OLLI

Image source: The Motley Fool. Wednesday, Sept. 2, 2026 at 8:30 a.m. ET Managing Director of Corporate Communications and Business Development - John Rouleau President and Chief Executive Officer - Eric van der Valk Executive Vice President and Chief Financial Officer - Robert Helm Operator: Good morning, and welcome to Ollie's Bargain Outlet's conference call to discuss financial results for the second quarter of fiscal year 2026. 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. I would now like to introduce our host for today's call, John Rouleau, Managing Director of Corporate Communications and Business Development for Ollie's. John, please go ahead. John Rouleau: Thank you, Carmen. Good morning, everybody. We appreciate your time and participation. Joining me on today's call from Ollie's are Eric van der Valk, President and Chief Executive Officer; and Robert Helm, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. [Operator Instructions] Finally, let me remind you that 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. 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-K and quarterly reports on Form 10-Q. Forward-looking statements are made 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 the most closely comparable GAAP financial measures to the non-GAAP financial measures are included in the company's earnings press release. With all of that said, it's now my pleasure to turn the call over to Eric. Eric van der Valk: Good morning, and thank you for joining us today. We delivered strong earnings growth in the second quarter and continue to execute against our strategic initiatives. Comparable store sales declined 1.8% against a challenging multiyear stack. We believe our sales results were negatively impacted by the combination of less favorable weather, continued economic pressure on the consumer and an elevated promotional environment, which all led to a more challenging backdrop than we originally expected. Outside of weather-impacted categories, the broader business performed generally in line with our expectations, and we continue to see customers actively seeking value. The consumer remains resilient, but increasingly selective in how they choose to spend. Lower income customers are prioritizing needs over wants, shopping closer to need, and in many cases, delaying discretionary purchases where they can, while higher income customers continue to trade down in search of value. For over 40 years, we have combined extreme value, well-known brands and an ever-changing assortment to deliver a treasure hunt shopping experience unlike anything else in retail. Our assortment spans both the consumable products that customers need and the discretionary products that they want. Customers come to Ollie's because they know they can find good stuff cheap and every visit offers something new and unexpected. The treasure hunt experience creates a sense of excitement and discovery that keeps customers coming back and helps build a deeper connection with our brand. The combination of price, brands, newness and unexpected finds remains a powerful differentiator for us. Many of the same pressures affecting consumers today are also expanding closeout availability. Our deal flow remains extremely strong, giving us additional opportunities to sharpen our value proposition. At the same time, we are focused on controlling what we can control by optimizing our assortment and category mix. Our flexible closeout model gives us the ability to pursue exceptional deals while strengthening categories that are driving demand. We are all about growth and our growth starts with opening new stores and acquiring new customers. We opened 15 new stores during the second quarter and 42 during the first half of the year, more than halfway to our full year target of 75. We are investing in our loyal customer base through events and programs that strengthen engagement and deepen our connection with customers. During the quarter, we held another successful Ollie's Army Night and wrapped our annual Ollie Days events around our country's 250th birthday celebration. Despite some weather-related challenges, both events drove even stronger customer acquisition and engagement than the year before. Ollie's Army members increased 13% versus last year, and we ended the period with over 18 million Bargainauts. At the same time, we are managing our assortment and floor space allocation to better align with today's customer while driving more value and newness. We are expanding categories with a strong product pipeline and white space in the market. Protein and energy products, beverage, seasonal decor and living room furniture as well as decorative pillows were great examples of this. Most importantly, we are doing this through a disciplined test-and-learn approach that allows us to move quickly, make better merchandising decisions, improve the customer experience and increase sales productivity. Beyond merchandising, we continue to invest in our supply chain to support growth, improve efficiency across the network and enhance our ability to serve our customers. We recently completed the expansion of our Texas distribution center and operations have now normalized. In the coming months, we will begin expanding our Illinois distribution facility with a planned completion date around this time next year. Together, these investments continue to expand capacity, improve execution and support our long-term growth plans. While we are not satisfied with our second quarter sales performance, we are moving swiftly to execute against our key strategic initiatives with the guiding principle of always putting the needs of our customers first. We are tempering our near-term expectations to reflect the current environment, but that does not diminish in any way our confidence in the long term, profitable growth of our business. Value always wins. It will remain our durable competitive advantage. Before I turn the call over to Rob, I want to thank our entire Ollie's team. Running a closeout retail business is hard work. It takes discipline, creativity, flexibility and relentless execution every day. Our associates continue to work hard servicing our customers and bringing good stuff cheap to our loyal Bargainauts, and I appreciate them more than words could ever express. Rob? Robert Helm: Thanks, Eric, and good morning, everyone. We delivered strong earnings growth in the second quarter amid a challenging environment. Earnings were better than expected, driven by IEEPA tariff refunds received in the quarter despite net sales performance below our expectations. Now let me walk you through the results for the quarter. Net sales increased 9.1% to $741 million, driven by new store openings. Comparable store sales decreased 1.8%, driven by flat transactions and a decrease in basket. As a reminder, the second quarter was a difficult comparison where we faced mid- to high single-digit comp increases in each of the prior 3 years. Top-performing categories were toys, general merchandise, summer furniture, candy and seasonal decor. We saw softer performance in weather-sensitive categories, particularly early in the quarter. Gross margin increased 360 basis points to 43.5%. The increase was driven primarily by IEEPA tariff refunds. Tariff refunds benefited gross margin by 380 basis points in this year's second quarter. Merchandise margin decreased primarily related to investments in price. [ Transportation costs ] remain elevated, but this was more than offset by lower tariff rates. SG&A expense as a percentage of net sales increased 80 basis points to 26.6%, primarily driven by the deleverage of fixed costs from the decline in comparable store sales and higher marketing expenses related to one incremental merchandise flyer in the quarter. Preopening expenses decreased 42% to $5 million, driven primarily from a fewer number of new store openings and lower dark rent expense. Moving down to the bottom line. Adjusted net income increased 40% to $85 million and adjusted earnings per share increased 43% to $1.42. Lastly, adjusted EBITDA increased 36% to $127 million and adjusted EBITDA margin increased 330 basis points to 17.1% for the quarter. Turning to the balance sheet. Our total cash and investments increased 10% to $507 million, and we continue to have no meaningful long-term debt at quarter end. We continue to deploy our capital opportunistically and again stepped up our buyback and repurchased $84 million of our common stock in the quarter. Through the first half of the year, we have bought back 1.6 million common shares at a cost of $137 million. At the end of the second quarter, $122 million remained available for future share repurchases under the current share repurchase authorization. Inventories increased 11% year-over-year, primarily driven by our new store growth. Capital expenditures were $43 million in the quarter, with the majority of the spending going towards the opening of new stores, improvements to existing stores and the expansion of our Texas distribution center. Now let me wrap up with commentary about our outlook for the full fiscal year. Our updated outlook reflects 2 key changes. First, we have updated our second half sales assumptions to better align with recent sales trends and the current environment. Second, the outlook now includes IEEPA tariff refunds received in the second quarter, which we have already started deploying in additional price investments to strengthen our competitive position. Details of our revised fiscal 2026 outlook are included in our earnings press release issued this morning. At a high level, our outlook assumes 75 new store openings, 2 store closures from storm damage, net sales of $2.928 billion to $2.941 billion, comparable store sales growth of flat to positive 0.5%, gross margin in the range of 41.3%, operating income of $345 million to $350 million, adjusted net income of $275 million to $279 million and adjusted net income per share of $4.57 to $4.65. Let me provide you with a little more color on our guidance. Starting with comps, we are now planning the back half in line with our second quarter 2-year stack, which translates into comp growth close to flat in the third quarter and up 1% in the fourth quarter. Moving on to gross margin. There are a lot of dynamics at play here, but our core fundamental thinking around gross margin is unchanged. Our outlook now includes $28 million of tariff refunds, net of a 50 basis point investment in price, some of which we've already begun to deploy in the second quarter. On the supply chain side, we have assumed that current tariff rates and fuel costs remain in place for the balance of the fiscal year. Depreciation and amortization expense is planned at $62 million, inclusive of $15 million included in cost of goods sold, preopening expenses of $21 million, interest income of $22 million, which includes $1 million of interest associated with the tariff refund in the second quarter, 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 60 million, which now includes a higher share repurchase level of $175 million and capital expenditures in the range of $103 million to $113 million. In closing, while our outlook reflects a more measured view of the near term, our confidence in the long-term growth opportunity remains unchanged. We continue to see significant runway for growth, maintain a strong balance sheet and are making disciplined investments to strengthen our value leadership position, support our future growth and create long-term shareholder value. Before turning it back to Eric, let me also express a heartfelt thanks to all of our hard-working team members across the country. I'm grateful for everything they do to serve our customers each day. Eric? Eric van der Valk: Thanks, Rob. Our team is focused on execution across the business and passionately committed to serving our communities by delivering extreme value on products people want and need. We offer real bargains on real brands in a thrilling, fun and quirky environment that is like no other in retail. The treasure hunt remains alive and well at Ollie's. We are Ollie's. Operator, we are now ready for questions. Operator: [Operator Instructions] One moment for our first question, please. It comes from Brad Thomas with KeyBanc Capital Markets. Bradley Thomas: I appreciate the updated guidance and I wanted to ask about changing behaviors on the consumer front. We know that, that was starting to occur within 1Q to some extent. And just wondering if you all could speak to how the consumer may be shopping stores differently or visiting less based on some of the factors out there like higher gasoline prices, price investments from the competitors, things like that. Again, just speaking about what you're seeing from your consumer. Eric van der Valk: Sure. Thanks for your question, Brad. The consumer remains resilient. We do continue to see strong engagement. Traffic was -- just to remind you, traffic was flat for the quarter, which was relatively consistent to the first quarter. Shopping frequency was down slightly and new customer acquisition was up. Consistent with the previous quarter, the lower income consumer is being very selective, prioritizing needs being -- meaning a little bit more heavier in the consumable-related businesses, shopping a little bit less frequently. Consumers, to your point about the question about fuel, we're continuing to see that dynamic that started in March of Q1 where customers are staying closer to home if they live outside of a certain radius of our stores, and that does tend to connect to income, meaning the lower that consumer is on the income scale, the less likely it is for them to travel if they're outside of a certain radius depending on whether in a suburban or rural area, they're potentially willing to drive a little bit further in the rural area. But when you look at this by region in our Western trade areas, which includes parts of the Midwest and Texas, we're seeing where they have -- tend to have longer drive times that there's even more of a headwind related to fuel with that consumer. And finally, just to speak to the trade down, we are continuing to see higher income customers trading down, and we're drawing that line at around $100,000 in household income and above. Operator: One moment for our next question, please. It comes from Steve Shemesh with RBC Capital Markets. Steven Shemesh: As I think about your 2026 comp guide, it implies a modest acceleration in the back half if we adjust for the flyer timing shift. Can you speak to the comp cadence throughout the quarter, where you're trending 3Q to date? And just anything else that's giving you confidence in that acceleration? Robert Helm: Steve, this is Rob. I'll take that question. So for the second quarter, high level, the weather just did not play out as favorably as we had hoped when we set the guidance in June. From -- when you click into the trends, we entered the second quarter with a down transactions trend. We're very encouraged to see that during each month of the quarter, that sequentially improved. We also -- it actually ended the quarter with a positive transaction trend. So that was good to see. Basket followed a very similar trajectory and basket ended the quarter flat. However, it wasn't enough to make up for the dip in seasonal performance early in the quarter as the weather-sensitive categories were most impacted. Consumables continue to perform well. We see that trend at mid-single digits as we've seen in prior quarters. And then similar to Q1, we saw some softness in the home improvement categories, which has more or less remained the same. From an August-to-date perspective, we updated our guidance today. Our comp guidance is flat for the third quarter. Right now, our August results are running ahead of the plan that we used to build that guidance. That assumes the flyer shift, as you mentioned, and the Labor Day shift as well. Operator: One moment for our next question that comes from Randy Konik with Jefferies. Randal Konik: I guess maybe, Rob, for you. Give us -- maybe unpack the gross margin a bit ex-IEEPA in the quarter. And then looking out a bit longer term balance of the year and into next year, just give us some perspective of how you guys are balancing price investment with margin generation as we think about tariffs and different moving pieces with the consumer going forward? Robert Helm: Thanks, Randy. I'll take the first part, and I'll hand it off to Eric for the second part. From a gross margin perspective, it was certainly a noisy quarter with the tariff refund. The tariff refund accounted for 380 basis points, as I mentioned in my prepared remarks. That was offset by a price investment related to those tariff refunds and mainly concentrated around weather-sensitive categories. Quantify that about 70 basis points. Ex those, that's about 310 basis points, our gross margin would have been above our guide for the quarter, which was 39.9%. We would have came in around 40.3% to 40.4%. Eric van der Valk: Yes, I'll take the second part of your question, just thinking about where we are, how we navigated Q2 and then how we're looking at the balance of the year. I think it's important to be said that we are an everyday low-price retailer. We build trust with customers by being the lowest price in the market on items every day. Promotional pricing like high-low pricing, excessive coupons, we believe for us erodes customer trust and damages our value proposition, which we take very seriously. We balance price and margin very carefully, selectively around items, deals and categories. So when you look back on the second quarter, our price investments were primarily in existing Ollie's Army loyalty events, making those events even more compelling. Like Ollie's Army Night, Ollie Days, we discounted seasonally relevant products such as fan and ACs, lawn and garden and patio furniture, extremely relevant, and they were businesses that were challenged as of mid-quarter, which timed well with our Ollie Days and Ollie's Army Night events. We planned the event at 7 days versus 5 days, so 2 days in addition to LY, which was really planned that way around Independence Day and the timing of Mega Pay week. We also tested -- well, we extended actually that event by 2 days as we looked at the climate, the promotional climate and the weather lineup. We ended up extending it by 2 days. We also tested a personalized offer to incentivize our customers, motivate them if they're outside of a certain drive radius of stores. We call it, the 5 for the Drive, which is a $5 discount on a basket threshold. On the product side, we invested in trend-right and seasonally relevant product that we know will drive traffic, meaning made price investments to make the prices even more sharp to really get attention of customers. So some examples of that, trend toys, patio furniture and pool chemicals. So that informs our strategy for the back half of the year, and we've learned as a result of some of this, these tactics we've deployed what is most productive in motivating the customers. So as we move into the third quarter, we're lighter on Ollie's Army promotional activity. So our price investments are more focused on flyer events and special deals in flyers. We are planning for the full year to invest approximately $15 million in price investments, and we'll not hesitate to invest beyond this level to strengthen our price leadership position. We do believe this is the most important element of our model with our customers, and it is the best thing for us over the long term. Operator: Our next question comes from Jeremy Hamblin with Craig-Hallum Capital Group. Jeremy Hamblin: So a lot of moving parts in here, and just want to make sure to understand kind of the change in expectations. First, just in Q2, I think if we back out the tariff refunds, it looks like it's maybe about a $0.35 impact to EPS on the quarter. Just want to confirm that. And then as we think about the change in kind of comp expectations and what obviously didn't execute from early June when you guided through the end of the quarter to what you're expecting now. I think you said that you're expecting flattish comps here in Q3 and then plus 1% in Q4. The compares are a little bit tougher in Q4. So I just want to understand if that's more a reflection of thinking the price investments are going to have a more meaningful impact? And then just confirming that you're running ahead of kind of that flat expectation in Q3 so far? Robert Helm: Thanks, Jeremy. That's a mouthful. So I'll try to answer all those as succinctly as I can. From a Q2 perspective, the quarter obviously did not play out as we had hoped when we set our guidance back in June. The major shortfall was on the top line. And we think a lot of -- it's hard for us to parse out how much of that was weather versus promotional environment versus state of the consumer since all that more or less happened at the same time. Now the environment around tariffs and the impacts, you're right, it's $0.35. That was offset by a 70 basis point investment in price, which we believe probably would not have happened if these tariff refunds were not available out there to fund promotions across the space. So we kind of tether those both together and that had an impact. Two other items within Q2, we continue to see shrink performing favorably. We continue to see supply chain efficiencies, and we're starting to burn in really the benefits from the Princeton DC and having that operating at scale. SG&A delevered, obviously, on the negative comp. But depreciation, preopening tax were all in line with our expectations. And then obviously, share repo was opportunistic and above our expectations with supported earnings. From an outlook perspective, we lowered the sales guidance in the second half. We did that to reflect the trends that we saw in the first half and the environment. There is a slight acceleration in the fourth quarter, which I think Eric will touch on in a moment, our thought process there. But from the rest of the guide, gross margin was higher between -- I think it was like 52 or 53 basis points, which is really driven by the tariff refund, which is roughly 100 basis points on the year, offset by 50 basis points of price investment, including what we've already done in the second quarter. We also got -- we also flowed through a small benefit relative to lower shrink and supply chain costs. There is some slight deleverage in the lower sales. And we did take the opportunity to step up the share repurchase in our guidance to $175 million today. Eric van der Valk: Yes. I think, Jeremy, just to add a little color on Q4. We're particularly excited about Q4 in part because there's some really big shopping days and events that occur in Q4, Black Friday, as an example, or Ollie's Army Night and the days leading up to Christmas, which have been increasingly strong for us over the years. And we're very excited about the deal flow that we're seeing and what we're able to secure to excite the customer in that period. And it also -- we have a little bit of flexibility around how we invest in those events that time of the year is just a different time of the year. And also on a macro basis, buyers, we're seeing customers shop closer to need, and that tends to be sort of the nature of the holiday season. So we kind of like the macro setup. But this is more about deal flow and Ollie's Army loyalty-related events, our, let's say, slight optimism on the acceleration in the Q4 guide. Operator: One moment for our next question, please. It comes from Steven Zaccone with Citi. Steven Zaccone: I wanted to follow up on the category performance in the second quarter. Can you help us isolate how much seasonal was a drag? And then help us understand some of the category productivity initiatives you have and more color on some of the merchandise assortment changes you're making. Robert Helm: Steve, it's Rob. I can quantify the seasonal drag. So just the straight math on lawn and garden and room air, the categories themselves would have been just over 100 basis points of drag year-over-year. However, those are businesses that drive traffic and drive folks into our store, and you've been to our store before, it's hard not to put another item in your basket. So given the attachment and everything else associated with that, we'd anticipate the drag to be even more meaningful than that. Calling out an exact number, it's hard to parse out the difference between weather, the consumer and the elevated promotional environment. So I don't want to give you an imprecise number, but it was meaningful and above the straight category math. Eric van der Valk: Yes, Steve, in terms of category performance, we're pleased with the progress that we're making in improving category productivity, especially in seasonal and the furniture businesses. It's not necessarily material enough for us to move the needle in Q2, but we are continuing to make progress. We're taking this test-and-learn approach informed by both data analysis and a qualitative evaluation of categories, reallocating inventory and space to categories where we see the white space in the market away from categories with low sales productivity that we believe are crowded by competition. Most importantly, decisions to introduce or expand categories, start with the existence of a robust sourcing pipeline of deep discount closeout product. We've been methodical in our approach to ensure we understand the customer response before we make any major changes. So test and learn in a handful of stores and really try to understand what's working, what isn't working and then roll from there. So a lot more to come on this. We're very excited about the progress we're making. Operator: Our next question comes from Edward Kelly with Wells Fargo. Edward Kelly: Eric, can we just take a step back on the comp? And I'm just kind of curious as you sort of assess things in here, you talked a little bit about assortment optimization. And I'm curious as to whether you think any of the weakness in the business relates to the availability of, let's call it, WOW discretionary items, let's call it, newness in the flyer, newness in the stores and the availability of that product versus what we know is availability of closeout overall. Is that having any impact? And then the second question here, just again, trying to dissect comps, how are the Big Lots stores comping as they are rolling in relative to the base? Eric van der Valk: Sure. Yes. Ed, I'll take the first part of the question. The closeout pipeline continues to be strong. So the short answer to your question is no, closeout availability is not a reason for a softer comp in Q2. I would point to all the things Rob just mentioned that kind of the collision of a promotional environment, unfavorable weather and a consumer that's under some pressure is more of the reason for Q2 coming in below expectations. You think about the product categories that are most important at that time of the year, we were very happy with the deal flow related to those categories, but they don't -- the categories don't necessarily resonate when the weather doesn't cooperate. And it's an opportunity, too, to just talk about deal flow in general as we move forward and where we sit. We feel very good about our deal flow. It remains strong. We look at this environment we're in and causation of deal flow in this moment. And this competition for customer attention, especially some of these very rapidly moving price investments tend to be focused more on consumables or if you look back on Q2 on some of the seasonal categories that I believe we were all struggling to sell, especially the first half of the quarter. That -- those price investments, that price competition, that competition for market share for attention, they all result -- create closeouts, and we're seeing that. And then the other comment to add color is the deal flow and summer seasonal weather impacted categories is especially strong in this moment. So that makes for a very good setup for next year in terms of the value we could deliver to the consumer when we come up on Q2. Robert Helm: From a Big Lots stores perspective, we talked about this a bit over the last couple of quarters. They're in the second year now up against the honeymoon period from the grand opening. Typically, our model would be to see a reverse waterfall where we'd see a negative mid-single digit to even a high single-digit negative in the second year. We're seeing that moderate in part because of the soft opening approach that we've taken. So we're seeing more of a low to mid, and that trend still is holding, Ed. Operator: One moment for our next question that comes from Matthew Boss with JPMorgan. Matthew Boss: So Eric, on the flat same-store sales this year versus the 2% algorithm that you had laid out multiyear, so continued strong deal flow you cited and the price investment this year. I guess what do you think is making up the 200 basis point delta for this year? And then what's your confidence to anniversary all of these actions and reaccelerate comps next year? Eric van der Valk: Sure. So when you look at Q2, we -- a lot of this pressure that we're talking about occurred through the first half of the quarter. And it was challenging to have the crystal ball as to how the quarter would play out related to especially the pressure on seasonal business. So we believe that as we move into Q2 of next year, first of all, that we'd have a more average weather-related condition. And we believe that a lot of what we were doing with price investments is a reaction to the competitive environment and ensuring that our values continue to stand out in an environment where a lot of our competitors were investing in price, especially the liquidation of weather-impacted categories. So that's an unusual environment. So like I guess that like said in very plain English, there isn't going to be this windfall of tariff refund to the extent that we know it this time next year, which doesn't provide the checkbook for accelerated price investments along with weather that just did not cooperate. I can't speak for the state of the consumer a year from now. I have a hard time speaking for the state of the consumer a month from now. So that's a question where fuel prices may land too is a question. Robert Helm: And Matt, overall, our model is built to comp. Our buyers are able to buy the best values in the marketplace, which gives us the opportunity to drive comps year in, year out. Stores of all vintages continue to comp, even some of our oldest stores. And as you know, you've been following the story a very long time, our track record on comp has been very good. Over the 10-year time horizon where we've been a public company, I think only 3 years where we've negatively comped during that time period. And most of that was related to COVID and some of our own internal challenges. So I think after this environment clears, to Eric's point, I think that this is a weird year and that we'll be back to operating like Ollie's in '27 and beyond. Operator: And our next question comes from Anthony Chukumba with Loop Capital Markets. Anthony Chukumba: So I had a question about seasonal more from a perspective of is there anything we have to be concerned with winter, right? In other words, like obviously, you were definitely negatively impacted in air conditioners and outdoor furniture. As you said, it was at least 100 basis points of comp, probably more. Is there any like big winter product seasonal sales that we need to kind of be aware of or keep an eye on? Is it much more of kind of a summer phenomenon? Eric van der Valk: Thanks, Anthony. It's definitely more of a summer phenomenon. So when you look at the back half of the year, there's a little bit of question around kind of October, November as you're kind of transitioning from Q3 into Q4 as to where the weather falls, has some impact, but it's really a matter of weeks. We look at the meaningfulness, the materiality of the winter weather impacted categories, and it's less than it is in the summer. So it's not nothing, but it's less material. Robert Helm: And so when we look at stacked, Anthony, as well, the third and fourth quarter, when you look further back in the 3- and 4-year stack, we're up against much more moderated stack. The second quarter was by far the toughest comparison that we're going to have all year long and probably one of the toughest comparisons we've had as a company because we've had multiyear strength in the second quarter. Operator: Our next question is from Peter Keith with Piper Sandler. Sarah Morin: This is Sarah Morin on for Peter Keith. Just looking towards 2027, how much visibility do you have into the new store pipeline? And have you been seeing any changes in quality or availability of the locations given the current retail environment? Robert Helm: No real changes to the environment. Real estate availability remains very good. We continue to be ahead of the pipeline, and we feel very confident about next year. We have our pipeline mainly in place for the upcoming year. 2028 and beyond, we're not speaking about yet, and we'll update it at a point in the future. Operator: One moment for our next question. It comes from Scot Ciccarelli with Truist. Scot Ciccarelli: I guess I still have some questions around your comments on the promotional environment. I guess just given your closeout model, I don't really recall competitive promotions as a big factor you've historically faced or at least noted in the past. So any color around that would be helpful. And then also, why couldn't we see an acceleration in promotional intensity as it seems like a lot of retailers are planning to invest back in price in the back half? Eric van der Valk: I'm not sure I understand the second part of your question, but what do you mean by acceleration, Scot? Scot Ciccarelli: Well, just in terms of most of the companies that have reported over the last couple of weeks, they're all talking about investing more in price in the back half. And so if we saw heightened promotional activity for you guys in the second quarter, like is that kind of built into the model? You guys are assuming it's going to be even deeper promotions from all the competitors out there? Eric van der Valk: I got you. Okay. Yes. In the second quarter, you're right in what you're saying, Scot, we typically don't talk about the promotional environment. This was a highly unusual environment. I think with the combination of tariff fuel price investments that were more exaggerated in the middle of the quarter, in addition to drag on seasonal weather, summer weather impacted categories and some of the clearance activity that took place out there that was much more aggressive than we've seen in the past. It did cause us to think a little bit differently about how we liquidate businesses and how we price certain goods. And I called out some examples earlier. As you look into the back half of the year, I mean, we've communicated that we're spending $15 million over the course of the year, and I think $10 million-ish of that is in the back half. So we are expecting to continue to invest in price. And I'll just emphasize, not knowing with certainty what the environment is going to look like from a promotion standpoint that if we need to invest more than $15 million, we will. We'll ensure that we are the price leader. We'll ensure that we maintain our price gaps and that we have the attention of the customer as we move into the back half of the year. I can't speak to what retailers did in Q2 versus the back half of the year and how they chose to report that out, how they invested and whether some of those investments are more back half weighted, I can only tell you what we're doing. And primarily, that is to make sure we're the best price in the market. Operator: Our next question comes from Simeon Gutman with Morgan Stanley. Simeon Gutman: So if you look back at when Ollie's had comped negative, it was almost always lapping a big compare to the prior year, which you are, a little bit following a lot of rapid store growth, which you've had. And then you've also cited some weather effects, and you've always recovered from it. But can you try to isolate the weather effects, not all regions probably have the same impact? And then as far as rapid store growth, are there regions where there's perhaps less cannibalization? So are you able to pinpoint maybe a little more with more precision some of these sort of onetime headwinds to your comps so we can understand, I guess, the recovery back? Robert Helm: Sure. Simeon, this is Rob. I'll take that. I gave some quantification earlier. That's about the best that I can quantify. I can add the qualitative that we've seen the most softness in comp in parts of the Midwest and Texas. The challenge that we have in terms of isolating and pinpointing is there's 2 dynamics that play in those regions. One, they had the greatest degree of unseasonable weather; and two, they happen to have the longest driving times, which are impactful when you're thinking about an elevated gas price environment. Both of those phenomenas, we would deem to be somewhat transitory. So hope in a nutshell in there, that gives you the answer that you're looking for in terms of when you can think about a return to a more regular comp cadence. Operator: Our next question is from Chuck Grom with Gordon Haskett. Charles Grom: Just as we exit 2026, can you clarify what the jumping point is going to be for gross margins, you're guiding to 41.3%. I think there's a 50 basis point net positive impact here from the refunds. Just how do we think about the jumping point from that? And then can you just remind us when you move a circ from -- or a flyer from one quarter to another, how much that positively impacted 2Q results? And then the last one for me, just on the quarter-to-date, I know you don't like to go there, but it does sound like it's positive. But I think you're net neutral now on flyers. I know you just dropped one this morning. So just 3 quick ones for me. Robert Helm: I'll answer about the gross margin algo, and then I think Eric will take the flyer and then hopefully, somebody else will take the third question. From an algo perspective, our views on the business haven't really changed over the longer term, even though we're in this short-term kind of moment in time. We are still on the long-term target of 40.5%. You're right to call out the additional 50 bps from the net tariff noise from the refunds less the price investments. In the short term, our view is the current pricing environment is being fueled in large part by tariff refunds, which are limited in terms -- finite in terms of dollars and represent a moment in time. We think that likely plays out over the balance of this year to some of the earlier comments that were made. Zooming out beyond this year, our strategy remains being the lowest price in the market anywhere and maintaining our leadership position in value and price gaps over retailers. Our flexible buying model allows us to drive this value with customers while delivering great returns to shareholders, and we continue to see more leverage from scale, but we're not ready to change any thinking relative to how we think about gross margin. Eric van der Valk: Yes, Chuck, I'll take the flyer question. It's probably important to talk about why we did what we did. And I think we talked a little bit about this on the Q1 call. We do routinely make changes to flyer timing based on the way the calendar sets up primarily. In this case, we actually made the change because in the past, we've not run a flyer event between Ollie Days and early to mid-August. So we've been kind of blank, dark on communicating in that way to the customer over a fairly elongated period of time when you consider we're out there at least monthly, if not more often, the rest of the year. We saw white space and deep discount closeout product for back-to-school and back-to-college, and didn't like that we were dark for that elongated period of time. So we shifted the flyer, as you indicated, from August into the last week of July. I think it's important to consider that, that flyer occurred at the very end of July. So it was just a handful of days that fell into August. And the reason I think the setup for our -- for the thought process on why we made the move is important is it was the launch introduction of newness with the back-to-college, back-to-school businesses. So it wasn't just about the flyer event and the impact of marketing around that event on one quarter versus another. It was about getting out in front of the customer with product that we felt was very relevant at a time that aligned with need. And we like what we saw out of that. It had a relatively immaterial impact on Q2, but it's definitely been more meaningful for Q3. And again, that's not about the flyer shift. It's about the setup of those businesses. And I don't know if the quarter-to-date question, I think, was the last, the flyer shift in the... Robert Helm: Well, the flyer shift is we literally get no benefit from as of yet, Chuck, because it just literally dropped this morning. Our stores are just opening now. Eric van der Valk: Yes. I think the advice for those that are looking at the weekly or daily cadence of our business is to wait until end of next week, not this week, but next week because there are intra-quarter shifts we're making as well. So I would attempt to read our business mid-September. Trying to compare quarter-to-date trends to last quarter is extremely difficult. We've done it, and it's informed our guide. So I think that's the most important point to make to everyone out there. Operator: One moment for our next question. It comes from Mary Sport with Bank of America. Mary Sport: I was wondering if you could just provide a few more details on performance by income cohort. I know you mentioned that you're still seeing high income trading down, but what did you see for the middle and lower incomes? And if there was some trade out, did you see a return of those customers after you were able to implement some of those price investments during the quarter? Eric van der Valk: Sure. Yes. When you look at Q2, it was relatively consistent to Q1. We saw -- on the income side, I already mentioned, we saw the higher income consumer trading down, kind of drawing the line around $100,000 in household income. On the trade-out side or not trade out, but less frequent shopping headwind that we were seeing with the lower income consumer, we saw that relatively consistent to Q1, and we're drawing that line at $65,000 in income or below. I think it's also important to note because we're very focused on attracting a younger customer that we're continuing to see great momentum in attracting and retaining younger consumers. And I'm going to define it today as ages 35 to 55 with -- especially with some strength in the 35 to 45 range. So we're very encouraged by that. We do think that our product offering has become -- some of our product anyway has become more appealing to younger customers, and that is deliberate. And we're chatting about it to consumers in a place where they tend to be looking, meaning in various digital platforms so that we're able to reach them with our continued increasing sophistication in digital marketing. Did I get all your questions, Mary? I don't know if I missed. Mary Sport: Yes. Super helpful. Operator: One moment for our next question. It comes from Mark Carden with UBS. Matthew Rothway: This is Matthew Rothway on for Mark. So as it relates to your fuel price assumptions, are you still expecting a roughly 20 to 30 basis point margin headwind from fuel? Has anything changed around your thinking there? And then any initial thoughts on how you're approaching your fuel assumptions for next year? Robert Helm: Thanks. I'll take that. You're spot on. The fuel pressure continues to be in the range of, say, 20 to 30 basis points. That's what we saw in the second quarter, and that's what we got baked into the balance of the year, which is not new news. We had that in our previous guidance as of the last call. In the second quarter, however, that was completely offset -- more than offset by tariff refunds. When we think out to next year, it's just a little bit early for us to start talking about guidance for next year. We still have a lot of year to go this year. We'll give you an update when we have our third quarter call. Operator: Ladies and gentlemen, this will conclude our Q&A session and conference for today. We want to thank everyone for participating, and you may now disconnect. Before you buy stock in Ollie's Bargain Outlet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ollie's Bargain Outlet wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,997!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,413,876!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 9, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Ollie's Bargain Outlet. The Motley Fool has a disclosure policy. Ollie's (OLLI) Q2 2027 Earnings Call Transcript was originally published by The Motley Fool

Ollie's Bargain Outlet Holdings Inc.’s (NASDAQ:OLLI) second quarter results were characterized by robust loyalty membership growth, store count expansion, and a notable boost in earnings despite weakness in comparable store sales. During the quarter, the retailer opened 15 new locations and shut down one store because of storm-related damages. This pushed its overall store count to 686 across 36 states, a year-over-year jump of 11.9%. The ongoing growth in its store network continues to be the core focus of Ollie's expansion roadmap, as the management recently confirmed its plans to open 75 new stores by the end of this fiscal year. Such a strategy strongly reflects on the extended growth potential of Ollie’s existing business model. Photo by Franki Chamaki on Unsplash The company's loyalty program, Ollie's Army, continued to gain momentum during the recent quarter, raising its reach to 18.1 million members. This helped push net sales higher by 9.1% to $741.3 million, with the gain coming mainly from newly opened stores rather than sales at existing locations. Even with comparable sales trending downward, key profitability figures showed clear improvement. With lower supply chain-related costs, gross margins expanded to 43.5%. A key factor behind this jump was the IEEPA tariff refunds, which contributed 380 basis points to gross margin on their own, in addition to broader reductions in tariff rates. This tariff-related benefit served as a meaningful cushion, helping to overcome the drop in comparable sales. Together, these factors fueled substantial growth in the bottom line as the adjusted net income climbed 40.3% to $85.4 million, and adjusted net income per diluted share rose 43.4% to $1.42. This represented an outsized growth compared to overall sales growth, which highlights the impact of tariff refunds and margin improvements on the overall results. Comparable store sales dropped 1.8%, relative to a 5% expansion in the same quarter last year. This year's decline can predominantly be linked to a smaller average basket size. Other factors that contributed to such weakness include less favorable weather, persistent economic strain on consumers, and a more promotional retail landscape than had been anticipated. Another critical factor is a base effect, since this quarter's performance faced a tough multi-year comparison. Regarding expenses, SG&A as a percentage of net sales increased 80 basis points to 26.6%. This was due to fixed costs deleveraging amid slower comparable sales, as well as higher marketing expenditures for additional merchandise flyer distributed during the period. Looking forward, Ollie's updated its guidance for the full year to account for revised second-half sales expectations and the tariff refunds it received under IEEPA in the second quarter. Management now anticipates full-year net sales between $2.928 billion and $2.941 billion, compared to previous guidance of $2.980 to $3 billion. The comparable store sales growth outlook has also been revised downward from previous 2% to a new range between 0 to 0.5%. Data tracked across 1,000+ hedge funds by Insider Monkey reveals a marginal increase in number of smart money managers invested in the stock. As per 13F filing data for Q2 2026, a total of 38 hedge funds held positions in the stock compared to 36 by the end of the first quarter. According to Yahoo Finance database, FMR is the largest institutional investor with 8.76 million shares as of June 30, representing 14.75% of outstanding shares. Other notable institutional names include BlackRock and Wasatch Advisors that held 9.42% and 7.34% of outstanding shares, respectively. The recently concluded quarter highlights that despite softer comparable sales, continued store expansions and effective cost discipline can bolster earnings and returns for company shareholders. This adds to Ollie’s positioning and durability within the value retail segment. Management has so far executed $137.3 million of share repurchases during the first half of 2026, with additional capacity of $121.5 million still at its disposal. This approach of returning capital to investors could also draw substantial amount of investor enthusiasm during the latter half. While we acknowledge the potential of OLLI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 12 Best Industrial Stocks With More Than 50% Upside and 10 Best Stocks Under $10 That Could Triple. Disclosure: None. Follow Insider Monkey on Google News.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Comparable store sales declined 1.8% due to a 'collision' of unseasonable weather, persistent economic pressure on lower-income consumers, and an elevated promotional environment. Management observed a bifurcated consumer: lower-income households (under $65,000) are prioritizing needs over wants and shopping closer to home to save on fuel, while higher-income households (over $100,000) continue to trade down to Ollie's. The closeout deal flow remains extremely strong as competitive price investments and market volatility create excess inventory opportunities for Ollie's to acquire. Operational performance was bolstered by the normalization of the Texas distribution center and continued supply chain efficiencies, which helped mitigate some top-line softness. The company is executing a 'test-and-learn' approach to category optimization, shifting floor space toward high-productivity areas like protein products, beverages, and seasonal decor. Ollie's Army loyalty program grew 13% to over 18 million members, serving as a critical tool for customer acquisition and targeted engagement during promotional events. The updated full-year outlook assumes a more measured sales trend, planning the second half in line with the second-quarter two-year stack (flat for Q3 and up 1% for Q4). Management is deploying $28 million in IEEPA tariff refunds to fund approximately $15 million in strategic price investments to maintain price leadership against competitors. Q4 optimism is driven by strong deal flow for holiday events and a consumer trend of shopping closer to immediate need, which aligns with the treasure hunt model. The company The company remains on track to meet its target of 75 new store openings for the current fiscal year., with the The Illinois distribution center expansion is planned for completion by mid-2026. Guidance assumes current fuel costs and tariff rates remain stable for the remainder of the fiscal year, with fuel expected to be a 20-30 basis point margin headwind. Gross margin was significantly impacted by a 380 basis point benefit from one-time IEEPA tariff refunds, partially offset by a 70 basis point deliberate investment in price. The company aggressively repurchased $84 million of common stock in Q2, signaling management's confidence in the long-term value despite near-term sales volatility. Inventory increased 11% year-over-year, which management explicitly attributed to new store growth rather than a buildup of slow-moving merchandise. Two store closures were noted due to storm damage, which are factored into the revised net sales guidance for the fiscal year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that consumers in rural areas or regions with longer drive times, like Texas and the Midwest, are showing more sensitivity to fuel prices. To combat this, the company tested a '5 for the Drive' personalized offer to incentivize customers living outside a certain radius to visit stores. The current 41.3% gross margin guidance includes a net 50 basis point benefit from tariff refunds after price investments. Management clarified that while they are using the 'windfall' of tariff refunds to fund current promotions, their long-term target remains 40.5% as these refunds are finite. Lawn, garden, and room air categories created a direct 100 basis point drag on comps, but the total impact was likely higher due to lost 'treasure hunt' attachment sales. Management expects this to be a summer-specific phenomenon, as winter weather-sensitive categories are less material to the overall business mix. A flyer was shifted from August to late July to capture 'white space' in back-to-school and back-to-college categories where Ollie's had strong closeout deals. The shift was intended to ensure the brand was not 'dark' during a critical shopping window, though it had an immaterial impact on Q2 total results.

Ollie’s Bargain Outlet Holdings, Inc. OLLI reported second-quarter fiscal 2026 adjusted earnings of $1.42 per share, which improved 43.4% year over year and beat the Zacks Consensus Estimate of $1.14 by 24.6%. Net sales rose 9.1% to $741.3 million but missed the consensus mark of $753 million by 1.5%.Earnings benefited from IEEPA tariff refunds and lower tariff rates, while the sales increase reflected new-store growth. Comparable-store sales declined 1.8% as average basket size fell, with less favorable weather, consumer pressure and a heightened promotional environment weighing on demand. OLLI opened 15 stores and closed one storm-damaged location during the quarter, ending with 686 stores across 36 states. The store base increased 11.9% from a year earlier and remained the main driver of top-line growth. The company opened 42 stores in the first half of fiscal 2026.Comparable-store transactions were flat, while the average basket declined. Toys, general merchandise, summer furniture, candy and seasonal decor were the strongest categories. Lawn and garden plus room air represented more than 100 basis points of year-over-year comp pressure, with management indicating that the broader drag was more meaningful because those categories also drive store traffic. Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote Ollie’s Bargain said lower-income customers continued to prioritize needs over wants, shop closer to need and make fewer trips. Management defined that cohort at a household income of $65,000 or below. Higher-income customers, defined around $100,000 and above, continued to trade down in search of value.Ollie’s Army loyalty membership increased 12.7% to 18.1 million. New customer acquisition also increased, while management highlighted continued momentum among shoppers ages 35 to 55, with particular strength in the 35-45 range. Closeout deal flow remained strong, giving the retailer flexibility to adjust category mix and value. Gross margin expanded 360 basis points to 43.5%. IEEPA tariff refunds contributed 380 basis points, while merchandise margin declined primarily because of price investments. Lower tariff rates more than offset elevated transportation costs. Excluding the refund and related price investment, management said gross margin would have been about 40.3%-40.4%.SG&A expenses increased 80 basis points as a share of sales to 26.6%, reflecting fixed-cost deleverage from the negative comp and higher marketing costs tied to one additional merchandise flyer. Pre-opening expenses fell 42% to $5.2 million on fewer store openings and lower dark-rent expense. Adjusted net income increased 40.3% to $85.4 million. Operating income rose 40.9% to $108.5 million, while adjusted EBITDA climbed 35.5% to $127.1 million. Adjusted EBITDA margin widened 330 basis points to 17.1%.Beyond the tariff benefit, management cited favorable shrink trends and supply-chain efficiencies as additional support to earnings. The Texas distribution-center expansion was completed during the quarter, and operations have normalized. The Illinois facility expansion is expected to begin in the coming months. Total cash and investments reached $507.1 million, up 10.2% year over year, while inventories increased 10.5% to $704.4 million, primarily to support new-store growth. Capital expenditures totaled $43.3 million, with spending focused on new stores, existing-store improvements and the Texas distribution-center expansion.OLLI repurchased about $84 million of stock in the quarter and $137.3 million in the first half. The company had $121.5 million remaining under its authorization at quarter-end and continued to carry no meaningful long-term debt. Ollie’s Bargain lowered its fiscal 2026 net sales outlook to $2.928-$2.941 billion from $2.980-$3.000 billion. Comparable-store sales are now expected to range from flat to up 0.5%, down from the prior view of about 2% growth. The 75-store opening target was maintained, while planned share repurchases increased to about $175 million from $125 million.The company raised its adjusted earnings outlook to $4.57-$4.65 per share from $4.45-$4.55 and lifted the gross-margin view to about 41.3% from 40.7%. Operating income is now projected at $345-$350 million. Management expects third-quarter comps near flat and fourth-quarter comps up about 1%, while August trends were running ahead of the plan used to set guidance.Shares of this Zacks Rank #4 (Sell) company have fallen 0.8% over the past three months against the industry’s rise of 7%. The Vita Coco Company, Inc. COCO, a leading beverage company that develops, markets and distributes coconut water and other plant-based beverages, currently sports a Zacks Rank #1 (Strong Buy). COCO delivered a trailing four-quarter earnings surprise of 21.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.Target Corporation TGT operates as a general merchandise retailer. TGT carries a Zacks Rank #2 (Buy). The consensus estimate for Target’s current fiscal-year sales and earnings implies growth of 4.7% and 37.7%, respectively, from the year-ago reported figures. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.Darling Ingredients Inc. DAR, a global developer and producer of sustainable natural ingredients derived from edible and inedible bio-nutrients, currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests an 11.5% jump from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ollie's Bargain Outlet Holdings, Inc. (OLLI) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report Darling Ingredients Inc. (DAR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Net Sales: Increased 9.1% to $741 million, driven by new store openings. Comparable Store Sales: Decreased 1.8%, impacted by flat transactions and a decrease in basket. Gross Margin: Increased 360 basis points to 43.5%, driven primarily by IEEPA tariff refunds. SG&A Expenses: As a percentage of net sales, increased 80 basis points to 26.6%. Adjusted Net Income: Increased 40% to $85 million. Adjusted Earnings Per Share: Increased 43% to $1.42. Adjusted EBITDA: Increased 36% to $127 million, with adjusted EBITDA margin up 330 basis points to 17.1%. Cash and Investments: Increased 10% to $507 million. Share Repurchases: Repurchased $84 million of common stock in the quarter. Inventories: Increased 11% year-over-year, driven by new store growth. Capital Expenditures: $43 million in the quarter. New Store Openings: Opened 15 new stores in the second quarter and 42 in the first half of the year. Ollie's Army Members: Increased 13% versus last year, ending the period with over 18 million members. Warning! GuruFocus has detected 2 Warning Signs with OLLI. Is OLLI fairly valued? Test your thesis with our free DCF calculator. Release Date: September 02, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strong earnings growth in Q2 2026, with adjusted EPS up 43% to $1.42 and adjusted EBITDA up 36% to $127 million. Gross margin expanded 360 basis points to 43.5%, driven by IEEPA tariff refunds. Opened 15 new stores in Q2 and 42 in the first half, on track to meet the full-year target of 75. Ollie's Army membership grew 13% year-over-year, reaching over 18 million members. Deal flow remains strong, providing opportunities to sharpen value proposition and secure quality closeout inventory. Completed Texas distribution center expansion, with Illinois expansion planned to support future growth. Strong balance sheet with $507 million in cash and no meaningful long-term debt, allowing for opportunistic share repurchases ($84 million in Q2). Comparable store sales declined 1.8% in Q2, impacted by unfavorable weather, economic pressure on consumers, and an elevated promotional environment. Lower-income customers are shopping less frequently and prioritizing needs over wants, leading to softer discretionary sales. Weather-sensitive categories, such as lawn and garden and room air, were significant drags on comp sales, with a direct impact of over 100 basis points. Merchandise margin decreased due to investments in price, reflecting a competitive promotional landscape. SG&A expenses deleveraged by 80 basis points due to fixed cost deleverage from negative comps and higher marketing expenses. Full-year comp guidance was lowered to flat to +0.5%, reflecting a more cautious near-term outlook. Fuel price pressures continue to impact consumer behavior, particularly in regions with longer drive times, creating a headwind for sales. Q: Can you unpack the gross margin performance in the second quarter, excluding the IEEPA tariff refunds, and discuss how you are balancing price investments with margin generation given the current tariff and consumer environment?A: Robert Helm (CFO) explained that the tariff refunds contributed 380 basis points to gross margin, which was partially offset by a 70-basis-point price investment concentrated in weather-sensitive categories. Excluding these items, gross margin would have been approximately 40.3% to 40.4%, above the company's guidance of 39.9%. Eric van der Valk (CEO) added that the company plans to invest approximately $15 million in price investments for the full year and will not hesitate to invest beyond this level to strengthen its price leadership position, emphasizing that being the lowest price in the market is crucial for building customer trust. Q: Could you provide more detail on the comparable store sales cadence throughout the second quarter and the trends you are seeing in the third quarter to date?A: Robert Helm (CFO) noted that while the second quarter was impacted by unfavorable weather, transaction trends sequentially improved each month, ending the quarter positive, with basket ending flat. Consumables continued to perform well at mid-single-digit growth. For August to date, results are running ahead of the plan used to build the guidance, which assumes flat comps for the third quarter, factoring in a flyer shift and Labor Day timing. Q: How are changing consumer behaviors impacting your business, particularly regarding shopping frequency, fuel prices, and trade-down trends?A: Eric van der Valk (CEO) stated that the consumer remains resilient, with traffic flat for the quarter. However, lower-income consumers are being more selective, prioritizing needs and shopping less frequently, especially those living farther from stores due to higher fuel costs. The company is seeing higher-income customers (above $100,000 household income) trading down to Ollie's. New customer acquisition remains strong, and the company is seeing great momentum in attracting younger consumers aged 35 to 55. Q: Can you quantify the impact of weather-sensitive categories on the second quarter comps and provide more color on the category productivity initiatives?A: Robert Helm (CFO) quantified that lawn and garden and room air categories alone were just over 100 basis points of drag year-over-year, but the total impact was more meaningful due to attachment sales. Eric van der Valk (CEO) added that the company is making progress in improving category productivity through a test-and-learn approach, reallocating inventory and space to categories with white space in the market, such as protein and energy products, beverages, seasonal decor, and living room furniture. Q: What is driving the difference between this year's flat comp guidance and the company's long-term 2% comp algorithm, and what gives you confidence in reaccelerating comps next year?A: Eric van der Valk (CEO) attributed the shortfall to an unusual confluence of factors: an elevated promotional environment fueled by competitors' tariff refunds, unfavorable weather impacting seasonal categories, and a pressured consumer. He noted that these are largely transitory issues. Robert Helm (CFO) added that the company's model is built to comp, and over its 10-year history as a public company, it has only negatively comped in three years, mostly related to COVID and internal challenges, expressing confidence in returning to normal operations in 2027. Q: Is the availability of "wow" discretionary closeout items impacting comps, and how are the new larger-format stores comping relative to the base?A: Eric van der Valk (CEO) stated that the closeout pipeline remains strong and is not a reason for the softer comp. The company is seeing strong deal flow, especially in summer seasonal categories, which sets up well for next year. Robert Helm (CFO) noted that the larger-format stores are in their second year and are comping in the low-to-mid single-digit negative range, which is better than the typical mid-to-high single-digit negative decline seen in the second year, due to the soft opening approach. Q: How should we think about the gross margin jumping-off point for 2027, given the current guidance of 41.3%?A: Robert Helm (CFO) clarified that the long-term gross margin target remains 40.5%. The current guidance includes a 50-basis-point net positive impact from tariff refunds, offset by price investments. He emphasized that the current pricing environment is being fueled by finite tariff refund dollars, which represent a moment in time. Beyond this year, the company's strategy remains focused on being the lowest price in the market while leveraging scale to drive value and returns. Q: Can you provide more details on performance by income cohort and whether you saw a return of customers after implementing price investments during the quarter?A: Eric van der Valk (CEO) stated that the trends were consistent with the first quarter, with higher-income consumers (above $100,000) trading down and lower-income consumers (below $65,000) shopping less frequently. The company is seeing strong momentum in attracting and retaining younger consumers, particularly those aged 35 to 45, driven by a more appealing product offering and increased sophistication in digital marketing. Q: Are you still expecting a 20 to 30 basis point margin headwind from fuel prices, and how are you approaching fuel assumptions for next year?A: Robert Helm (CFO) confirmed that the fuel pressure remains in the range of 20 to 30 basis points, which is baked into the balance of the year guidance. In the second quarter, this was more than offset by tariff refunds. He noted that it is too early to provide guidance for next year, and the company will provide an update on the third quarter call. Q: How much visibility do you have into the new store pipeline for 2027, and have you seen any changes in the quality or availability of locations?A: Robert Helm (CFO) stated that there have been no real changes to the real estate environment, with availability remaining very good. The company is ahead of the pipeline and feels very confident about next year, with the pipeline mainly in place for 2027. The company will update on 2028 and beyond at a future point. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) shares rose 2.3% in premarket trading after the off-price retailer reported fiscal second-quarter 2026 results, including higher net sales and adjusted earnings per share. Net sales increased 9.1% year over year, while adjusted net income per diluted share rose 43.4% to $1.42. The supplied information cites a consensus earnings estimate of $1.14 per share and an analyst revenue estimate of $756.4 million. It does not provide Ollie’s reported quarterly revenue figure. Comparable store sales decreased 1.8% during the quarter. Chief Executive Eric van der Valk attributed the decline to less favourable weather, continued economic pressure on consumers and a higher level of promotional activity. These factors represent management’s explanation for the comparable sales performance. Despite the decline in comparable store sales, Ollie’s increased its expectations for gross margin and adjusted earnings per share for the full year. The company raised its gross margin guidance to approximately 40.7% from 40.5%. Ollie’s also increased its adjusted earnings per share forecast to a range of $4.45 to $4.55, compared with its previous guidance of $4.40 to $4.50. The revised projections represent company guidance and remain subject to future operating and market conditions. Ollie’s spent approximately $84 million to repurchase 1.107 million shares during the second quarter. Share repurchases during the first half of the fiscal year totalled $137.3 million, according to the supplied information. The buybacks represent capital allocation decisions by the company and do not by themselves establish management’s view of the stock’s future performance or valuation. Ollie’s entered the quarterly report trading near $75, with the shares down approximately 32% year to date and below their 52-week high. Elsewhere in the discount retail sector, the supplied information showed differing recent results. Ross Stores reported revenue growth of 13.3% and results above estimates, while Burlington reported results below expectations. Broader U.S. equity markets provided a mixed-to-lower backdrop in premarket trading, with the S&P 500 slightly negative and the Nasdaq down 0.4%. Ollie’s 2.3% premarket increase followed the company’s quarterly results and higher profitability guidance. However, the extent to which individual factors contributed to the share-price move cannot be established from the supplied information. Ollies Bargain Outlet Holdings stock price