Ollie's Q3 2026: Contradictions Emerge on Store Performance, Big Lots Impact, Consumer Sentiment, and Tariff Effects

Date of Call: None provided

Financials Results

• Revenue: $614.0M for Q3, up 19% YOY
• EPS: $0.75 adjusted EPS for Q3, up 29% YOY (adjusted net income $46M)
• Gross Margin: 41.3%, down 10 bps YOY
• Operating Margin: 11.9% adjusted EBITDA margin, up 30 bps YOY

Guidance:

• FY2025 net sales raised to $2.648B–$2.655B.
• FY2025 comparable store sales growth 3.2%–3.5%.
• FY2025 gross margin ~40.3% (company-stated range).
• FY2025 operating income $293M–$298M; adjusted net income $236M–$239M; adjusted EPS $3.81–$3.87.
• Assumptions: D&A $55M, preopening ~$25M, annual effective tax rate ~24%, diluted shares ~62M, capex ~$88M.
• Q4 comp outlook +2% to +3%; no more store openings in FY2025; targeting 75 new stores in 2026.

Business Commentary:

* Record Store Openings and Growth: - Ollie's Bargain Opened a record 32 new stores in the third quarter and 86 for the year, representing 18% growth in store count. - This acceleration in store openings was driven by the opportunity to secure attractive second-generation real estate sites in a challenging retail environment, coupled with long-term consolidation in the sector.

• Strong Financial Performance:
• Net sales increased by 19% to $614 million, with comparable store sales growth of 3.3%.

• The growth was driven by new store openings and an increase in transactions, partially offset by a decrease in average ticket price due to strategic pricing and strong deal flow.

• Customer Acquisition and Loyalty Program Expansion:

• New memberships in the Ollie’s Army Loyalty Program increased by 30% year-over-year, with the total number of members reaching 16.6 million.

• This growth was attributed to customer acquisition strategies and enhanced value propositions within the loyalty program, particularly among younger and higher-income groups.

• Marketing Strategy Shift:

• Ollie's is accelerating the shift from traditional print media to digital platforms, leading to stronger than expected results in October despite reducing print campaigns.
• This strategic shift is aimed at leveraging digital channels for targeted marketing, enhancing customer engagement, and optimizing media spend.

Sentiment Analysis:

Overall Tone: Positive

• Management: "We are raising our full year sales and earnings outlook." Executives highlighted record new-store openings (32 in Q3; 86 YTD), accelerating membership growth, improved margins, and that QTD trends are running ahead of guidance.

Q&A:

• Question from Chuck Grom (Gordon Casket): I was hoping you could frame out the state of your consumer in light of your basket commentary...and can you talk about your vendor relationships, both on the closeout and steps to drive deeper CPG relationships?
  Response: Management: Upper- and upper-middle-income customers are strong; CPG closeouts and abandoned inventory have opened new vendor relationships and materially helped customer acquisition.

• Question from Matthew Boss (JPMorgan): Could you elaborate on components of the Q3 comp, growth in transactions vs Q2, drivers of basket decline, cadence of monthly comps, and trends before/after Black Friday?
  Response: Management: Q3 comps +3.3% driven by mid-single-digit transaction growth; basket/AUR down high-single-digits in Q3 but has turned to positive low-single-digits quarter-to-date; momentum strengthened in October and carried into November.

• Question from Steven Zaccone (Citi): Can you talk about growth with new customers and overall retention? And how has planning for Ollie's Army Night changed based on June learnings?
  Response: Management: Best acquisition period ever with strong retention/reactivations; younger (18–34) and higher-income cohorts grew fastest; earlier start time increased foot traffic but no incremental guidance baked in.

• Question from Bradley Thomas (KeyBanc Capital Markets): You did a nice job driving leverage with many new stores — what SG&A levers are you pulling and how to think about 2026?
  Response: Management: Marketing optimization (shift to digital), scale benefits and annualization of new stores will drive leverage; expect double-digit top-line and mid-teens bottom-line growth in 2026 assuming stable environment.

• Question from Lorraine Hutchinson (Bank of America): How are new stores performing, especially bankruptcy-location conversions, and how are soft openings working?
  Response: Management: New store performance strong (~85% meeting plan); bankruptcy (e.g., 99 Cents Only) soft-open approach flattened the reverse waterfall, improving second-year comps.

• Question from Scott Ciccarelli (Truist): Update on performance near closed Big Lots locations and any operational stresses from accelerated openings?
  Response: Management: Stores within ~5 miles of closed Big Lots saw low- to mid-single-digit lifts; operational stresses mitigated via soft openings, paced rollout, and added infrastructure—execution was demanding but successful.

• Question from Anthony Chukumba (Loop Capital Markets): Are seasonal/holiday gifts direct-sourced from Asia vs closeout, and what are margin implications?
  Response: Management: Seasonal/gifts are a mix of direct-sourced and closeout; increased scale and leverage improved margins—direct sourcing is not a margin headwind.

• Question from Mark Carden (UBS): How are you thinking about the traditional print flyer role versus shifting to digital?
  Response: Management: Continue flyer-event strategy but materially shift spend from print into digital; print (shared mail) expected to decline as digital targeting improves ROI.

• Question from Simeon Gutman (Morgan Stanley): Can you walk through Q4 comp expectations (QTD ahead of guide) and size tariff impact on Q3/Q4 gross margins?
  Response: Management: QTD comps are ahead due to sustained transaction strength and improved AUR; Q4 gross margin planning conservatively (~mid-39% historically) with tariffs already assumed in guidance.

• Question from Ed Kelly (Wells Fargo): Early thoughts on 2026 comp build — will Big Lots tailwind normalize and should we expect a 1%–2% comp guide?
  Response: Management: Plan to remain on long-term algo; initial comp guide likely positive 1%–2% for 2026 while acknowledging tailwinds (Big Lots market-share capture, tax timing) that could help upside.

• Question from Kate McShane (Goldman Sachs): For the 2026 pipeline of 75 stores, drivers and any differences in the new-store pipeline or real-estate environment?
  Response: Management: 75-store plan is set with many leases signed; abundant warm-box Big Lots opportunities (many already identified) and sufficient vacancy to sustain front-loaded growth.

• Question from Jeremy Hamblin (Craig-Hallum Capital Group): Expectations for preopening expense in 2026 and margin impact of DC expansions; and tariff reduction effects next year?
  Response: Management: Preopening will normalize after removing this year's dark-rent; DC expansions expected to have nominal margin impact and be offset; tariff changes will be managed via price adjustments to maintain price gaps, not material unexpected margin swings.

Contradiction Point 1

Store Performance and Growth Strategy

It involves differing perspectives on the performance of new stores and the company's growth strategy, which could impact investor expectations and strategic planning.

How are stores in former Big Lots markets performing, and have there been operational stresses with accelerated store openings? - Scott Ciccarelli (Truist)

20251209-2026 Q3: Stores in closed Big Lots markets performed well, with strong growth in new markets. - Robert Helm(CFO)

Update on Big Lots store performance and potential reverse new store impact? - Scot Ciccarelli (Truist)

2026Q2: Stores in former Big Lots markets performing well, with up to mid-single-digit comps in some locations. - Robert Helm(CFO)

Contradiction Point 2

Impact of Big Lots Store Closures

It concerns the impact of Big Lots store closures on the business, which can affect strategic decisions and revenue projections.

How are Big Lots stores in closed markets performing, and have any operational stresses occurred due to accelerated store openings? - Scott Ciccarelli (Truist)

20251209-2026 Q3: Big Lots closed stores outperform the rest of the chain. - Robert Helm(CFO)

What is the impact of Big Lots store closures, and what are the key learnings from operations and talent acquisition? - Chuck Grom (Gordon Haskett)

2025Q4: Big Lots impact was not as expected; liquidation headwinds not anticipated. - Robert Helm(CFO)

Contradiction Point 3

Impact of Big Lots Liquidations and Store Performance

It involves differing perspectives on the impact of Big Lots liquidations and the performance of stores in former Big Lots markets, which could affect strategic decisions and expectations.

How are stores in closed Big Lots markets performing, and have there been operational stresses from accelerated openings? - Scott Ciccarelli (Truist)

20251209-2026 Q3: Big Lots closed stores outperform the rest of the chain. - Robert Helm(CFO)

Can you quantify the impact of Big Lots liquidations in Q1 and any visibility on comp lift from former Big Lots stores? - Peter Jacob Keith (Piper Sandler)

2025Q1: The liquidation of about 200 Big Lots stores during Q1 had a 50 basis point impact on comps for those stores, contributing to a 25 basis point headwind overall. Former Big Lots stores that closed earlier are seeing low to mid-single-digit lift versus the rest of the chain, with strong transaction trends and Ollie's Army sign-ups. - Robert Helm(CFO)

Contradiction Point 4

Consumer Sentiment and Economic Impact

It involves differing views on the state of the consumer, particularly in lower-income segments, which could impact sales and strategic decisions.

What is the current state of your consumer based on your basket analysis, and what steps are you taking to strengthen CPG relationships? - Chuck Grom (Gordon Casket)

20251209-2026 Q3: The consumer is strong in higher income and upper middle-income segments. We see a little softness in lower incomes due to government shutdown disruptions. - Eric van der Valk(CEO)

What is the current status of closeout availability? Are there any current concerns across product categories? What opportunities do you see from this disruption in the second half of this year or next year? - Matthew Robert Boss (JPMorgan)

2025Q1: We've seen a very strong deal flow over the past several months. Inventory was up 16% at the end of Q1, indicating a strong deal flow. Retail bankruptcies and store closings have provided access to product pipelines that weren't available before. - Eric van der Valk(CEO)

Contradiction Point 5

Effect of Tariffs on Business

It involves differing perspectives on the impact of tariffs on the business, which could affect financial forecasts and strategic decisions.

What are Q4 comp expectations and the impact of tariff-related expenses on Q3 gross margins? - Simeon Gutman (Morgan Stanley)

20251209-2026 Q3: Tariff-related expenses impacted Q3, but the company manages price gaps and adjusts for market changes. - Robert Helm(CFO)

How is first-quarter sales cadence shaping up and what market-share opportunities exist from Big Lots closures? - Matthew Boss (J.P. Morgan)

2025Q4: Tariffs disrupt pricing, but Ollie's thrives on disruptions. Potential for excess inventory that can be purchased later. - Eric van der Valk(CEO)