GERMANY – 2024/12/09: In this photo illustration, a person is holding a smartphone with the logo of … More
As the nation’s largest retailer of closeout merchandise across virtually every conceivable product category, Ollie’s Bargain Outlet profits from other retailers’ mistakes. Recently, it’s had no shortage of blunders to capitalize on.
Since fiscal 2018, Ollie’s revenues have nearly doubled from $1.2 billion to $2.3 billion and its store base has grown at the same pace, from 303 to just under 600 stores. And with some 15,000 stores expected to close this year, it will have plenty of new opportunities.
The downfall of Big Lots, which operated in the same closeout segment, is a prime example. Ollie’s acquired 63 former Big Lots stores from Gordon Brothers, its current owner, and is rapidly converting them to the Ollie’s no-frills, discount bazaar format.
“Everything about these stores lines up well with our business and growth strategy,” CEO Eric van der Valk said in a statement. “These locations are the right size, come with favorable lease terms, are located in existing and adjacent trade areas, and have long serviced value conscious consumers.”
Opportunities Abound
Not only do these defunct Big Lot locations allow the Harrisburg, PA-based retailer to expand its customer reach beyond its Mid-Atlantic and Southeastern regional stronghold, Ollie’s gets first dibs on prime closeout merchandise. In that regard, it has also gotten a lift by the closure earlier this year of closeout competitor the Bargain Hunt chain of 92 stores.
“There has never been a shortage of goods for us to purchase, and our growing size and scale continue to benefit our buying power,” van der Valk said in the first quarter 2025 earnings call, citing both Joann and Party City closures.
“Recently, it’s been a significant number of retail store closures and supply chain disruptions that have created a tremendous amount of excess inventory,” he continued.
Reporting that it is seeing strong deal flow, Ollie’s inventory is up 16% through selective buying, which allows it to sell “good stuff cheap,” up to 70% off brand-name list prices.
And since flexibility is built into Ollie’s business model – its fluid store presentation heightens the store’s treasure-hunt experience – he added, “This gives us ultimate flexibility when it comes to navigating a choppy environment and puts us in a very strong position versus most retailers.”
On The Path To 1,000 Stores
At the close of fiscal 2022, then-CEO John Swygert, who transitioned to executive chairman earlier this year, said the company had modeled a path to 1,050 stores and it is more than halfway there.
Currently, it operates 584 stores in 32 states, following the opening of 25 stores in the most recent quarter – 18 of which were former Big Lots locations. And it’s footprint reaches no further west than Texas and Oklahoma.
Through the end of July, some 29 store openings have been announced, including its first in New Hampshire and Nebraska. And 23 of those will be Big Lots locations.
Store expansion has jazzed Ollie’s recent results. It ended fiscal 2024 with revenues up 8% to $2.3 billion and net sales increased 13.4% to $577 million in the first quarter. However, comparable sales growth was a disappointment, up 2.6% in the current quarter versus 3% last year. The first quarter shortfall was primarily attributed to competition from Big Lots’ final liquidation sales.
With that behind it, Ollie’s expects to receive a welcome boost once its newly acquired Big Lots locations are converted. “These stores are off to a very strong start. We appear to be benefiting from the fact that these are warm boxes, with a built-in discount shopper customer base, which was our hypothesis going in,” van der Valk said.
Nonetheless, the company is conservative with its year-end guidance. Revenues are expected to reach between $2.579 billion and $2.599 billion with adjusted net income between $225 million and $232 million.
The rapid pace of store growth comes with a cost: $6.7 million in pre-opening expenses, including $1.8 million in “dark rent” associated with the bankruptcy-acquired stores, plus a 16% increase in SGA expenses to $165 million.
Levers To Pull
Ollie’s depends on in-store traffic for 100% of sales. While it doesn’t operate an e-commerce website, the company drives store traffic through digital email and social media marketing, as well as traditional print circulars and regional television spots featuring its quirky Ollie cartoon character logo.
Once new customers come in, they are invited to join the free Ollie’s Army loyalty program that gives them opportunities to earn greater discounts, including a 15% off coupon as an “enlistment bonus” and a scaled point-based reward program where members receive a point for every dollar spent. Redemption rewards start after 250 points are earned.
Plus Ollie’s Army members get exclusive access to the store during Ollie’s Army Night in December, offering storewide discounts up to 50% off. The December event is typically Ollie’s biggest sales day each year and it added a June event this year to coincide with its annual Ollie’s Army Day promotion.
In the most recent quarter, Ollie’s Army membership grew 9% to 15.5 million members, its fastest growth rate in the past four years. Ollie’s Army members account for 80% of sales and spend upwards of 40% more per shopping trip.
Going forward, converting casual shoppers to Ollie’s Army members is a strategic focus. Van der Valk explained that it is testing alternative conversion methods in its newer stores, which are delivering “outsized performance.”
Growing Ollie’s Army membership pays off beyond greater spending. The company gains valuable insights into the most in-demand products and offers to guide the merchant and marketing teams.
Forward, March
Ollie’s is highly disciplined in its buying choices. Despite the wide-ranging opportunities available, it maintains a 40% gross margin rate yet has to offer deep enough discounts to energize its customer base. In other words, Ollie’s can afford to be choosy.
“We see continued strength in OLLI’s value business model. Store expansion is highly visible as the company’s increasing size and scale amplifies its purchasing power leading to more business with vendors,” Jefferies equity analyst Randal Konik wrote.
Ollie’s has honed a winning formula that will keep it moving forward despite or because of the disruptions ahead in retail.
“Given the challenging environment, we believe there could be product and market share opportunities. The significant number of retail store closures over the past year has already resulted in strong deal flow and abandoned customers. This is only likely to increase going forward,” said van der Valk.
“We are aggressively going after market share by accelerating our store growth, expanding our digital marketing capabilities, and enhancing our Ollie’s Army customer loyalty program,” he concluded.
See also:
Source: https://www.forbes.com/sites/pamdanziger/2025/07/10/how-ollies-bargain-outlet-capitalizes-on-retail-disruption/