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Ollie's Bargain (OLLI) Thrives on Customer-Centric Endeavors

Ollie's Bargain Outlet Holdings, Inc. OLLI thrives on its distinctive business model, characterized by the strategy of "buying cheap and selling cheap." This strategy, complemented by initiatives to control costs, prioritize store productivity and expand its customer loyalty program, Ollie's Army, has firmly established the company's foothold in the market. The key to Ollie's success lies in its capability to provide attractive deals that strongly resonate with consumers. The company's favorable vendor relationships also play a pivotal role in its sustained growth.

Demand for Closeout Goods Persists

Ollie's Bargain's focus on value-centric merchandise assortments has positioned it strategically to seize opportunities in the market and effectively cater to consumer needs. The continuous growth of Ollie's Army, a pivotal sales driver, is evident from a steadily increasing membership base. As of the conclusion of fiscal 2023, Ollie's Bargain boasts an active Ollie's Army membership of 14 million, contributing to more than 80% of total sales.

The company's commitment to offering brand-name and closeout merchandise at attractive price points has garnered positive responses from customers, reflecting its dedication to delivering exceptional deals, enhancing operational margins and expanding its store network. Ollie's Bargain is well-positioned to capitalize on a favorable closeout environment and the rising trend of trade-down activity, aligning seamlessly with its growth objectives.

Management has set ambitious targets for fiscal 2024, with net sales projected between $2,248 million and $2,273 million, which suggests an increase from $2,102.7 million reported in fiscal 2023. Ollie’s Bargain now anticipates comparable store sales to rise in the band of 1-2%.

Store Expansion Strategy

In terms of store growth opportunities, Ollie's Bargain plans to have 1,300 stores in the long run. Ollie's Bargain increased its store base at a CAGR of 10.4% from 345 stores in fiscal 2019 to 512 stores in fiscal 2023.

In the preceding two fiscal years, Ollie's Bargain opened 45 and 40 stores, respectively. Looking at fiscal 2024, the company plans to open 50 new stores in fiscal 2024.

Importantly, Ollie's Bargain's new store real estate model prioritizes flexibility and focuses on the store size between 25,000 and 35,000 square feet. The company targets new store sales of about $4 million in the first full year of operations.

Wrapping Up

Ollie's Bargain, which shares space with Grocery Outlet GO, Sprouts Farmers Market SFM and Target TGT, has thrived by offering unbeatable deals to its customers through its unique business approach. By focusing on affordability and value, alongside efficient cost management and a robust loyalty program like Ollie's Army, the company has firmly established itself in the market. With a keen eye on customer needs and strategic partnerships with vendors, Ollie's Bargain is well-poised to continue its success story, meeting consumer demands and seizing opportunities in the ever-evolving retail landscape.

A Synopsis of Other Stocks

Grocery Outlet's unique business model, marked by opportunistic sourcing and an Independent Operator framework, sets it apart in the industry. With a focus on offering quality products at exceptional value, Grocery Outlet's dynamic product assortment and commitment to customer convenience through initiatives like same-day delivery underscore its market penetration efforts. The buyout of United Grocery Outlet signals expansion into key Southeastern markets, aligning with its store growth plans.

Sprouts Farmers is charting a course for success, driven by strategic innovation, a customer-centric approach and a commitment to delivering exceptional value. Through well-executed initiatives, the company has firmly established itself as a key player, fostering customer loyalty and achieving impressive growth. One of the company's standout strategies has been its dedication to natural and organic products. Recognizing the surging demand for healthier options, Sprouts Farmers has expanded its presence in this segment.

Target has been making multiple changes to its business model to adapt and stay relevant in the dynamic retail landscape. TGT has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers with a seamless shopping experience. These have been contributing to the top line. Furthermore, by streamlining inventory management and reducing markdown frequency, the company anticipates margin expansion. Through a strategic allocation of resources, Target prioritizes scaling operations, attracting new customers and optimizing its service and supply chain infrastructure.

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