Ollie’s Struggles To Meet Heightened Pandemic Sales Expectations
As Ollie’s Bargain Outlet prepares to open a new location in the Chautauqua Mall, the store’s parent company is struggling to meet heightened expectations driven by last year’s stimulus check-fueled buying bonanza.
Ollie’s Bargain Outlet Holdings Inc. officials recently released the company’s financial results for the second quarter of 2021, with net income of 52 cents per share that fell short of Wall Street expectations, according to the Associated Press. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of 57 cents per share.
The retailer posted revenue of $415.9 million in the period, also falling short of initial forecasts. Four analysts surveyed by Zacks expected $436.7 million. Comparable store sales decreased 28.0% from the prior year increase of 43.3%, resulting in a two-year stack of positive 15.3%. According to company officials, managing expectations in the retail sector is trying to meet stockholder expectations after recording company-best profits and sales in 2020 driven in part by federal stimulus checks. Realigning expectations will continue in the third quarter, according to company officials.
“Very similar to Q2 numbers — obviously, during Q2, there was a lot of stimulus dollars out there, this year from March, April and May, and those dollars, we saw them really slow down in June and July,” said John Swygert, Ollie’s president and CEO. “So, we really saw a slowdown from where we were running in May, but we’re still very excited to deliver a two-year stack of 15.3%, and we felt real good where we land. And so, I think the most important piece is the inventories are in real good position. The deal flow is strong and we’re excited where we are right now positioned for Q3.”
Ollie’s store in the Chautauqua Mall is expected to open soon, with hiring signs populating the area around the mall. The Lakewood store is one of nearly 50 stores to open in the 2021 financial year, with another 50 new stores expected in 2022, according to Swygert. More stores would have opened this year, but permit delays and construction delays have delayed some projects on which leases have been signed.
“We continue to expand the Ollie’s brand to new communities and customers,” Swygert said. “We opened 12 stores during the quarter and have opened a total of 30 stores this year, including two relocations. Milestones in the quarter include the opening of our 400th store and the entry into three new states: Vermont, Missouri and Kansas, expanding to a total of 28 states. Overall, the team has done an amazing job executing these projects despite the added challenges of opening and operating during the pandemic.”
One help in some states has been the voluntary end of federal jobless aid that was first approved in 2020 when the COVID-19 outbreak hit. States that have already ended pandemic unemployment include Alaska, Iowa, Mississippi, Missouri, Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia, Wyoming, Arkansas, Florida, Georgia, Ohio, South Carolina, South Dakota, Texas, Utah, Montana, Oklahoma, Tennessee and Arizona.
The rest of the pandemic unemployment benefits end Sept. 6 unless states choose to pick up the cost on their own. As Ollie’s tries to fill out its roster in the Lakewood store, Swygert said filling openings has been easier in states where the pandemic benefits were ended earlier this summer.
“Yes. Some of the states have rolled off the unemployment early has made hiring easier for sure,” Swygert said. “We saw a big change in those states that did that. It made (it) a lot easier to hire. The states that have not done that yet still have definitely a larger challenge to hire people in there, but that’s coming up, that’s right on the corner, here in September.”