MW Ollie's Bargain Outlet store count boosts results as it buys up Big Lots locations

By Steve Gelsi

While office space problems loom, retail real estate is hot and Ollie's is benefits from adding more stores

The bankruptcy of Big Lots is helping Ollie's Bargain Outlet's new store pipeline as the discount retailer's bottom line benefits from an increased number of locations.

Ollie's $(OLLI)$ has been buying up Big Lots stores to both widen its retail footprint and grow profits as an example of the healthy activity in pockets of commercial real estate, particularly for stores.

Ollie's stock was up 6.6% in premarket trading on Tuesday after its results.

Boosted by an 8% jump in stores over the year-ago period, Ollie's Bargain Outlet's third-quarter adjusted profit of 58 cents a share beat the FactSet consensus estimate of 57 cents a share.

Its revenue rose 7.8% to of $517.8 million due partly to its increase in stores, but fell slightly short of the estimate of $518.8 million.

The company was forced to close two stores permanently and one temporarily due to Hurricane Helene.

Its overall store count rose 8% including 24 new stores to a total of 546 stores in 31 states.

On Friday, Ollie's was the winning bidder in a bankruptcy sale process to buy seven more former Big Lots store leases, subject to court approval.

Chief Executive John Swygert said the company "took advantage of a number of real estate opportunities that strengthened our new store pipeline and enhanced our competitive positioning for the future."

Not including the latest transaction, Ollie's has already bought 17 stores formerly occupied by Big Lots, which filed for bankruptcy in September.

Ollie's bought 15 of the stores in the third quarter and two so far in the fourth quarter.

"These store locations are leased properties with favorable rent and leasing structures, located in good trade areas, and have been serving value-oriented customers for many years," the company said.

Overall, retail space, along with multifamily and industrial continue to perform well with the larger universe of commercial real estate, according to the JPMorgan 2024 commercial real estate midyear outlook.

Some positive trends in the retail real estate sector include neighborhood shopping centers in densely-populated areas, including big-box retailers opening smaller concept stores.

"The best performing retail properties will have owners and operators who are flexible and willing to adapt to what their most important tenants need," the study said.

-Steve Gelsi

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December 10, 2024 09:15 ET (14:15 GMT)

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