Ollie's Bargain Outlet Q2 2026 Earnings Report

Ollie's Bargain Outlet EPS Results

• Actual EPS: $0.99
• Consensus EPS: $0.91
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: $0.78

Ollie's Bargain Outlet Revenue Results

• Actual Revenue: $679.56 million
• Expected Revenue: $658.03 million
• Beat/Miss: Beat by +$21.53 million
• YoY Revenue Growth: +17.50%

Ollie's Bargain Outlet Announcement Details

• Quarter: Q2 2026
• Date: 8/28/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 28, 2025
• Conference Call Time: 8:30AM ET

Ollie’s Bargain Outlet is an American discount retailer specializing in closeout merchandise and surplus inventory across a broad range of categories. The company operates a no-frills retail format that offers branded and private-label products at significant markdowns. Its merchandise mix typically includes housewares, electronics, health and beauty items, food products, beauty supplies, books, toys, and seasonal goods.

Founded in 1982 by Oliver E. “Ollie” Rosenberg, the company is headquartered in Harrisburg, Pennsylvania. Since opening its first store, Ollie’s has grown steadily through a combination of company-owned expansion and selective acquisitions, going public in 2015. The retailer now operates more than 450 stores across over 25 states, primarily serving customers in the Southeast, Mid-Atlantic and Midwest regions.

Ollie’s emphasizes a treasure-hunt shopping experience, with new product arrivals each week reflecting overstock and closeout deals sourced directly from manufacturers and wholesalers. This model allows the company to pass savings on to price-conscious consumers seeking brand-name goods at deep discounts.

Leadership at Ollie’s includes founder Oliver Rosenberg as Executive Chairman and Jay Denton as President and Chief Executive Officer. Management maintains a focus on disciplined cost control, efficient distribution, and community engagement, aiming to sustain growth while preserving the company’s value-oriented identity.

Ollie's Bargain Outlet Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q2 performance drove a raise in full-year guidance, with net sales, comparable store sales and adjusted EPS all exceeding previous targets.
• Positive Sentiment: Accelerated unit growth as Ollie’s opened 54 stores in H1 (29 in Q2), hit its 600th store milestone and raised its 2025 new-store target to 85 locations.
• Positive Sentiment: Ollie’s Army loyalty membership grew to 16.1 million (up 10.6%), and the revamped member-only Ollie’s Days event added ~100 basis points to Q2 comps and boosted new member sign-ups by ~60%.
• Positive Sentiment: Gross margin expanded 200 basis points to 39.9% in Q2, driven by lower supply-chain costs, stronger deal flow and reduced shrink.
• Negative Sentiment: SG&A rose 60 basis points to 25.8% of sales, reflecting higher medical and casualty claims and increased dark rent on bankruptcy-acquired stores.

Presentation

[Operator]

Good morning, and welcome to Ollie's Bargain Outlet's Conference Call to discuss Financial Results for the 2025. Please be advised that this call is being recorded and the reproduction of this call in whole or in part is not permitted without the express written authorization of Ollie's. Joining today's call from Ollie's management are Eric Vanderbug, President and Chief Executive Officer and Robert Helm, Executive Vice President and Chief Financial Officer. Certain comments made on today's call may constitute forward looking statements, and these are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements.

[Operator]

Those risks and uncertainties are described in the company's earnings press release and filings with the SEC, including the annual report on Form 10 ks and quarterly report on Form 10 Q. Forward looking statements made today are as of the date of this call, and the company does not undertake any obligation to update these statements. On today's call, the company will also be referring to certain non GAAP financial measures. Reconciliation of those most closely comparable GAAP financial measures to the non GAAP financial measures are included in the company's earnings press release. With that, I will now turn the call over to Mr. Vanderbug. Please go ahead, sir.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Good morning. Thank you for joining us today. We had a very strong second quarter and we are operating with the wind in our sails. New store openings, total sales, comparable store sales and adjusted earnings were all ahead of our expectations and we are raising our full year outlook across the board. Our performance of the quarter is the result of the hard work and commitment of our entire team.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We are driving the business to new heights through improved planning, coordination and execution across the organization. We are delivering against our strategic priorities, laying the groundwork for future growth and driving strong consistent results. With so many retailers closing stores or going bankrupt in the past year, there's an opportunity to gain market share through expanding our footprint, acquiring new customers and turning these customers into loyal Ollie's Army members. This is our flywheel, our formula for growth, and we are all over it. Everyone loves a bargain, and it's our mandate to bring great deals to consumers from coast to coast.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We have a tremendous opportunity ahead to continue opening new stores and gain market share. This is not growth at any cost however. We are committed to profitable growth and we are able to do this through a flexible store model that can be adapted to generate strong returns across different geographies, demographics and store spaces. In the first six months of the year, we opened 54 new stores. This is over four times the number of stores we opened in the same period last year.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And in just six months, we have exceeded our previous full year unit growth high watermark. During the second quarter, we celebrated the opening of our six hundredth store in New Hampshire and entered our 30 and thirty fourth states. With our new stores continue to perform ahead of our expectations and are benefiting from a number of factors, including improved planning and execution, a soft opening schedule and what we call the warm box dynamic. We are committed to delivering double digit annual unit growth moving forward and have invested in the necessary people and process to deliver this. The bankruptcy filing and subsequent store closures of a number of retailers over the past year have provided a unique opportunity to pick up additional stores that are well suited for our business model.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

The team has done an excellent job prioritizing the opening of these locations while advancing our pipeline of organic store openings and we are ahead of plan for the first half. As a result, we are raising our new store target and now expect to open an additional 10 stores for a total of 85 this year. We are equally focused on new customer acquisition and demonstrating our deep appreciation for our most loyal customers. We have some of the most dedicated and passionate customers in this business and there's an opportunity to strengthen this connection and grow lifetime value. Ollie's Army members shop more frequently and spend over 40% more per visit than non members.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

They account for more than 80% of our sales and are now more than 16,000,000 strong. This is a devoted group of deal seeking bargain odds who take pride in saving money. We are fiercely committed to serving this group and enhancing the value proposition of the Ollie's Army program. We made a deliberate and strategic change in the second quarter that did just that. We revamped our annual Ollie's Days event to include an exclusive member only shopping night and we limited the promotions for the week to Ollie's Army members.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

By all accounts, the reimagine event was a huge success and exceeded all expectations. First and most importantly, we rewarded our Ollie's Army members and acquired an abundance of new members. Second, the event was accreted to sales and earnings. Before I turn the call over to Rob, let me quickly call milestones. Ollie's celebrated its forty third year in business last month.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

The company opened its first store in Mechanicsburg, Pennsylvania in July 1982. We also celebrated our ten year anniversary as a public company and learned that Ollie's is one of the best performing retail IPOs over a ten year period since NASDAQ began tracking this in 2014. We appreciate our shareholders for putting their trust in us for the past ten years. We also value our partners who make this business happen, especially our merchandise suppliers, vendors and manufacturers. We greatly appreciate the deep and long lasting relationships. Now let me turn the call over to Rob.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Thanks, Eric, and good morning, everyone. We are very pleased with our second quarter results and the continued momentum in our business. New store openings, new store performance, comparable store sales, total sales and earnings were all ahead of our expectations for the quarter and we're raising our sales and earnings outlook for the fiscal year. Accelerating new unit growth and expanding the Ali's Army loyalty program are two big priorities this year. We are delivering on both of these initiatives.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

We opened 29 new stores in the second quarter and ended the period with a total of six thirteen stores, an increase of 17% year over year. Both our new store openings and new store performance were ahead of our plans for the quarter and first half of the year. Eric spoke to a number of changes to our Ollie's Days event in June. These and other enhancements to our loyalty program are working. We drove strong customer acquisition in a way that benefits sales and protected margin.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Ollie's Army members increased 10.6% to 16,100,000 and we estimate that the revamped Ollie's Days event added approximately 100 basis points to comp store sales in the quarter. Now let me run you through our P and L numbers. Net sales increased 18% to $680,000,000 driven by new store openings and comparable store sales growth. Comparable store sales increased 5% and and was driven by an increase in transactions. We saw strong demand for consumer staples throughout the quarter and demand for seasonal items accelerated as the weather normalized in June and July.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Our top five performing categories were Lawn and Garden, Hardware, Food, Housewares and Domestics. Gross margin increased 200 basis points to 39.9% and this was better than our expectations. Lower supply chain costs and higher merchandise margins were the primary drivers of the increase. Benefiting merchandise margins in the quarter was strong deal flow and lower shrink. SG and A expense as a percentage of net sales increased 60 basis points to 25.8%, driven primarily by higher medical and casualty claims, as well as slightly higher store labor expenses.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Consistent with the trends we experienced in Q1, the higher medical expenses were from an unusually high number of severe medical cases. This is not typical for us and we expect medical expenses to work their way back down as these cases are resolved. Pre opening expenses were $9,000,000 in the quarter. Most of the $4,000,000 increase was from the higher number of new store openings this year. We opened 29 stores in the quarter compared to nine last year.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Dark rent associated with the bankruptcy acquired stores was $2,300,000 which was also a factor in the year over year increase. Moving down to the bottom line, adjusted net income was $61,000,000 and adjusted earnings per share increased 26.9% to $0.99 for the quarter. Lastly, adjusted EBITDA increased 26% to $94,000,000 and adjusted EBITDA margin increased 90 basis points to 13.8% for the quarter. Let me also take a moment to comment on our balance sheet. Given the nature of our business, the strength of our balance sheet is a strategic asset.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Our financial stability, the visibility of being a public company and our size and scale truly differentiates us in the closeouts and off price space. As a result, we are committed to maintaining a fortress type of balance sheet on the go forward because it helps drive our business. For the quarter, our total cash and investments increased by 30% or over $100,000,000 to $460,000,000 and we had no meaningful long term debt at quarter end. Inventories increased 20% year over year, primarily driven by our accelerating store growth and higher in transit inventory. Capital expenditures totaled $26,000,000 for the quarter with the majority of the spending going towards the opening of new stores, the build out of the bankruptcy acquired stores and to a lesser degree investments in both our supply chain and existing stores.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

We bought back $12,000,000 worth of our common stock in the quarter and had $3.00 $4,000,000 remaining under our current share repurchase authorization at the end of the quarter. Lastly, let me run through our outlook for fiscal year twenty twenty five. We are raising both our sales and earnings outlook for the full year. Our revised outlook flows through the upside in our first half results and raises our comparable store sales outlook for the third quarter, given the momentum in our business. Our updated outlook also assumes the current tariffs remain in place for the balance of the year.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Our updated guidance figures are contained in the table in our earnings release posted this morning and include 85 new store openings, net sales of 2,631,000,000.000 to $2,644,000,000 comparable store sales growth of 3% to 3.5, gross margin in the range of 40.3%, operating income of $292,000,000 to $298,000,000 and adjusted net income and adjusted earnings per share of $233,000,000 to $237,000,000 and 3.76 to $3.84 respectively. These estimates assume depreciation and amortization expenses of $54,000,000 inclusive of $14,000,000 within cost of goods sold pre opening expenses of $23,000,000 which includes dark rent of approximately $5,000,000 related to the acquired Big Lots locations an annual effective tax rate of approximately 25%, which excludes the tax benefits related to stock based compensation diluted weighted average shares outstanding of approximately $62,000,000 and capital expenditures of $83,000,000 to $88,000,000 which includes the build out of the former Big Lots locations. As far as the quarterly comps are concerned, we now think our third quarter comp growth could be above our long term algo of 1% to 2%. We are leaving our fourth quarter numbers in place for the moment as we generally do not update more than one quarter ahead at a time.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

This puts us in the range of 3% in the third quarter and leaves us just below 2% in the fourth quarter. For the remaining new stores, the large majority of these are planned to open in the third quarter. In closing, we are taking advantage of the unique opportunity in this moment to gain market share through accelerated unit growth and enhancements to our Ollie's Army program to aggressively go after these abandoned customers up for grabs. Our actions are clearly working. We are strengthening our competitive positioning, broadening our footprint and setting us up to drive strong shareholder returns for the years to come. Now let me turn the call back to Eric.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Rob. This is a very exciting time for Ollie's. We are delivering extraordinary value to consumers. We are accelerating our unit growth. We are doubling down on customer acquisition.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We are delivering profitable growth and consistent financial results. And most importantly, we are Allies. Carmen, we are ready for questions.

[Operator]

Thank you so much. And as a reminder, to ask a question, press 11 on your telephone and wait for your name to be announced. To remove yourself, press 11 again. It comes from the line of Matthew Boss with JPMorgan. Please proceed.

[Matt Boss, Equity Research Analyst at JP Morgan]

Great. Congrats on a really nice quarter and you killed the chant this morning.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Matt.

[Matt Boss, Equity Research Analyst at JP Morgan]

So Eric, could you elaborate on the improving cadence of comp as the second quarter progressed and maybe speak to trends that you've seen in August? And then with the wind in your sales as you cited, what are you seeing from deal flow given the tariff disruption? Maybe how would you characterize the state of the closeout industry today?

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Great. Yes. Thanks, Matt. I'll cover deal flow and Rob can cover the cadence of comp for the quarter. I feel like a broken record because the answer is always deal flow is strong.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

It's always strong. There's so many different sources of closeouts in any given quarter. In this particular quarter, as everyone's aware, our model thrives on disruption. Tariffs have created uncertainty in the market, which is disruptive. This has resulted in additional buying opportunities.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

The retail bankruptcies and store closures have certainly resulted in additional buying opportunities. Some of this is a banded product that was made for these retailers. And then we're starting to see abandoned product pipelines as well, which are typically very good for us long term. Those are sometimes new relationships or growth of some of our existing relationships. So they tend to be sticky and very good for the pipeline on a long term basis.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And just to remind everyone, our inventory was up 20% at the end of Q2, which is a pretty strong indicator of a strong deal flow.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

On the quarterly cadence of comps, as you might recall from our Q1 call, May got off to a slow start. We were essentially flat for the month of May. June began to accelerate and includes the upside that we mentioned relative to the Ollie's Army night on our prepared remarks. And July was in fact the strongest month of the quarter for us.

[Matt Boss, Equity Research Analyst at JP Morgan]

Great. Best of luck.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Matt.

[Operator]

Our next question comes from the line of Peter Keith with Piper Sandler. Please proceed.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

Thank you. Good morning and great results guys. I'm going to dig into the OLI Army night from Q2 and maybe comparing it to the traditional December, were there any differences or call outs as it related to the sales lift or new member adds?

[Matt Boss, Equity Research Analyst at JP Morgan]

And then just any general learnings from that event and how you might think about future events?

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Sure, Peter. Thanks for the question. We are very excited about the event moving into the event and it's very pleased with what ended up happening with the Reimagine Alley Stays of Ed. It surpassed all of our expectations on every level. It drove record setting customer engagement and Alley's Army acquisition.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And Rob will take us through the numbers in a minute. The Ollie's RV members are a very passionate group. We take great pride in saving money and they just very much appreciated the additional private shopping event. Most stores had very long lines when we opened the doors. Here in Harrisburg, was close to 200 people that were waiting to get in, which was super exciting.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

The organization executed the event very well in every discipline of the company. We did learn a few things to the point of your question, Peter, that we will apply on a go forward basis, whether it's to the Ollie's Army Night in December or some insights into how our customers think about the benefits of the program. Not ready yet to expand on that since we're finalizing some plans and preparing communication to customers and you'll hear it alongside of when our customers get that communication.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

And in terms of the financials, if you recall, we were we went into this event with pretty muted expectations. We were doing this purely as an enhancement and for a customer acquisition not for a short term gain in our P and L. The sales exceeded all of our expectations by far and we talked about it driving 100 points of comp to the quarter. From a gross margin perspective, was very neutral to our gross margin for the quarter and we were really pleased about where our gross margins ended up on the full quarter. In terms of customer acquisition, our customer acquisition for the week was up almost 60%.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

So that well outpaced our sales gain that we got from the event. And the last thing that I would end off with is we were very nicely surprised with how it performed in respect to the December night where the sales actually exceeded the December night which we felt was awesome considering we're not in a peak holiday moment.

[Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies]

That's great. Thank you very much.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Peter.

[Operator]

Our next question comes from the line of Chuck Grom with Gordon Haskett. Please proceed.

[Chuck Grom, Managing Director at Gordon Haskett Research Advisors]

Hey, thanks. Good morning. Congrats guys. Love the energy this morning. Hoping we peak ahead to 2026 a bit and how you're thinking about store growth.

[Chuck Grom, Managing Director at Gordon Haskett Research Advisors]

I guess more broadly earnings power, seems to me that $4.5 to $5 is certainly an achievable number. And maybe Rob, can you talk about the opportunities for gross margins over the next couple of years and how you see it flowing? Thanks.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Sure. Thanks, Chuck. I'll take the store growth piece and Rob will speak to earnings power. We're committed to delivering the 10% annual unit growth. It's our long term algorithm on a go forward basis.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We acknowledge that there are moments in time where we may have opportunities to outpace that 10% unit growth target and flex up and we're in one of those moments with the bankruptcies and store closures and the market share opportunity. We've been able to accelerate and it doesn't take that off the table in future years to potentially consider. When you look into 2026, there are sufficient opportunities out there to continue to drive accelerated growth and we would expect another year of elevated openings. We'll provide more color specifically on that in the Q3 call.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

In terms of earnings power Chuck, we don't get too ahead of ourselves. So I'm not going to give too much in terms of concrete numbers today. But what I would say is, we're starting the back half of this year, we're going start to see the benefits of higher and earlier openings over the past twelve calendar months. We've opened 88 stores at this point. And that will flow through the second half and the annualization will be a big impact for earnings growth for 2026, as well as potentially another year of elevated growth as Eric refers to.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

We'll also gain some leverage off not having to incur the dark rent for the bankruptcy acquired stores, as well as improving trends in medical and casualty as some of those costs are transitory for this year. In terms of gross margin, we haven't really rethought the algo in terms of going above 40. We are guiding to above 40 for this year, but that's really a product of how we performed year to date and not a change to long term algo. What this means for 2026 earnings? Assuming no radical changes to the current environment, potentially it looks like double digit top line growth that translates into faster growth in the bottom line in mid teens.

[Operator]

From the line of Brad Thomas with KeyBanc Capital Markets. Please proceed.

[Brad Thomas, Associate Director - Research at KeyBanc Capital Markets]

Good morning and great quarter here. Wanted to follow-up maybe a little bit off of the last question from Chuck and just asking about the SG and A side of things. And could you help us think a little bit about SG and A leverage both in the back half and how that may feed into the long term algorithm? And then perhaps, Eric, I could sneak in kind of a high level one for you. The quarter was really interesting with you changing some kind of long standing practices from Ollie's that seemed to work very well.

[Brad Thomas, Associate Director - Research at KeyBanc Capital Markets]

And I was wondering if you could just talk a little bit about maybe some cultural changes and the willingness to maybe look for new opportunities like that. Thanks.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Sure. I'll take the first part Brad. We're really excited about how we're executing right now and hitting all our core marks. The value proposition, store openings, accelerated growth, customer acquisition, you name it. Unforeseen costs happen from time to time and that's what we're seeing with medical and casualty right now.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

While these costs are putting a little pressure on our first half SG and A, they don't structurally change how we think about our long term algo or how managing this business. So when we come into the back half, we do we have put provision for higher medical in the back half, But we are up against some higher expenses in the back half of last year, specifically executive comp leading up to the leadership transition last year, some of our pursuit expenses around Big Lots. So we had planned to leverage and we do plan to leverage in the back half and we feel comfortable about delivering our guidance for the full year.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Brad, yes, in terms of I appreciate your question. This is an excellent business model, which is an amazing foundation. It has a massive competitive moat. So when you think about changing how we look at our business as we move forward, there are tweaks, are adjustments that we'll make. And it's really just being committed to ensuring that our business remains super relevant to the consumer.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And our prejudices are commitment to our Ollie's Army members and welcoming new members into the program. So our orientation over the past couple of quarters has been more around enhancements to the Ollie's Army program and how does we acquire and retain people in the program. But nothing is off the table. I just want to emphasize that it's an amazing model. So when we think about continuing to make improvements and on this path to continually improving our business.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Again, are more tweaks and small changes. You mentioned culture, which is something that we at Ollie's are very, very passionate about our strong culture and making sure that we all have a great sense of who we are and how we behave as a team. And that really is foundational and a key part of our success. In much of what we think of is our kind of core values from a culture standpoint came from our founders. It is part of the legacy that they've left us and maybe it's a little bit modernized today versus what it may have been forty three years ago, but it still has the fabric of the founders as part of that and it's what's made us successful for forty three years.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We've done a much better job of making sure people understand it both internally and externally, which has been very good for us.

[Brad Thomas, Associate Director - Research at KeyBanc Capital Markets]

Really appreciate it. Thanks so much.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks.

[Operator]

Our next question comes from the line of Stephen Chacon with Citi. Please proceed.

[Steven Zaccone, Director & Equity Research - Hardlines Retail at Citi]

Hi, good morning. Thanks very much for taking my questions. Our question was on new store economics. Can you just talk about how some of the new stores are performing? How these new stores compared to prior cohorts since you've accelerated the unit growth?

[Steven Zaccone, Director & Equity Research - Hardlines Retail at Citi]

And then just given the acceleration in store growth, at what point will you need a new distribution center?

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

I'll take the first part. Eric will take the second part. We have some of the strongest new store economics in the business, which have been very stable over time. We've long said that our model is portable, profitable and predictable. The model is also flexible, which allows for us to open and operate different sized stores across a wide range of demographics and geographies, all while maintaining mid teens four walls and strong payback periods.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

The other strength of our model is our fortress balance sheet and our ability to generate strong cash flows. We can use this strong capital position to opportunistically fund our growth in whatever manner generates the highest rate of return as was the case with the bankruptcy acquired stores. So in terms of the current cohort of stores we're opening this year, they're nicely performing above plan as a group. And I would say that the payback periods for the organic openings are very consistent with what we've seen in the past. The payback periods for the bankruptcy acquired stores are a little bit longer because there's upfront cost in terms of the dark rent component and the build out cost that we're now on the hook for.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

But all in all, we're very pleased with the openings for this year.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

On the DC question, Steve, we have the ability to expand our distribution center in both Texas and in Illinois. And we do plan to expand both those buildings in the coming call it eighteen months give or take. So each building's expansion is approximately 200,000 feet and adds another 50 stores of service for a total of 100 stores, which takes us somewhere in the say mid-800s in terms of total capacity from a store count standpoint. The fifth building, just to answer the question specifically, is three plus years out, so call it three to four years out. And we'll update provide more color most likely on the Q4 call is what that roadmap looks like a little bit more concretely.

[Steven Zaccone, Director & Equity Research - Hardlines Retail at Citi]

Okay. Thanks for that detail. Best of luck in the back half.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Steve.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Thank you.

[Operator]

Thank you. Our next question is from Kate McShane with Goldman Sachs. Please proceed.

[Kate McShane, Managing Director at Goldman Sachs]

Hi, good morning. Thanks for taking our question. We just wondered how did the customer acquisition look from the Ollie Army Night? You've indicated you were reaching a broader consumer with a younger cohort over the last couple of quarters. Did the Ollie's Army Night reflect this at all?

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

I'll answer this one, Kate. We didn't see much of a differential in what we saw in the rest of the quarter in the Ollie's Army Night results. For the quarter, our customer our new customers were up across the, I would say mid upper income and higher income levels reflective of trade down. And then in the existing customers, the biggest trend that we saw which is a long term trend that we're seeing is our customer file is getting younger in the existing customer base as our digital strategies are really taking hold and driving that cohort.

[Kate McShane, Managing Director at Goldman Sachs]

Thank you. If we could just ask a second question, and this kind of mirrors an earlier question about culture. Eric, you spent a lot of time working and refining the supply chain at Ollie's before you became CEO. I was wondering if you could talk through how some of that work is resulting in the strength and what you're seeing with the business today?

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Yes, absolutely. We're very proud as an organization of what we accomplished on the supply chain side. We have four distribution centers that are operating with great momentum. We're especially proud of what we've accomplished in our Princeton, Illinois distribution center, which is now and we're anniversarying its opening here last year and some of the automation that we've installed. So it's definitely part of this foundation of that we've created to propel growth into the future.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

It's key to it. And we've also made a number of changes in transportation, go back a couple of years now, but in terms of how we procure international freight and those we've seen dividends from and we have the capacity now in any uncertain environment to be able to address the needs of the business and to do them in a cost effective way and that really wasn't the case a few years ago. I mean, mentioned culture and culture to me is really the most important element of what it takes for us to be successful and motivate people and that starts with our passion for serving customers who are on a tight budget and just really appreciate the values we offer. And we're all committed really to that first and to each other to make that happen. And that's really no different for our distribution centers than it is for our stores or people here at our store support center in Harrisburg.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

We're committed to the cause, committed to each other and we understand what it means to deliver and what it means to that consumer base. We really have a heart for our consumer.

[Operator]

Thank you. Our next question comes from the line of Scott Ciccarelli with Truist. Please proceed.

[Scot Ciccarelli, MD & Senior Equity Research Analyst at Truist Securities]

Good morning, guys. Two questions. First, can you provide us an update on what you're seeing at your Ollie stores that were in a similar market to Big Lots stores that have been closed? And then secondly, historically, guys had a bit of a reverse new store waterfall process where new stores would open really strong with your grand openings and then you'd incur a bit of a comp drag as that store moved into the comp base. Just given this year's unit acceleration, is that something we should be thoughtful of as we roll into 2026? Thanks.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Sure. This is Rob. I'll take this one. Good morning, Scott. We're excited about our performance that we're seeing in stores where the Big Lots are closed.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

This is the first full quarter that has not been impacted by some type of store closing from the Big Lots chain. So we're starting to see the trends a little more clearly. The best performers out of where Big Lots closed are the overlapping stores where they closed and have not reopened. That's call it two ninety ish stores. In the stores where the Big Lots has reopened, those stores are still performing well.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

With a five comp, it's a little hard to separate the standouts from the underperformers though. So I would say in that two ninety store set, we're seeing between the low single digit to mid single digit comp above the balance of the chain. That's holding in place as we've discussed in the past. From a new store waterfall perspective, our new stores are performing really well. The vast majority of our stores this year are performing over plan.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

We're not sure about what it means about the reverse waterfall yet, because we're only a year or so into these bankruptcies acquired stores and these warm boxes where we made the approach change to our soft opening cadence. So we're watching the data, we're looking at it, but we and we're going to study in the back half. And we'll have updates as we go along.

[Scot Ciccarelli, MD & Senior Equity Research Analyst at Truist Securities]

Understood. Thanks guys.

[Operator]

Thank you. One moment for our next question. And it comes from Steven Chamish with RBC Capital Markets.

[Steven Shemesh, Director - Equity Research at RBC Capital Markets]

Great. Thanks for taking the question and nice results. Just wanted to circle back on the comp. So strong result and with the May being flat and improving throughout the quarter, it sounds like the exit rate was in the high single digit, low double digit range. So as we just try to kind of like triangulate 3Q being in the 3% range off of an easier compare, I'm just curious have you seen anything different quarter to date?

[Steven Shemesh, Director - Equity Research at RBC Capital Markets]

Is there anything to keep in mind from a compare perspective? Or is there just a lot of quarter left?

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

There's certainly a lot of quarter left. And we typically have a pretty conservative approach to how we guide and remaining in the 1% to 2% long term algo. Us signaling today the 3% certainly shows that we believe that we have the wind in our sails and we're operating with good momentum right now. And you're very accurate on the exit rate on Q2. That's right about where we were at.

[Steven Shemesh, Director - Equity Research at RBC Capital Markets]

Got it. Okay. That's very helpful. And then just a bigger picture question on gross margin and understand that the baseline is 40%. But as we think about what's changed over the last handful of years, supply chain costs peaked up during the pandemic and they've since been coming down, still running above pre pandemic levels.

[Steven Shemesh, Director - Equity Research at RBC Capital Markets]

But you are running above that 40% gross margin now. So I guess on the quarter and then just bigger picture, like what has changed from a merchandising margin perspective that's allowed you to over deliver despite the higher supply chain cost?

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Yes. Thanks, Steve. It's our size and scale. It remains to be seen what this means long term. But our size and scale has resulted in buying power.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

It's attracted new suppliers to us. It's expanded existing relationships and we're able to buy better. So we typically pass that along in investing in price and our customers are rewarded for it. We've been able to do both. We've expanded our price gaps and we're delivering elevated margin. So in this moment it feels very good.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

And I would just say that we're flowing product better through our distribution centers into our stores with our people. We're executing really well on all fronts. So that's underpinning it. And that comes in the form of lower supply chain costs, but also lower markdowns to a degree. And then shrink has been a tailwind.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

And that's one thing to note. We now have three quarters of positive shrink trend under our belts, but we have not changed our guidance in the back half, which is still on that elevated number that we had saw in the previous quarters.

[Steven Shemesh, Director - Equity Research at RBC Capital Markets]

That's great. Thanks guys. Best of luck in the back half.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks Steve.

[Operator]

Our next question comes from the line of Jeremy Hamblin with Craig Hallum. Please proceed, Jeremy.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks and congrats on the impressive results. I wanted to just come back to the Medical and Casualty costs and just see Rob, if you could share what is the incremental cost expected both for the full year 2025, but also baked into the second half of the year? And then just want to come back to Q2 in particular, because you have such outsized results now over a multiyear period or three year stacks, 20% gross margin in Q2 by far the best that you've ever had in a Q2. And just see is there something that's changed in the mix of product that is driving both gross margin upside, but also sales upside? I mean, I know obviously the Ollie's days added 100 basis points, but any other color you can share? Thanks so much.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

I'll take the first part of this and maybe I'll take the second part. But so for the first part, from the medical perspective, it was essentially all of our deleverage last year. And that was a similar trend that we saw in Q1. We have a slight improvement baked into that in Q3 and Q4. And that's based on the fact that we are starting to see some early signs of the trend softening here as we get into the third quarter.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

So that's if we have an improvement where they revert to kind of what we've historically, we'd have some upside within our numbers. From a gross margin sales perspective on the second quarter, I think Eric mentioned size and scale, our ability to size and source better deals, drive better costs, get better access to goods that's all part of it. I would also say the strength of our consumables business. That's a high frequency, high visit business that kind of carries us through the what typically was a little bit of a summer doldrums quarter. I think that underpins kind of the frequency.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

And then when we showcase as great a deals and assortment as we you get attachment, you get folks coming in and grabbing those great deals off of those visits.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Yes. I'll just add a little bit of color. It's also the consolidation of the closeout market. There aren't as many buyers out there for closeouts. And so as the biggest buyer, we believe in the country for closeouts, that market share of closeouts comes to us.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And we have a very tenured experienced buying team with the acumen to really leverage the moment and consume that market share. And that's just what we're doing. We've been very, very aggressive about establishing new relationships, expanding existing relationships. It's not the case where we just pick up the phone. It's both proactive seeking and our phone is ringing a lot more as a result of this consolidation.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

So we do believe that's going to have lasting positive consequences for us.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks so much. Best wishes guys.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks, Jeremy.

[Operator]

Thank you. Our next question comes from Mark Carden with UBS. Please proceed.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

Good morning.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

Thanks so much for taking the question. So I wanted to ask another one on Big Lots. Just how meaningful were the differences in sales capture between warm boxes and your existing footprint? So said another way, how should we think about the Big Lots contribution going to your same store sales versus your new store productivity? And then what are you seeing with respect to the Ollie's Army sign ups from some of these former Big Lots customers? Thanks.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

I would say on the top line not a noticeable difference between our organic openings and our Big Lots openings. Little bit of lift potentially because there is that warm docks dynamic. I would say most the most meaningful difference from a profit flow through perspective is better operating margins in the bottom line because the rents in these locations were in many cases much, much lower than some of the deals that we're signing today.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Second, can you repeat Yes. I'll get it Mark on the second question, the Allies Army. So that we are seeing outpaced growth in our new stores. Haven't clearly haven't parsed that down to big lots versus non big lots, but the majority of them are big lots. So we're definitely seeing accelerated acquisition in those newer stores.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

So our stores are doing a great job communicating the story around the program and the value that it offers to consumers. A lot of the consumers coming into our Big Lots stores are talking sorry, Big Lots converted Ollie stores are talking about their familiarity with deep discount in Big Lots and how it reminds them of Big Lots from ten years ago. And that they really appreciate the values that we offer. It becomes an easier sale so to speak at register than to convince them to sign up. We're also seeing very nice growth in our comp stores, which is great, but definitely outpaced in new stores.

[Mark Carden, Director - Equity Research at UBS Investment Bank]

Thanks so much. Good luck guys.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Please proceed.

[Lauren Ng, Equity Research Associate at Morgan Stanley]

Hi. This is Lauren Ng on for Simeon. I just were curious about what specifically was driving that higher merch margin. Is this maybe more a result of better buying or product mix or maybe both? And then a follow-up is just on the Q2 comp of the 5%.

[Lauren Ng, Equity Research Associate at Morgan Stanley]

Can you share how much is this coming from maybe stores ramping versus your mature stores? Thank you.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

From a merch margin perspective, chalked it up to strong deal flow, better margin on deals than what we expected. Mix was more aligned in line with where we thought it was going to be. And we also saw lower shrink which also assisted the gross margin. In terms of comps, in terms of relatively new stores versus vintages, we saw broad based strength across all cohorts. It was really just how high the comp was across all the different cohorts of stores that we track.

[Lauren Ng, Equity Research Associate at Morgan Stanley]

Okay. Thank you.

[Operator]

One moment for our next question please. And our last question comes from Edward Kelly with Wells Fargo. Please proceed.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Yeah. Hi. Good morning guys and nice quarter. Want to add my congratulations. A couple of questions for you.

[Edward Kelly, MD - Equity Research at Wells Fargo]

I just wanted to follow-up on the questions around the gross margin. Obviously, Q2 was a great performance. I don't know maybe the strongest Q2 that you guys have had. Just curious as to why we should be modeling a decline in the back half. I mean, it does sound like there's some conservatism in there.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Curious as to the impact of tariffs that how that might flow through, particularly as you get into the fourth quarter? And then I had a bigger picture question, which I guess is probably for you, Eric, which is I'm curious as to what's happening with your product mix. I mean, closeout opportunity is very strong. So I don't know if that percentage of the mix is up. And then what's happening with product that vendors may be making for Ollie's?

[Edward Kelly, MD - Equity Research at Wells Fargo]

I know you've had some of that ramp over time, but I think it was still small. But I'm just curious as to whether you're getting more of like consistent flow from vendors that they're using you as well in terms of like made for Ollie's kind of product? Thanks guys.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

Well, that was a lot. I'll try to answer at least a part of it and then I'll you have remind to me. On the gross margin line, we are planning a deceleration in gross margin off the first half. You know us for a long time and following us. We're the kind of folks who like under promise and over deliver.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

We feel like our guidance gives us the opportunity to execute in the environment. If we need to take the opportunity to invest in price, we have the room while we can still deliver to the Street. So that's kind of how we're thinking about the gross margin. There's also that outstanding performance we had in the fourth quarter last year, we were over 40%. That typically is not something that we would plan to when we enter a year.

[Robert Helm, EVP & CFO at Ollie's Bargain Outlet]

And so we've left our fourth quarter guidance in place. That So also kind of drags down the gross margin in the second half. Yes.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

I think Ed in terms of tariffs, we're price followers in the market. So we'll take a similar approach that we take even in an environment that isn't disrupted by tariffs where if we can't buy a product whether it's import or closeout and offer the right price in the market and maintain a price gap that we can be proud of, then we just don't buy the item. So what that means is we're going to be priced right, we're going to maintain our price gaps and the mix adjust accordingly according to our sourcing and whether that's counter sourcing in various countries to chase the latest news in terms of tariff adjustments that have been made for counter sourcing and replacing substituting products that we might import with other products that we could buy here in The U. S. Especially in the closeout market.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

But just fiercely committed to making sure we maintain our value proposition all the way through and meet our obligation to the shareholders to provide the merch margin that we're expected to provide. So that's really the answer in terms of how we're navigating tariffs. It's the closeout import mix hasn't changed materially to date. It's really hard to say what that may look like in coming quarters. We're navigating it one press release at a time in terms of where the tariffs are moving.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

But we're committed to ensuring we offer the right values. The other piece of your question, I believe, was about production closeouts or manufactured closeouts or engineered closeouts, however you might like to refer to them. We buy product in the closeout market from suppliers who may have the product as a result of deliberately manufacturing the product. It could be an overrun. It could be an end of run production situation or could be it was produced for us to cover something that may have been produced for us a year prior.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

And candidly, we don't ask a whole lot of questions about the origin story of the product. If we can get it for the right price, offer it at the right retail price to our consumer and meet the financial obligation in terms of our IMU, then we're buying the item. What I can tell you kind of refers back to the very first question Matt asked about the deal flow is that there's more than enough product out there to buy. We haven't felt compelled to go down the path of contract contracted manufacturer, production manufactured product. So we're still fairly opportunistic.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

But we realize that at our size, the supplier vendor community is supporting volume both on their end and on our end. And it does make our business in some pockets more predictable and more stable, which is great for us long term.

[Edward Kelly, MD - Equity Research at Wells Fargo]

Great. Thanks guys.

[Eric van der Valk, President, CEO & Director at Ollie's Bargain Outlet]

Thanks Ed.

[Operator]

Thank you. And this concludes our program for today. Thank you for participating. And you may now disconnect.

Participants

Executives

• Eric van der Valk, President, CEO & Director

Analysts

• Robert Helm, EVP & CFO at Ollie's Bargain Outlet
• Matt Boss, Equity Research Analyst at JP Morgan
• Peter Keith, MD & Senior Research Analyst at Piper Sandler Companies
• Chuck Grom, Managing Director at Gordon Haskett Research Advisors
• Brad Thomas, Associate Director - Research at KeyBanc Capital Markets
• Steven Zaccone, Director & Equity Research - Hardlines Retail at Citi
• Kate McShane, Managing Director at Goldman Sachs
• Scot Ciccarelli, MD & Senior Equity Research Analyst at Truist Securities
• Steven Shemesh, Director - Equity Research at RBC Capital Markets
• Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Mark Carden, Director - Equity Research at UBS Investment Bank
• Lauren Ng, Equity Research Associate at Morgan Stanley
• Edward Kelly, MD - Equity Research at Wells Fargo