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Ollie's Bargain Outlet's (OLLI +11%) is trading sharply higher after Q4 (Jan) earnings results. OLLI reported in-line EPS while revenue grew just 2.8% yr/yr to $667.1 mln, which was light of expectations. In fairness, OLLI benefitted from an extra week last year. Backing that out, revenue was up 8.5% yr/yr. The FY26 guidance was mixed with downside EPS and in-line revs. It also guided to FY26 comps of +1-2% and 75 new store openings vs 50 in FY25.

• Same store comps in Q4 came in at +2.8%, in-line with internal expectations. Its consumables business continues to be very strong with housewares, food and candy, electronics being its best-performing categories. However, big-ticket items have been a little softer. In terms of household income segments, OLLI says the trade down continues as it is seeing and retaining more higher income consumers ($100K+). Its low income cohort has been stable.
• In terms of FY26 cadence, OLLI says Q1 (Apr) has gotten off to a sluggish start but momentum has started to build. OLLI faces tougher comparisons in June/July from the lapping of strong air-conditioner sales last year. Then in the back half, the comparisons start to ease a bit from lapping the liquidation events from the Big Lots store closures. As a result, comps could be in the lower end of the +1-2% range in 1H and at the midpoint to the higher end of that range in the back half.
• Consumers remain under pressure and are seeking value. Many retailers are closing stores or shutting down entirely. Tariffs are creating uncertainty across the retail landscape. OLLI says it thrives in this environment. Ollie's is the destination for any type of disruption, whether it's consumers under pressure, excess inventory resulting from store closures, tariff pressure etc.
• Management made a good argument that the closeout market is massive and there will always be merchandise available for a variety of reasons, whether it be innovation, packaging changes, shifts in consumer demand, store closures, tariffs etc. These are just some of the drivers of the closeout market. While sources of products are constantly changing, the availability of closeouts is stable and consistent.
• OLLI also noted that, with so many retailers closing stores or going bankrupt in the past year, there is a lot of abandoned customers' merchandise, real estate and talent in the marketplace. OLLI recently announced a deal to acquire 40 additional store leases of former Big Lots locations. They come with below-market rents and long-term leases for 20-30 years.

While the headline numbers for Q4 and the FY26 guidance were a bit lackluster, we think investors are pleased with the +2.8% Q4 comp given the compressed holiday season and one fewer week this year. Also, OLLI seems to be benefitting from some upheaval in the retail space generally with tariffs, inflation, competitor troubles. OLLI argues that close-out retailers handle these conditions better than most.