tailwinds	Headwinds
Rapidly growing, extreme value retailer offering a broad selection of “Good Stuff Cheap” Trading down may introduce more shoppers to Ollie’s Bargain Outlet, with potential for high customer retention rates Opportunities for sustained expansion in international markets	Underexposure to high-growth e-commerce Intense competition from other discounters and retail formats, including department stores, drugstores, Internet retailers, mass retailers, and warehouse clubs

Strategy Ollie’s Bargain Outlet has outlined the following key areas to drive growth in sales and profitability: 1. Expand its store base

• Take advantage of the significant white-space opportunity the company believes is available for suitable low-cost, second-generation real estate—which it can infill in existing markets and expand into new, contiguous geographies within the US.

2. Increase brand-name product offerings and value for the customer

• Enhance supplier relationships and develop additional sources to acquire brand-name and closeout products for customers.

3. Leverage and expand the Ollie’s Army customer loyalty program

• Expand the Ollie’s Army member base and increase the frequency of members’ store visits and spending. Enhance distinctive, fun and recognizable marketing programs; build brand awareness; reward member loyalty more extensively; and utilize more sophisticated data-driven targeted marketing.

Revenue Breakdown (FY21)   Company Developments

Date	Development
November 24, 2020	Ollie’s Bargain Outlet announces a partnership with the Marine Toys for Tots Foundation, allowing customers to donate cash or toys at Ollie’s stores to help less fortunate children in their local communities.
February 27, 2020	Ollie’s Bargain Outlet promotes Scott Osborne to VP of store operations, effective immediately.
December 10, 2019	Ollie’s Bargain Outlet appoints John Swygert as CEO, effective immediately.

Management Team

• John W. Swygert—President and CEO
• Jay Stasz—Senior Vice President and CFO
• Kevin McLain—General Merchandise Manager

Source: Company reports