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 recognized the retailer's robust fourth-quarter results, which featured better-than-expected same-store sales (SSS) and an earnings per share (EPS) beat, attributed to gross margin (GM) improvements.
Ollie's Bargain Outlet's performance in the fourth quarter was notable for surpassing SSS forecasts and achieving an EPS increase due to higher GM. The company's guidance for fiscal year 2024 suggests a full return to its long-term growth pattern, expecting a 1% to 2% comparable store sales increase on top of the substantial SSS in fiscal year 2023.
Additionally, Ollie's has planned to open 50 new stores, although the openings are more concentrated in the second half of 2024, leading to sales guidance that is slightly below consensus.
The company's momentum in SSS is not only holding but is also projected to exceed the upper range of the full-year forecast in the first quarter. Ollie's has also increased its long-term store target from 1,050 to 1,300 locations. This expansion strategy signifies a potential to grow the store count by 2.5 times from the current number and adds over $1 billion to the long-term annual sales forecast.
Craig-Hallum's stance on Ollie's Bargain Outlet is that it remains a leading growth narrative within the retail sector. The firm anticipates that the ongoing SSS momentum and adherence to the long-term growth model will lead to an expansion of the stock's multiple.
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