Ollie's Bargain Outlet Holdings Stock

Ollie's Bargain Outlet Holdings, Inc. operates as a retailer of brand name merchandise. The company offers customers a broad selection of brand name products, including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys, and electronics.

Strategy

The key elements of the company’s strategy are to grow its store base; increase its offerings of great bargains; and leverage and expand Ollie’s Army.

The company offers a highly differentiated, constantly evolving assortment of brand name merchandise across a broad range of categories. The company’s ever-changing assortment of Good Stuff Cheap includes brand name and closeout merchandise from leading manufacturers. The company augments its brand name merchandise with opportunistic purchases of unbranded goods and its own domestic and direct-import private label brands in underpenetrated categories to further enhance the assortment of products that it offers.

The company’s warehouse format stores feature a broad number of categories, including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys, and electronics, as well as other products, including hardware, candy, clothing, sporting goods, pet and lawn and garden products. The company focuses on buying cheap to sell cheap and source products as unique buying opportunities present themselves. The company’s merchandise mix is designed to combine unique and brand name bargains.

Product Mix

Examples of the company’s product offerings include:

Housewares: Cooking utensils, dishes, appliances, plastic containers, cutlery, storage and garbage bags, detergents and cleaning supplies, cookware and glassware, candles, hardware, frames, and giftware;

Bed and Bath: Household goods including bedding, towels, curtains, and associated hardware;

Food: Packaged food including coffee, bottled non-carbonated beverages, salty snacks, candy, condiments, sauces, spices, dry pasta, canned goods, cereal, and cookies;

Floor Coverings: Laminate flooring, commercial and residential carpeting, area rugs, and floor mats;

Books and Stationery: Novels, children’s, how-to, business, cooking, inspirational and coffee table books, greeting cards and various office supplies, and party goods;

Electronics: Home electronics, cellular accessories, and as seen on television;

Toys: Dolls, action figures, puzzles, educational toys, board games, and other related items;

Health and Beauty Aids:Personal care, hair care, oral care, health and wellness, over-the-counter medicine, first aid, sun care, and personal grooming;

Seasonal: Summer furniture, air conditioners, fans and space heaters and lawn & garden; and

Other: Clothing, sporting goods, pet products, luggage, and automotive.

Consumables includes items, such as health and beauty aids, food, candy, and pet food. Home includes items, such as housewares, domestics, floor coverings, and hardware. Seasonal includes items, such as summer furniture, air conditioners, fans and space heaters, toys, and lawn and garden. Other includes items, such as books and stationery, electronics, clothing, sporting goods, pet products, luggage, and automotive.

Product Categories

The company maintains consistent average margins across its primary product categories.

Brand Name and Closeout Merchandise

Brand name and closeout merchandise represented approximately 65% of the retail value of the company’s 2022 merchandise purchases. The company’s focus is to provide huge savings to its customers primarily through brand name products across a broad range of merchandise. The company’s experienced merchant team purchases deeply discounted, branded or closeout merchandise primarily from manufacturers, retailers, distributors, and brokers. This merchandise includes overstocks, discontinued merchandise, package changes, cancelled orders, excess inventory and buybacks from retailers, and major manufacturers.

Non-Closeout Goods/Private Label

Non-closeout and private label products collectively represented approximately 35% of the retail value of the company’s 2022 merchandise purchases. The company augments the breadth of its brand name merchandise with non-closeout and private label merchandise. In categories where the consumer is not as brand conscious, such as food, home textiles, and furniture. These extreme value offerings are mixed in the stores with the company’s brand name merchandise. The company also has a variety of domestic and direct-import private label merchandise and exclusive products sold under numerous brands. These high quality products are developed in key categories, such as housewares and is designed to create brand-like excitement and complement its brand name merchandise. The company also has licenses for private label products that use recognizable celebrity names or brand names. The company routinely evaluates the quality and condition of these private label goods to ensure that it is delivering its customer a high quality product at a great price.

Distribution and Logistics

The company has made significant investments in its distribution network and personnel to support its store growth plan.

Store Design and Layout

All of the company’s warehouse format stores incorporate the same philosophy: no-frills, bright, semi-lovely stores and a fun, treasure hunt shopping experience. The company presents its stores as semi-lovely to differentiate its stores from other traditional retailers, and to minimize operating and build-out costs.

Marketing and Advertising

The company’s marketing and advertising campaigns feature colorful caricatures and witty sayings in order to make its customers laugh. The company’s distinctive and often self-deprecating humor and highly recognizable caricatures are used in all of its stores, flyers and advertising campaigns. The company tailors its marketing mix and strategy for each market, deal or promotion. The company primarily uses the following forms of marketing and advertising:

Print and Direct Mail: During 2022, the company distributed over 700 million highly recognizable flyers. The company’s flyers are distributed 22 times per year and serve as the foundation of its marketing strategy. They highlight deals to create shopping urgency and drive traffic and increase frequency of store visits;

Television and Radio: The company selectively utilizes creative television and radio advertising campaigns in targeted markets at certain times of the year, particularly during the holiday sales season, to create brand awareness and support new store openings;

Charity and Community Events: The company is dedicated to maintaining a visible presence in the communities in which its stores are located through the sponsorship of charitable organizations, such as Feeding America, Toys for Tots, Children’s Miracle Network, Cal Ripken, Sr. Foundation, and the Kevin Harvick Foundation; and

Digital Marketing and Social Media: The company maintains an active online presence and promote its brand through its website, its mobile app and social media channels. The company also utilizes targeted email marketing to highlight its latest brand name offerings and drive traffic to its stores. In addition, the company invests in digital marketing where it targets both its current and prospective customers.

Ollie’s Army

The company’s customer loyalty program, Ollie’s Army, stands at 13.2 million members as of January 28, 2023. In 2022, Ollie’s Army members accounted for over 80% of net sales and spent approximately 40% more per shopping trip, on average, than non-members. Consistent with its marketing strategy, the company engages new and existing Ollie’s Army members through the use of witty phrases and signage; examples include Enlist in Ollie’s Army today, become one of the few, the cheap, the proud and Ollie’s Army Boot Camp…all enlistees will receive 15% off their next purchase.

Trademarks and Other Intellectual Property

The company owns multiple state and federally registered trademarks related to its brand, including Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, and Real Brands! Real Bargains!, among others. In addition, the company maintains a federal trademark for the image of Ollie, the face of the company. The company also own registered trademarks for many of its private labels, such as Sarasota Breeze, Steelton Tools, American Way, and Middleton Home, among others. The company also owns several domain names, including www.ollies.us, www.ollies.com, www.olliesbargainoutlet.com, www.olliesarmy.com, www.ollies.cheap, www.sarasotabreeze.com and www.olliesmail.com, and unregistered copyrights in its website content.

Seasonality

The company’s business is seasonal in nature and demand is generally the highest in its fourth fiscal quarter due to the holiday sales season. To prepare for the holiday sales season, the company must order and keep in stock more merchandise than it carries during other times of the year and generally engage in additional marketing efforts. The company expects inventory levels, along with accounts payable and accrued expenses, to reach their highest levels in its third and fourth fiscal quarters in anticipation of increased net sales during the holiday sales season. As a result of this seasonality, and generally because of variation in consumer spending habits, the company experiences fluctuations in net sales and working capital requirements during the year (year ended January 28, 2023). Because the company offers a broad selection of merchandise at extreme values, it is generally less impacted than other retailers by economic cycles, which correspond with declines in general consumer spending habits and it still benefit from periods of increased consumer spending.

Government Regulation

The company sources a portion of its products from outside the United States. The U.S. Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The company’s policies and its vendor code of conduct mandate compliance with applicable law, including these laws and regulations.

History

The company was founded in 1982. It was incorporated in Delaware in 2012. The company was formerly known as Bargain Holdings, Inc. and changed its name to Ollie’s Bargain Outlet Holdings, Inc. in 2015.