Ollie’s: A Tough Close to 2019

Ollie’s Cut price Outlet Holdings Inc. (NASDAQ:OLLI), which operates a chain of price reduction retail outlets principally in the japanese 50 percent of the United States, not long ago documented benefits for the fourth quarter of fiscal 2019. For the quarter, revenues amplified seven% to $422 million, with a double digit enhance in the unit depend more than offsetting a five% decline in similar retail outlet sales (take note that this is lapping a two-12 months stack of 10% gains). The weak spot in comps in the fourth quarter was because of to a shorter holiday break buying period (six fewer times in between Thanksgiving and Xmas), as perfectly as a bet on the toys category that did not pay back off. As CEO John Swygert famous on the convention simply call, “this proved to be a more challenging sales time period than we anticipated.”

For the 12 months, Ollie’s revenues amplified 13% to $1.41 billion, with a fourteen% enhance in units offset by a 2% decline in comps (lapping an enhance of 4% in 2018, with the two-12 months stack in-line with management’s extensive-time period anticipations). As demonstrated under, Ollie’s retail outlet depend has practically doubled in excess of the earlier five many years, to 345 units at 12 months close 2019.

Gross earnings in 2019 amplified 12% to $556 million, with gross margins down 60 foundation points to 39.five% on increased supply chain expenditures. Adjusted operating cash flow amplified five% to $171 million, with operating margins down 100 foundation points to 12.1% on reduce gross margins, as perfectly as deleveraged operating expenditures on reduce sales for every retail outlet. Adjusted net cash flow amplified at a similar speed to operating cash flow, up mid-solitary digits to $129 million. The similar is genuine for diluted earnings for every share, which amplified seven% 12 months in excess of 12 months to $2 for every share.

For the 12 months, Ollie’s created $one zero five million in funds from functions, which was down from 2018 because of to net functioning capital investments. They spent $34 million on investing routines, with $seventy seven million for new outlets and a 3rd distribution center offset by $42 million in proceeds from a sale-leaseback transaction involving 3 previous Toys “R” Us outlets.

In 2019, the corporation spent $forty million to invest in 689,000 shares of stock at an ordinary price tag of $fifty eight for every share. The entirety of those people repurchases happened in the 3rd quarter as of now, $60 million continues to be below the firm’s repurchase authorization.

Ollie’s will facial area some brief-time period tension as a final result of the novel coronavirus (Covid-19). As administration famous on the simply call, only 20% to 25% of their business falls into the “essentials” category, which contains consumable merchandise in foods, cleaning provides and private cleanliness. For their ordinary shopper, we may perhaps be coming into an financial surroundings the place added paying out funds will be hard to arrive by. As a