Ollie’s (OLLI) Q2 2025: 29 New Stores Drive 17% Unit Growth, Loyalty Flywheel Accelerates

August 28, 2025 | By EarningsIQ Research

Ollie’s delivered a high-velocity Q2, with accelerated new store openings and surging loyalty engagement fueling both top-line and margin expansion. The company is capitalizing on industry disruption, leveraging bankruptcies and supply chain flexibility to outgrow peers and deepen its competitive moat. Raised guidance and strong execution signal increased confidence in Ollie’s scalable model and long-term earnings power.

Summary

• Store Expansion Surges: Ollie’s aggressively accelerated new store openings, capturing market share left by retail bankruptcies.
• Loyalty Program Drives Sales: Ollie’s Army loyalty program delivered record member growth and meaningful comp lift.
• Margin Leverage Strengthens Outlook: Improved deal flow, supply chain execution, and cost discipline support further profit upside.

Performance Analysis

Ollie’s reported a standout quarter, with net sales up 18% and unit count rising 17% year-over-year. The company opened 29 new stores in Q2, ending the period with 613 locations, and surpassed its previous full-year unit growth record in just six months. Comparable store sales increased 5%, driven by higher transaction volumes, with notable strength in staples and seasonal categories as weather normalized.

Gross margin expanded by 200 basis points to 39.9%, fueled by lower supply chain costs, robust merchandise margins, and shrinking inventory loss. While SG&A as a percentage of sales increased 60 basis points, primarily due to medical and casualty claims and higher labor, these headwinds were offset by outperformance in top-line growth and margin. Adjusted EBITDA rose 26% and margin improved 90 basis points, reflecting operational leverage despite elevated pre-opening and dark rent expenses tied to the accelerated store rollout.

• Category Momentum: Lawn and garden, hardware, food, housewares, and domestics led category performance, reflecting consumer focus on essentials and value.
• Loyalty Impact: Ollie’s Army membership grew 10.6% to 16.1 million, now representing over 80% of sales and delivering 100 basis points of comp lift from the revamped Ollie’s Days event.
• Balance Sheet Strength: Cash and investments rose 30% to $460 million, with no meaningful long-term debt, providing ample flexibility for continued growth.

Inventory increased 20% year-over-year, reflecting both accelerated store openings and strong deal flow—an indicator of Ollie’s ability to source closeout product as retail disruption persists. Capital deployment included $12 million in share repurchases, with $304 million remaining authorized.

Executive Commentary

Strategic Positioning

1. Aggressive Unit Growth Leveraging Industry Dislocation

Ollie’s is seizing on retail bankruptcies and store closures to expand its footprint, acquiring prime locations at attractive rents and accelerating its store opening cadence. The company now targets 85 new stores for the year, up from prior guidance, and plans to sustain double-digit annual unit growth. Management emphasized this is not “growth at any cost,” but rather disciplined expansion enabled by a flexible, portable store model adaptable across geographies and demographics.

2. Loyalty Flywheel and Customer Acquisition

The Ollie’s Army program, a loyalty initiative, is central to the company’s customer engagement strategy. Members shop more frequently and spend 40% more per visit, accounting for over 80% of sales. The revamped, member-exclusive Ollie’s Days event delivered record customer acquisition—up nearly 60% for the week—and exceeded sales expectations, demonstrating the program’s ability to drive both immediate and long-term value.

3. Supply Chain and Deal Flow as Competitive Moat

Ollie’s business model thrives on supply chain disruption and closeout buying, with management citing tariffs, bankruptcies, and abandoned product pipelines as sources of strong deal flow. The company’s size and scale have improved its buying power, attracting new suppliers and driving better merchandise margins. Ongoing investment in distribution center expansion and automation further supports scalable growth and cost control.

4. Disciplined Cost Management and Balance Sheet Resilience

Despite higher medical and casualty costs, management expects these headwinds to normalize, with SG&A leverage anticipated in the back half. The company maintains a “fortress balance sheet,” with significant cash reserves and no long-term debt, ensuring financial flexibility to capitalize on market opportunities and withstand volatility.

5. Cultural and Operational Adaptability

Leadership highlighted a willingness to modernize practices, citing the successful overhaul of longstanding events and ongoing tweaks to the loyalty program. The company’s culture, rooted in founder values but modernized for today’s retail landscape, is seen as foundational to its execution and agility.

Key Considerations

Ollie’s Q2 reflects a business in expansion mode, leveraging both industry disruption and its own operational strengths. The company is executing on multiple fronts: new store growth, margin management, and customer engagement, while remaining disciplined in capital allocation and risk management.

Key Considerations:

• Deal Flow Remains Robust: Tariffs and retail bankruptcies continue to create abundant closeout buying opportunities, underpinning inventory and margin gains.
• Loyalty Drives Frequency and Spend: Ollie’s Army members are increasingly central to the business, with program enhancements supporting both sales and customer lifetime value.
• Unit Growth Accelerates Earnings Power: The annualization of 88 new stores over the past 12 months will drive earnings leverage into 2026 and beyond.
• SG&A Pressures Likely Transient: Elevated medical and casualty costs are expected to moderate, with back-half leverage anticipated as one-time items cycle out.
• Distribution Network Scales with Growth: Planned DC expansions in Texas and Illinois will extend capacity to mid-800s store count, deferring the need for a fifth facility for three to four years.

Risks

Ollie’s faces risks from macroeconomic volatility, competitive responses in the closeout and off-price sector, and potential margin pressure if supply chain costs or tariffs worsen. The accelerated pace of new store openings increases execution risk, particularly as integration of bankruptcy-acquired “warm box” locations and expansion into new geographies tests operational consistency. Any reversal in deal flow or consumer demand could impact both sales and profitability.

Forward Outlook

For Q3, Ollie’s guided to:

• Comparable store sales growth above the long-term 1–2% algorithm, targeting approximately 3%.
• The majority of remaining new stores (out of 85 planned for the year) opening in Q3.

For full-year 2025, management raised guidance:

• Net sales of $2.631–$2.644 billion
• Comparable store sales growth of 3–3.5%
• Gross margin of 40.3%
• Operating income of $292–$298 million
• Adjusted net income of $233–$237 million
• EPS of $3.76–$3.84

Management highlighted:

• Guidance assumes current tariffs remain in place and conservatively holds Q4 comp expectations just below 2%.
• SG&A outlook includes higher medical costs, but improvement is expected as severe cases resolve.

Takeaways

Ollie’s is demonstrating that disciplined expansion, loyalty flywheel activation, and supply chain agility can drive both growth and margin improvement even in a disrupted retail environment.

• Unit Growth Outpaces Industry: Ollie’s is converting industry disruption into a step-change in store count and market share, with new stores performing above plan.
• Loyalty and Deal Flow Power Margin: The Ollie’s Army program and robust closeout sourcing are delivering both sales and gross margin upside, reinforcing the company’s differentiated model.
• Watch for Ongoing Margin and SG&A Trends: Continued execution on cost control, loyalty engagement, and store productivity will determine the durability of recent outperformance as the company annualizes its expanded base.

Conclusion

Ollie’s Q2 2025 results showcase a retailer leveraging disruption to accelerate profitable growth, with strategic investments in new stores, loyalty, and supply chain setting the stage for sustained earnings power. Execution risks remain, but the company’s balance sheet, deal flow, and operational discipline provide a strong foundation for continued outperformance.

Industry Read-Through

Ollie’s results underscore the opportunity for well-capitalized off-price and closeout retailers to gain share as traditional competitors exit the market. Retail bankruptcies and supply chain volatility are fueling a buyer’s market for inventory, favoring scale players with flexible models and strong balance sheets. The success of loyalty-driven events and targeted customer acquisition highlights the importance of engagement strategies in value retail. For peers, the message is clear: agility, disciplined expansion, and investment in customer experience are critical to capturing displaced demand and driving margin in a turbulent environment.

OLLI Consumer Discretionary Retail Off-Price Loyalty Store Expansion Closeout Supply Chain