Ollie’s Bargain Outlet Winning Bidder in Bankruptcy Auction to Acquire Eleven Former 99 Cents Only Stores
Ollie's Bargain Outlet (NASDAQ: OLLI) announced its successful bid to acquire eleven former 99 Cents Only Stores locations for $14.6 million in cash through a bankruptcy auction approved by the United States Bankruptcy Court for the District of Delaware. The acquisition includes three owned properties and eight leased properties with favorable terms, all located in key Texas markets. The transaction is expected to close in early June. The company aims to quickly operationalize the new stores, maintaining their target of 50 new store openings for fiscal 2024, minus two planned closures.
- Acquisition of eleven new store locations at $14.6 million, expanding the company's footprint in Texas.
- Three owned properties and eight leased properties with attractive rents and leasing structures.
- Texas locations are in key markets with high growth potential and strong population growth.
- The acquisition supports the company's target to open 50 new stores in fiscal 2024.
- Immediate occupancy expenses will begin incurring upon closing, adding to operational costs.
- Potential impact on the cadence of new store openings due to the acquisition.
Insights
The acquisition of eleven former 99 Cents Only Stores locations for
Short-term impact: The acquisition closes in early June, aligning with Ollie’s fiscal targets. However, the company will start incurring occupancy expenses immediately, which could impact near-term cash flows. Investors should monitor these expenses and any early revenue contributions from the new stores.
Long-term impact: Texas's strong population growth and Ollie’s established market presence bode well for long-term revenue growth. The mix of owned and leased properties with attractive rental structures could offer flexibility and financial advantages. Overall, the acquisition seems likely to contribute positively to Ollie’s expansion and market penetration goals, provided successful integration and quick store openings.
In conclusion, the deal has potential for a positive impact on Ollie’s financial health, offering growth opportunities in a key market while maintaining fiscal discipline.
From a market perspective, Ollie’s acquisition of these locations taps into the robust consumer base that 99 Cents Only Stores has cultivated. Texas is a lucrative market due to its increasing population and economic opportunities. The budget-focused nature of both brands means there’s a strong existing customer overlap, which could facilitate a smoother transition and faster revenue ramp-up.
This acquisition will also expand Ollie’s footprint in strategic trade areas. The mix of owned and rented properties offers flexibility for future operational strategies, such as redevelopment or sub-leasing, should market conditions change.
However, the initial costs associated with occupancy could strain short-term financial performance, especially if there are delays in store openings. It remains vital for Ollie’s management to mitigate these risks and accelerate the opening process to capitalize on the seasonally strong back-to-school and holiday shopping periods.
In essence, this transaction strengthens Ollie’s market presence and leverages existing customer bases, but its success hinges on efficient execution and rapid integration.
HARRISBURG, Pa., May 24, 2024 (GLOBE NEWSWIRE) -- Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) (the “Company”) today announced that at the conclusion of a final sale hearing, the United States Bankruptcy Court for the District of Delaware approved the Company’s stalking horse bid to acquire eleven former 99 Cents Only Stores locations. The Company and debtor entered into an asset purchase agreement to acquire eleven former 99 Cents Only Stores locations for
“We are very excited to be announced as the winning bidder of these store locations. These stores are the right size, located in good trade areas, have attractive rents and leasing structures, and have been serving value-oriented customers for many years. Texas is a great market for us that has tremendous growth potential and continues to benefit from strong population growth,” said John Swygert, President and Chief Executive Officer of Ollie’s.
Mr. Swygert continued, “We are focused on getting these stores up and running as quickly as possible, given the occupancy expenses we will begin incurring at closing. We are maintaining our target of 50 new stores, less two planned closures, for fiscal 2024 and are in the early stages of evaluating the impact on our new store opening cadence this year.”
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 516 stores in 30 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
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