Ollie's Bargain Outlet blasted past a buy point after edging past third-quarter earnings estimates early Tuesday, though sales were on the light side. Meanwhile, United Natural Foods continued to make good on its turnaround, posting an unexpected profit and stronger outlook for fiscal 2025.
Analysts see Ollie's as positioned to thrive as closeout merchandise competitor Big Lots founders. Big Lots declared bankruptcy in September and undertook a second wave of store closings. Ollie's has taken over the leases of 15 of those stores.
United Natural Foods, a wholesaler of natural and specialty foods, has been optimizing its distribution network, reducing capital intensity and bolstering its complementary data and analytics services to customers.
Ollie's Bargain Outlet Earnings
Ollie's Bargain Outlet posted Q3 adjusted earnings per share of 58 cents, up 14% from a year ago and a penny ahead of estimates. Sales rose 7.8% to $517.4 million, shy of $519.5 million estimates. Same-store sales, which rose 7% in the year-ago quarter, slipped 0.5% from a year ago vs. flat expectations, according to FactSet.
"We delivered strong earnings on higher sales, gross margin, and disciplined expense control," CEO John Swygert said in the earnings release. He noted that Ollie's "took advantage of a number of real estate opportunities that strengthened our new store pipeline and enhanced our competitive positioning."
Ollie's stood by its full-year EPS outlook, but slightly pared its sales outlook. Same-store sales are now seen rising 2.7% to 3% from a year ago, down from the prior 2.7% to 3.2% range.
Truist analyst Scot Ciccarelli found Ollie's results impressive, considering "several headwinds" during the quarter. Among those was competitor store closeouts, which provide a temporary boost to competition. Truist kept a buy rating while boosting its OLLI stock price target to 121 from 109.
United Natural Foods
UNFI earned 16 cents a share in its fiscal first quarter vs. estimates of a one-cent loss and a year-ago loss of four cents. Revenue grew 4.2% to $7.87 billion, topping $7.61 billion estimates.
United Natural Foods raised its full-year EPS view to a range of 40 cents to 80 cents, doubling the bottom of the range from 20 cents.
OLLI, UNFI
OLLI stock surged 13.2% to 111.02 in Tuesday stock market action. The chart shows a 102.83 buy point from a handle at the end of its 22-week consolidation. The 5% buy zone runs through 107.97.
UNFI surged 20% to 29.62. UNFI, which broke above a buy point on Nov. 21, had already climbed beyond the top of its buy range with Monday's 2.5% gain.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
