Ollie’s Bargain Outlet: A High-Growth Retail Play with Strong Earnings, Margin Expansion, and Aggressive Store Openings

In the fiercely competitive discount retail sector, Ollie’s Bargain Outlet (OLLI) has emerged as a standout performer, leveraging retail disruptions and a value-conscious consumer climate to drive exceptional growth. With a 16.8% year-over-year increase in store count to 613 locations across 34 states as of August 2025 and a revised 2025 store opening target of 85 new units, the company is outpacing peers like Dollar Tree and Dollar General while expanding margins and earnings [1]. For investors seeking a high-conviction retail play, Ollie’s offers a compelling case for continued outperformance in fiscal 2025.

Financial Performance: Earnings and Margin Resilience

Ollie’s demonstrated resilience in Q4 2024 despite margin compression, reporting adjusted earnings per share (EPS) of $1.19, a 15.1% increase from $1.03 in Q4 2023 [2]. While operating margins dipped 100 basis points to 14.0% due to higher SG&A expenses and pre-opening costs, the company reversed this trend in Q2 2025, expanding operating margins by 80 basis points to 11.3% [3]. This improvement was driven by lower supply chain costs and a 200-basis-point gross margin increase to 39.9% [4].

The company’s fiscal 2025 guidance further underscores its strength, with net sales projected between $2.631 billion and $2.644 billion and adjusted EPS expected to range from $3.76 to $3.84 [5]. These figures outpace Dollar Tree’s Q1 2025 adjusted EPS guidance of $5.15–$5.65 [6], despite Dollar Tree’s larger scale, highlighting Ollie’s efficiency in converting expansion into profitability.

Store Expansion: Capitalizing on Retail Disruption

Ollie’s aggressive store growth is fueled by its strategic acquisition of 40 former Big Lots locations and its ability to rapidly convert underutilized retail assets into profitable outlets. In Q2 2025 alone, the company opened 29 new stores, a pace that outstrips Dollar Tree’s 85 rebranded 99 Cents Only Stores in 2024 [7]. This approach has allowed Ollie’s to bypass the high costs of greenfield development while tapping into markets with pent-up demand for value shopping.

By contrast, Dollar General’s expansion has slowed, with a mere 2.9% year-over-year traffic growth in July 2025, down from 12.2% in 2024 [8]. Meanwhile, Dollar Tree’s decision to divest Family Dollar—a brand that saw 4.0% traffic declines in 2024—reflects the challenges of managing a fragmented portfolio [9]. Ollie’s focused strategy on a single, high-growth banner positions it to avoid such pitfalls.

Loyalty Program and Customer Retention

Ollie’s Army, the company’s loyalty program, has become a key growth driver. Membership surged to 16.1 million in Q2 2025, a 10.6% quarter-over-quarter increase [10]. This growth not only enhances customer retention but also provides valuable data to refine inventory and marketing strategies. In contrast, Dollar Tree’s reliance on multi-price formats (e.g., $1, $3, $5) has yielded mixed results, with comp sales growth in Q1 2025 driven largely by traffic increases rather than basket size [11].

Why Ollie’s Outperforms

Ollie’s success stems from its ability to balance rapid expansion with margin discipline. While peers like Dollar Tree face margin pressures from store closures and impairment charges [12], Ollie’s has maintained a lean cost structure. Its 2025 store opening target of 85 units—up from 75—reflects confidence in its model, supported by a $300 million share repurchase program to reward shareholders [13].

Investment Thesis

Ollie’s is uniquely positioned to capitalize on the ongoing retail shakeout. With a clear path to 1,050 stores by 2030 and a loyal customer base, the company’s combination of disciplined expansion, margin resilience, and strategic asset acquisition makes it a top-tier retail investment. As consumer demand for value persists, Ollie’s is not just surviving—it’s thriving.

Source:
[1] Ollie's Bargain Outlet Holdings, Inc. Announces Second Quarter Fiscal 2025 Results [https://finance.yahoo.com/news/ollie-bargain-outlet-holdings-inc-113000452.html]
[2] Ollie's Bargain Outlet (OLLI) Earnings Date and Reports 2025 [https://www.marketbeat.com/stocks/NASDAQ/OLLI/earnings/]
[3] Ollie's Bargain Outlet Holdings, Inc. Reports Fourth Quarter ... [https://investors.ollies.com/news-releases/news-release-details/ollies-bargain-outlet-holdings-inc-reports-fourth-quarter-and-4]
[4] Ollie's Bargain Outlet: Navigating Margin Compression and ... [https://www.ainvest.com/news/ollie-bargain-outlet-navigating-margin-compression-speculative-valuation-saturated-retail-sector-2508/]
[5] Ollie's Bargain Outlet Holdings, Inc. Announces Second ... [https://www.stocktitan.net/news/OLLI/ollie-s-bargain-outlet-holdings-inc-announces-second-quarter-fiscal-a1d2o7qbcalw.html]
[6] Dollar Tree, Inc. Reports Results for the First Quarter Fiscal ... [https://corporate.dollartree.com/news-media/press-releases/detail/287/dollar-tree-inc-reports-results-for-the-first-quarter]
[7] Dollar Tree Has Averaged One New Store Opening Per Day [https://jasonmiller15.substack.com/p/dollar-tree-has-averaged-one-new]
[8] Where Can Dollar General & Dollar Tree Still Expand? [https://www.placer.ai/anchor/articles/where-can-dollar-general-dollar-tree-still-expand]
[9] Dollar Tree earnings call reveals sale of Family ... [https://www.usatoday.com/story/money/2025/03/26/dollar-tree-family-dollar-sale-more-stores/80730837007/]
[10] Ollie's Bargain Outlet Holdings, Inc. Announces Second ... [https://www.stocktitan.net/news/OLLI/ollie-s-bargain-outlet-holdings-inc-announces-second-quarter-fiscal-a1d2o7qbcalw.html]
[11] Dollar Tree Q1 2025 slides: Comp sales accelerate to 5.4% ... [https://www.investing.com/news/company-news/dollar-tree-q1-2025-slides-comp-sales-accelerate-to-54-as-margins-face-pressure-93CH-4080151]
[12] Dollar General Corporation Reports Fourth Quarter and ... [https://investor.dollargeneral.com/websites/dollargeneral/English/2120/us-press-release.html?airportNewsID=0000fc06-eaf0-41b3-9dc6-9a2e18a26db1]
[13] Ollie's Bargain Outlet Stock Surges on Buyback, Store ... [https://www.investopedia.com/ollies-bargain-outlet-stock-surges-on-buyback-store-expansion-11699718]