The market has Ollie’s Bargain Outlet (NASDAQ: OLLI) completely wrong, pricing it as a dollar store rather than a closeout retailer, which is what it is. Close-out retailers rely on end-of-season, surplus, and excess inventory from major retailers and manufacturers, snagging deep discounts they pass on to their shoppers.
On the other hand, dollar stores offer a low-price variety of everyday items they keep in stock; they are low-price convenience stores. The distinctions are margin, pricing power, and, ultimately, what they carry, and they make all the difference.
