Ollie's Bargain Outlet (OLLI) ZACKS·2024-10-30 17:55Core Viewpoint - Ollie's Bargain Outlet Holdings, Inc. (OLLI) is expanding its footprint by acquiring leases for eight former Big Lots locations, which is part of Big Lots' restructuring efforts involving the closure of 170 stores [1][2]. Expansion and Growth Strategy - With the new acquisitions, Ollie's Bargain will hold a total of 15 former Big Lots store leases, providing valuable opportunities due to advantageous lease terms and prime locations [2]. - The ongoing closure of Big Lots stores allows Ollie's Bargain to streamline its operations and focus on enhancing productivity while minimizing pre-opening costs [3]. - For fiscal 2024, Ollie's plans to open 50 new stores and has two planned closures, with a long-term goal of expanding to 1,300 stores across the United States [4]. Business Model and Performance - Ollie's Bargain operates on a "buying cheap, selling cheap" model, which has resonated well with value-conscious customers, leading to positive customer feedback and a diverse clientele [5]. - The company has achieved nine consecutive quarters of growth in comparable store sales, with a 5.8% increase in the second quarter of fiscal 2024 [7]. - OLLI shares have gained 24.6% in the past six months, outperforming the industry and the S&P 500 [8]. Financial Metrics and Valuation - OLLI's forward 12-month price-to-earnings ratio is 25X, which is higher than the industry's ratio of 18.6X, indicating a premium valuation compared to expected earnings growth [10]. - The company has prioritized cost efficiency and has maintained solid profit margins despite market fluctuations [6]. Customer Engagement and Loyalty - Ollie's Army, the customer loyalty program, has strengthened customer connections and reinforced the company's competitive edge in the retail market [6].