Ollie's Bargain Outlet: The Discount Retailer Defying Gravity With Aggressive Growth

In the competitive world of discount retail, Ollie's Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) is making a case that it's built differently. The company's recent third-quarter fiscal 2025 results and strategic execution are fueling a bullish narrative among investors who see a durable growth story unfolding.

Ollie's, which operates 645 stores across the United States selling closeout merchandise and excess inventory, reported a 19% year-over-year jump in net sales to $614 million. Comparable store sales grew 3.3%, driven by transaction growth. More impressively, adjusted earnings per share surged 29% to $0.75, beating analyst expectations, while adjusted EBITDA increased 22% to $73 million.

The performance wasn't accidental. Management has deliberately prioritized customer acquisition and long-term loyalty over short-term margins. An aggressive pricing strategy, particularly in consumables and seasonal goods, drove significant store traffic and membership growth in its "Ollie's Army" loyalty program. New memberships soared 30% YoY, with notable gains among younger and higher-income demographics—a cohort that tends to shop more frequently and spend more.

"The flywheel is working," said a retail analyst who requested anonymity. "They're using price to drive traffic, traffic to build the membership base, and that loyal base gives them the scale to secure better deals from suppliers. It's a powerful model in the fragmented closeout market."

Store expansion is accelerating. Ollie's opened 32 new locations in Q3 and plans to launch at least 75 more in fiscal 2026, representing unit growth of approximately 11.6%. Notably, over 85% of new stores are outperforming plan, including sites acquired from recent Big Lots closures. This physical growth, combined with a target of 3% same-store sales growth, sets the stage for sustained top-line expansion.

Financially, the company remains on solid ground. It ended the quarter with $432 million in cash, minimal debt, and continued share repurchase capacity. This strength allows it to be a strategic buyer in the closeout market, securing premium inventory flows.

Investor Perspectives:

• Mark Richardson, Portfolio Manager at Clearwater Capital: "Ollie's is executing a textbook playbook for scaling a niche model. The membership growth is the key metric—it creates a predictable, high-value customer base that competitors can't easily replicate. The valuation (forward P/E ~24) prices in growth, but the execution justifies it."
• Sarah Chen, Retail Analyst at Broad Street Research: "The numbers are strong, but let's not ignore the macro risks. Their entire model depends on a steady stream of manufacturer overruns and retail liquidations. In a tighter inventory environment, that pipeline could dry up. The stock's run-up feels ahead of the underlying safety margin."
• David "Bull" Miller, Independent Trader & Newsletter Author: "This is exactly the kind of stock the market is missing! While everyone chases AI hype, Ollie's is grinding out 15%+ growth with real cash flow. The balance sheet is a fortress, and they're taking market share while bigger players stumble. Calling it 'just a discount store' is a massive underestimation."
• Lisa Goldberg, Senior Editor at Frugal Finance Blog: "As a customer, I've seen the change. The stores are better organized, the brands are more recognizable, and the 'Good Stuff Cheap' mantra really works. My concern is whether this level of expansion can maintain the 'treasure hunt' feel that drives loyal customers. Over-expansion killed other retailers."

While Ollie's did not appear among the 30 Most Popular Stocks in recent hedge fund surveys, its holder base is growing. Institutional holdings increased to 38 funds at the end of Q3, up from 32 the previous quarter.

The bull case rests on Ollie's unique positioning at the intersection of value-seeking consumers and a perpetual supply of excess inventory from the broader retail ecosystem. Near-term valuation multiples may give some pause, but proponents argue the company's operational momentum and structural advantages support a compelling long-term outlook.

Disclosure: This is an independent analysis for informational purposes only and is not investment advice.