Ollie's profit beats on tariff refunds, but shoppers pull back and sales outlook cut
Shoppers are spending less at existing Ollie's stores Same-store sales fell 1.8% last quarter, and management cut its full-year outlook for those stores to roughly flat from about 2% growth. Fewer visits and smaller baskets mean the core business is stalling, which is what pushed the stock down and led most analysts to trim price targets.
Weak comparable sales and the cut outlook are the main drag on the stock and the core of the period's news.
Tariff refunds inflated profit, and analysts doubt it lasts A one-time refund of import tariffs added about $0.35 a share, lifting earnings 43% and gross margin to 43.5%. That is a cash windfall, not better selling, so several analysts cut targets even as two raised them; the boost fades next year.
The earnings beat is the biggest positive number in the period, but its one-off nature is the key caveat.
Still opening stores and buying back stock Ollie's opened 15 stores last quarter and just hit its 700th location, on the way to a planned 1,300-plus. It also bought back $84 million of stock and raised the yearly buyback target to about $175 million, with $507 million of cash and almost no debt.
Store growth and buybacks are the main supports under the stock while existing-store sales are weak.
Wall Street worries the business is subscale and pricey to run Analysts flagged flat operating margins, a modest 9.2% return on capital and slow growth, and short interest sits at 15% of the shares available to trade. That skepticism, plus cautious consumer spending and higher fuel costs, keeps pressure on the stock.
This is the counterweight: outside analysts question the model's returns even as profits beat.