Loop Capital believes that Ollie’s Bargain Outlet can continue benefitting as a weaker macroeconomic further pushes consumers down the price curve. The investment firm upgraded the discount store to a buy rating from hold, and raised its price target to $135 from $130, which implies upside of 25% from Friday’s close. Loop’s upgrade comes after a recent store tour led by the company’s management, analyst Anthony Chukumba wrote. He raised his fourth quarter estimates based on the store tour, and wrote that Ollie’s appears well-positioned for the holiday shopping season as consumers continue to “trade down” from higher priced alternatives. OLLI YTD mountain OLLI YTD chart Chukumba pointed to the bankruptcy of Big Lots Stores, another American discount retail chain, as a boost for the stock. “Big Lots’ liquidation is ‘the gift that keeps on giving,’ particularly given the resulting plethora of potential store locations and incremental supplier relationships,” he wrote. Meanwhile, Chukumba noted that Ollie’s has also upped the game when it comes to its assortment of food and consumables, including nationally branded breakfast cereals, which management noted are always in high demand. Other consumables include liquid laundry detergent and Brawny paper towels. These consumables serve to drive more consistent store visits, the analyst said. “While management stated Ollie’s has no desire to become a food retailer, the company has had improved access to nationally branded food products since Big Lots’ late 2024 Chapter 7 filing,” he added. The analyst also applauded the company’s “much more data driven, scientific approach to the business as compared to its predecessors.” For instance, Ollie’s has begun to carry more holiday seasonal merchandise and gift assortments rather than toys this year. He also noted that the store carried a sizable assortment of heating products such as heaters and heated blankets, sales of which have risen as the weather gets colder. Shares of Ollie’s Bargain Outlet have slipped 2% this year.
