The sign for Ollie’s Bargain Outlet is pictured being installed on the outside of the Chautauqua Mall. The store opened in October.
P-J file photo
Ollie’s Slogs Through Third Quarter
Jamestown-area shoppers haven’t yet seen the best of Ollie’s, which opened in the Chautauqua Mall in October.
John Swygert, Ollie’s president and CEO, spoke with investor analysts recently to discuss the company’s third-quarter financial results.
Total net sales decreased 7.5% to $383.5 million across the company with comparable store sales decreasing 15.5% from the prior year increase of 15.3%. Comparable store sales decreased 1.3% compared with the third quarter of 2019.
“Looking back on the third quarter, sales and operating performance was primarily impacted by greater than expected supply chain related headwinds, leading to results below our expectations,” Swygert said. “These headwinds included shipping delays of imported seasonal product into our supply chain network, which in turn create a backlogs in our distribution centers causing delays in shipping the right product to the stores in a timely fashion. We also believe that the sudden rise in inflation had an outsized impact on a portion of our customers who mostly live on a fixed income. While, I’m extremely proud of our team’s efforts through these challenging times, we were unable to overcome these headwinds during the quarter.”
Operating income decreased 47.7% to $30.2 million and operating margin decreased 600 basis points to 7.9%. Adjusted operating income decreased 48.3% to $29.9 million and adjusted operating margin decreased 610 basis points to 7.8%. Net income was $23.2 million, or 36 cents per diluted share, as compared with net income of $45.2 million, or 68 cents per diluted share, in the prior year. Adjusted net income was $22 million, or 34 cents per diluted share, as compared with prior year adjusted net income of $43.2 million, or 65 cents per diluted share.
Despite the disappointing quarter, Swygert said there are opportunities being presented that should assuage investors’ concerns and be beneficial to Ollie’s customers. Swygert said customers may have noticed later-than-expected deliveries of toys, Christmas items and heaters, typically a big seller in the wintertime, as shipping containers weren’t available due to capacity issues and port congestion.
“First, we remain very excited about the incredible deals being presented to us each and every day,” Swygert said. “And we expect to see even more deals related to order cancellations, and abandoned goods associated with import shipping delays. Second, we have made meaningful progress in driving improved efficiencies and increased through put across our distribution centers. And third, we provide exceptional value to our customers, which we believe will benefit our business as this highly inflationary period continues, and consumers trade down.”
Ollie’s opened 18 new stores in the third quarter of 2021, including the Lakewood facility, ending the quarter with 426 stores in 29 states, a year-over-year increase in store count of 10.6%. In 2021, Ollie’s has opened 45 total so far in 2021.
And despite the issues Ollie’s has seen with inflation and capacity, Swygert said new stores have performed well.
“While new stores have likely been impacted by the same dynamics as our current store base, we remain pleased with the productivity level of our new stores overall,” Swygert said. “New stores are ultimately the engine of our sales growth and we plan to open between 50 to 55 stores annually on a go forward basis, and believe that our model can support 1,050 stores in total. While the supply chain issues are likely impacting us in the short-term, we remain as confident as ever in our business model and our long-term growth outlook.”
