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Ollie’s Down as Citi Downgrades

Ollie’s Bargain Outlet Holdings (NASDAQ:OLLI) lost ground early Monday, after Citi downgraded the retailer to sell from neutral, saying it has a “difficult model to scale” and has seen weaker productivity with its new stores in the past several years.

OLLI reported an adjusted EPS of $0.84 for 4Q22, with an adjusted EBIT margin of 12.1%. Management has projected FY23 EPS of $2.49-$2.58 based on same-store sales growth of 1%-2%, the opening of 44 net new stores, a gross margin of 39.3%-39.6%, and an operating income margin of 10.2%-10.6%. In addition, management provided some commentary on recent trading performance, in which they noted the company's current positive momentum. That means quarterly Same-Store Sales are currently outpacing the 3% growth seen in 4Q22.

Ollie's is a retail company that operates stores selling name-brand items at low, closeout prices. Products offered by the company include goods such as food, cleaning supplies, books, office supplies, and more. There is plenty of room for OLLI to expand into new and existing markets, in my opinion. OLLI is in a good position to continue gaining market share thanks to its already substantial and expanding brand recognition and the buoyant purchasing climate that has ensued in the wake of significant retail dislocation.

OLLI began Monday and the week off 92 cents, or 1.6%, to $57.18.