Ollie's Bargain Outlet Holdings, Inc. — Second Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net sales increased 9.1% year-over-year to $741.3 million for the thirteen weeks ended August 1, 2026, compared to $679.6 million in the prior year period.
• Net income rose 39.3% to $85.5 million, up from $61.3 million in the same quarter last year.
• Net income per diluted share increased 43.4% to $1.42, compared to $0.99 in the prior year.
• Adjusted net income increased 40.3% to $85.4 million, with adjusted net income per diluted share rising 43.4% to $1.42.
• Adjusted EBITDA grew 35.5% to $127.1 million, representing 17.1% of net sales, up from $93.8 million (13.8% of sales) in the prior year.
• Gross margin expanded 360 basis points to 43.5%, driven by lower supply chain costs, IEEPA tariff refunds, and lower tariff rates; IEEPA tariff refunds specifically benefited gross margin by 380 basis points.
• Selling, general, and administrative (SG&A) expenses as a percentage of net sales increased 80 basis points to 26.6%, primarily due to the deleverage of fixed costs from declining comparable store sales and higher marketing expenses.
• Pre-opening expenses decreased 42.0% to $5.2 million, driven by fewer new store openings and lower dark rent expense.
• Total cash and investments increased $46.8 million to $507.1 million, comprising $120.8 million in cash and cash equivalents, $66.7 million in short-term investments, and $319.6 million in long-term investments.
• Operating cash flow for the quarter was $108.1 million, compared to $80.7 million in the prior year period.

Guidance and Future Outlook

• The Company updated its fiscal 2026 net sales outlook to a range of $2.928 billion to $2.941 billion, down from the previous range of $2.980 billion to $3.000 billion.
• Comparable store sales growth guidance for fiscal 2026 was lowered to 0% to 0.5%, compared to the previous expectation of approximately 2%.
• Gross margin guidance for fiscal 2026 was raised to approximately 41.3%, up from the previous ~40.7%.
• Operating income guidance for fiscal 2026 was raised to a range of $345 million to $350 million, compared to the previous $340 million to $348 million.
• Adjusted net income guidance for fiscal 2026 was raised to a range of $275 million to $279 million, compared to the previous $271 million to $277 million.
• Adjusted net income per diluted share guidance for fiscal 2026 was raised to a range of $4.57 to $4.65, compared to the previous $4.45 to $4.55.
• Share repurchase guidance for fiscal 2026 was increased to approximately $175 million, up from the previous ~$125 million.
• New store openings guidance for fiscal 2026 remains at 75, and capital expenditures guidance remains at $103 million to $113 million.
• The updated outlook includes the impact of $28.3 million in IEEPA tariff refunds received in the second quarter, which the Company intends to reinvest in pricing actions.

Business Segments and Product Lines

• The Company opened 15 new stores and closed one store due to storm damage, ending the quarter with 686 stores across 36 states, a net increase of 11.9% year-over-year.
• Ollie's Army loyalty program membership grew 12.7% to 18.1 million members.
• Comparable store sales decreased 1.8%, driven by a decrease in average basket size, contrasting with a 5.0% increase in the prior year's second quarter.
• The business model focuses on closeout merchandise and excess inventory from suppliers and manufacturers, offering brand-name household products at prices up to 70% below traditional retailers.

Market and Competitive Landscape

• Management noted that consumers continue to seek value, creating buying opportunities across the closeout market.
• The Company reported strong deal flow and remains committed to strengthening its competitive position through price reinvestment.
• Sales results were negatively impacted by less favorable weather, continued economic pressure on consumers, and an elevated promotional environment.
• The Company highlighted its flexible business model, deep vendor relationships, growing scale, and talented team as key positioning factors for long-term profitable growth.

Risks and Challenges

• Sales performance was challenged by unfavorable weather conditions, ongoing economic pressure on consumers, and a competitive promotional environment.
• Store closures occurred due to storm damage.
• SG&A expense deleverage occurred as a result of the decline in comparable store sales.
• Forward-looking statements are subject to risks including tariff announcements, macroeconomic pressures, and other factors detailed in the Company's Form 10-K and other SEC filings.

Management Commentary and Tone

• Eric van der Valk, President and CEO, stated the Company delivered strong earnings growth and continued to execute on strategic initiatives despite a challenging multi-year stack.
• Management expressed confidence that Ollie's is well-positioned to deliver long-term profitable growth through any retail environment due to its flexible model and scale.
• The tone acknowledged the challenging backdrop but emphasized the opportunity created by consumer value-seeking behavior and strong deal flow.

Other Key Points

• The Company invested $84.0 million to repurchase 1.107 million shares of common stock in the second quarter.
• In the first half of fiscal 2026, the Company repurchased $137.3 million, or 1.6 million shares, of its common stock.
• At the end of the second quarter, $121.5 million remained available for future share repurchases under the current authorization.
• Adjusted net income guidance includes approximately $22 million in interest income.
• Adjusted net income excludes excess tax benefits related to stock-based compensation.
• The Company operates as a leading off-price retailer of brand-name household products, founded in 1982.