Ollie’s Bargain Outlet Acquires Former Big Lots Stores
Rhea-AI Summary
Ollie's Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) has successfully bid to acquire seven former Big Lots store leases through a bankruptcy auction. Six of these stores have received final approval from the U.S. Bankruptcy Court, with one pending approval. The acquisition is part of Big Lots' first wave of store closures, which included 143 stores.
CEO John Swygert expressed satisfaction with the acquisition, noting that the stores are well-sized, located in good trade areas, and have a history of serving value-oriented customers. Most of the acquired stores are in the Midwest, an area where Ollie's sees significant growth potential and has a new distribution center.
Ollie's plans to prioritize opening these acquired stores, adjusting their existing pipeline of new store openings to optimize productivity and reduce pre-opening expenses. The company maintains its plan to open 50 new stores, less two planned closures, in fiscal 2024, and is evaluating how these new acquisitions will impact future store openings and timing.
Positive
- Acquisition of seven former Big Lots store leases through bankruptcy auction
- Expansion into the Midwest market with high growth potential
- Stores are well-sized and located in good trade areas
- Alignment with existing customer base (value-oriented customers)
- Potential for increased market presence and revenue growth
- Maintaining plan to open 50 new stores (less two closures) in fiscal 2024
Negative
- One store acquisition still pending bankruptcy court approval
- Potential reshuffling of existing store opening plans may impact short-term growth
- Integration costs and expenses associated with acquiring and opening new stores
Insights
Ollie's acquisition of seven former Big Lots stores through a bankruptcy auction is a strategic move that could significantly impact the company's growth trajectory. This expansion, primarily in the Midwest, aligns with Ollie's recent distribution center investment in the region, potentially enhancing operational efficiency and market penetration.
The acquisition demonstrates Ollie's opportunistic approach to expansion, capitalizing on the distress in the retail sector. By acquiring established locations, Ollie's can potentially reduce new store opening costs and accelerate its growth plan. The company's ability to maintain its fiscal 2024 target of 50 net new stores (48 openings after closures) while integrating these acquisitions suggests strong execution capabilities.
Investors should note that this move, combined with the earlier acquisition of 99 Cents Only stores, indicates an aggressive growth strategy that could drive revenue and market share gains. However, it's important to monitor the integration process and the performance of these new stores to assess the long-term value creation potential of this strategy.
Ollie's acquisition of former Big Lots stores represents a significant opportunity in the discount retail space. By taking over established locations, Ollie's can potentially benefit from existing customer awareness and foot traffic patterns, which could lead to faster store ramp-up and improved return on investment.
The focus on the Midwest is particularly noteworthy, as it's an underserved market for Ollie's with high growth potential. This move could help the company establish a stronger presence in a region where it previously had exposure, potentially leading to increased market share and economies of scale.
The strategy of reshuffling planned store openings to prioritize these acquired locations is smart, as it allows Ollie's to capitalize on immediate opportunities while maintaining its overall growth targets. This flexibility in execution could be a key differentiator in the competitive discount retail landscape, potentially leading to accelerated growth and improved financial performance.
HARRISBURG, Pa., Oct. 01, 2024 (GLOBE NEWSWIRE) -- Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) (the “Company”) today announced that it was the winning bidder in a bankruptcy sale process to acquire seven former Big Lots, Inc. (“Big Lots”) store leases. The seven stores were part of a bankruptcy auction for the first wave of Big Lots store closures, which included 143 stores. Six of the seven stores have already completed the sale hearing process and received final approval from the United States Bankruptcy Court for the District of Delaware. The remaining one store is subject to final bankruptcy court approval and customary closing conditions.
John Swygert, Chief Executive Officer of Ollie’s stated, “We are very pleased to be the winning bidder for these store locations in the initial wave of Big Lots store closures. These stores are the right size, located in good trade areas, and have served value-oriented customers for years. In addition, the majority of these stores are located in the Midwest, an area where we have tremendous growth potential and a brand-new distribution center.”
Mr. Swygert continued, “Similar to the 99 Cents Only stores that we acquired recently through a separate bankruptcy process earlier this year, we will prioritize the opening of the acquired Big Lots stores and reshuffle other planned new store openings in our existing pipeline to maximize new store productivity and minimize pre-opening expenses. We continue to plan to open 50 new stores, less two planned closures, in fiscal 2024 and are evaluating the impact of these stores on our future store openings and cadence.”
About Ollie’s
We are America’s largest retailer of closeout merchandise and excess inventory, offering Real Brands and Real Bargain prices®! We offer extreme value on brand name products in a variety of departments, including housewares, food, books and stationery, bed and bath, floor coverings, toys, health and beauty aids, and more. We currently operate 541 stores in 31 states and growing! For more information, visit http://www.ollies.us
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections, the outlook for the Company’s future business, prospects, financial performance, including our fiscal 2024 business outlook or financial guidance, and industry outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, capital market conditions, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including, but not limited to, supply chain challenges, legislation, national trade policy, and the following: our failure to adequately procure and manage our inventory, anticipate consumer demand or achieve favorable product margins; changes in consumer confidence and spending; risks associated with our status as a “brick and mortar” only retailer; risks associated with intense competition; our failure to open new profitable stores, or successfully enter new markets, on a timely basis or at all; fluctuations in comparable store sales and results of operations, including on a quarterly basis; factors such as inflation, cost increases and energy prices; the risks associated with doing business with international manufacturers and suppliers including, but not limited to, potential increases in tariffs on imported goods; our inability to operate our stores due to civil unrest and related protests or disturbances; our failure to properly hire and to retain key personnel and other qualified personnel; changes in market levels of wages; risks associated with cybersecurity events and the timely and effective deployment, protection and defense of computer networks and other electronic systems, including email; our inability to obtain favorable lease terms for our properties; the failure to timely acquire, develop, open, and operate, or the loss of, or disruption or interruption in the operations of, any of our centralized distribution centers; risks associated with our lack of operations in the growing online retail marketplace; risks associated with litigation, the expense of defense, and potential for adverse outcomes; our inability to successfully develop or implement our marketing, advertising and promotional efforts; the seasonal nature of our business; risks associated with natural disasters, whether or not caused by climate change; outbreak of viruses, global health epidemics, pandemics, or widespread illness; changes in government regulations, procedures and requirements; and our ability to service indebtedness and to comply with our financial covenants together with each of the other factors set forth under the heading “Risk Factors” in our filings with the United States Securities and Exchange Commission (“SEC”). Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Ollie’s undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.
Investor Contact:
John Rouleau
ICR
John.Rouleau@icrinc.com
Media Contact:
Tom Kuypers
Senior Vice President – Marketing & Advertising
717-657-2300
tkuypers@ollies.us
FAQ
How many former Big Lots stores did Ollie's Bargain Outlet (OLLI) acquire?
What is the status of the Big Lots store acquisitions by Ollie's (OLLI)?
Where are the majority of the acquired Big Lots stores located?
How will the Big Lots store acquisitions affect Ollie's (OLLI) store opening plans for fiscal 2024?
