2026.10.09 | GP | Retail | Ollie's Comps & Low-Income Consumer

Primary:

OLLI

Associated:

DG

DLTR

FIVE

Viewpoint:

Industry Consultant

Moderator: Rohini Venkat (RV)

Howard Jackson (HJ), President - HSA Consulting

SUMMARY

Overview

The discussion examined Ollie’s recent performance, merchandise mix, pricing, loyalty program, expansion, and closeout sourcing. The expert argued that the liquidation of Big Lots, rather than broad economic weakness, is the primary factor affecting current comparable sales. Ollie’s previously benefited from displaced Big Lots demand and is now comparing against that temporary uplift.

The expert expects strong merchandise availability and limited competition to support Ollie’s longer-term growth. However, expansion beyond 700 stores could create operational and merchandising risks similar to those that contributed to Big Lots’ difficulties.

Key Insights

The expert expects Ollie’s to miss its near-term comparable-sales guidance because prior-period Big Lots demand created a difficult comparison. Performance should improve after the Big Lots benefit and reductions in low-income consumer assistance are fully reflected in comparisons. The expert views a 2% longer-term comparable-sales target as realistic. A higher consumables mix should increase shopping frequency but reduce basket size and pressure gross margin. Broad price reductions are unlikely to generate enough traffic because Ollie’s existing discounts are already substantial. Targeted loyalty promotions should produce better returns. The loyalty program is improving through removal of inactive members and more localized outreach, although membership growth per store is not keeping pace with expansion. Higher-income customers who temporarily shift to discount retailers are unlikely to remain over the long term. Closeout supply is exceptionally favorable because Asian availability is strong and several major buyers have reduced activity.

Competitive Landscape

10/12/2026 at 06:01 AM UTC

Company or segment

Positioning and implications

Ollie’s

Big Lots

Increasing scale, procurement resources, vendor access, and former Big Lots locations strengthen its position. Margin discipline and overexpansion remain risks.

Its exit transferred customers, consumables demand, locations, and sourcing opportunities to Ollie’s while creating difficult comparisons.

Dollar General

Remains an aggressive competitor for closeout merchandise.

Family Dollar

Retrenchment is reducing demand for closeouts and benefiting Ollie’s sourcing position.

Walmart

Less active overall, but its size can materially disrupt branded closeout purchasing when it participates.

Costco

Continues to be a significant buyer with no major strategic change identified.

Sam’s Club

Has shifted toward branded goods and reduced closeout activity.

Warehouse clubs

Collectively remain relevant buyers, though participation has moderated.

Quantitative Insights

Metric

Detail

Recent comparable sales

Declined 2%; the expert expects another near-term guidance miss.

Longer-term comparable-sales target

2%, viewed as achievable after unusual comparisons normalize.

Big Lots footprint

Approximately 1,200 closures; roughly one-third represented closeout-equivalent capacity.

Geographic overlap

About 400 Ollie’s stores overlapped former Big Lots markets.

Acquired locations

Approximately 62 former Big Lots sites.

Displaced consumables volume

Estimated at $200 million to $300 million.

Loyalty growth

Increased 13% in the prior quarter.

Closeout wholesale supply

Approximately $13 billion in consumables and $27 billion in general merchandise.

Implied retail value

Roughly $26 billion and $54 billion, respectively.

Supply assessment

Highest level observed since tracking began in 2018.

Sourcing rank

Ollie’s advanced from roughly tenth to fifth among major closeout buyers over two years.

10/12/2026 at 06:01 AM UTC

RV: Thank you everyone, it's Rohini Venkat from the consumer team at Guidepoint Insights, and I want to welcome you to our Ollie's discussion today with Howard Jackson. And just a reminder, as always, for anyone listening in, if you have any questions for us, you can email ask@guidepoint.com. But we have a number of topics we do want to hit on today. So let me first turn the call over to Howard so he can introduce himself to us for those who aren't familiar with his background, and then we'll jump right in. Howard?

HJ: Lovely. Thanks, Rohini. Nice to be with you today. My background is a deep discount business in the warehouse club for probably 25 years and we've been providing consulting advice to a lot of the closeout locations. We also have done work with Ollie's a couple of years ago on productivity and marketing in Ollie's Army and looking at their overall scaling of their operation under their previous CEO. We also publish the only guide I'm aware of on closeout supply in the United States, looking at both consumables and general merchandise. And I've been in the M&A business for closeout chains for a number of years. We've looked at Ollie's for clients. We've looked at Grocery Outlet. We've looked at a number of their competitors. And we were also involved in the Big Lots liquidation as we also run liquidation events as well. So we were very sort of much at the front line on that major event that will impact Ollie's for the last 2 years and certainly going forward. So deep discount is what we do and analysis and assessments of the overall health of the low-income consumer are sort of specialty areas of ours.

RV: Excellent. Well, thank you as always for joining us, Howard. So I know we were chatting before the call opened and I think there were some points related to Ollie's 2Q earnings that you wanted to highlight. Maybe we can start there. So, you know, comps were down 2% in the quarter. Just wanted to get your perspective on the quarter and specifically what you wanted to highlight there.

HJ: Right. I think one of the things that I'll highlight what I was missing or what I was expecting to hear from both management. If you look at top line, top line was significantly impacted by the exit of Big Lots from the market. 1,200 locations closed, about a third of those sold out, that's sold closeout merchandise. So that's an FT equivalent of closeout locations of about 370. One of the features that some analysts may be aware of is on the geographic locational algorithm that's used for real estate and development for Ollie's is the location of proximity to Big Lots locations. So it's not a coincidence that a large number, about 400 of the locations, overlapped old Big Lots locations. And it's not a coincidence that about 62 locations were acquired from the liquidator and continue to be acquired from former landlords that took those locations back. The algorithm still holds. What I'm surprised about is that that had a devastating impact on Big Lots locations, had a real big windfall for Ollie's. So the windfall was not macro. It was more micro than anything else. And yet I'm surprised that analysts seem to be focusing on the macro aspects, which have impacted overall closeout volume, availability, and also demand for closeout merchandise, which was significant for Ollie's. And that's the headwind that they've really been facing since the bankruptcy in September 2024, but it really got into its swing and had an impact on 2025. So '26 versus '25 was all about the shift in volume from Big Lots to Ollie's, and that's really that micro impact is what is impacting same-store sales that they're actually comping against this year. So it's not macro, it's micro. And I think many of the analysts in their questions and some of the answers they got back seem to suggest it's a macro event, but it's not.

RV: Okay.

HJ: And I think finally how Ollie's navigates that exit of Big Lots and avoids becoming Big Lots 2, I think is really an issue that management will have to wrestle with for the next couple of years because if they cross 700 locations, it will become the issue. And I think that they'll do a better job than Big Lots ever did with a very different profile of merchandise, obviously, without the furniture, for example, and just a close-out sort of focus merchandise mix, but it is an important part to realize. As I said, I was surprised to hear that a number of the analysts seem to have forgotten what happened just in 2024, 2025, which impacted 2026.

RV: Interesting. Okay, well, I do want to follow up on the macro piece of it. But just as we're speaking about Big Lots,

10/12/2026 at 06:01 AM UTC

can you help us understand what might be the implications for merchandise mix and margins as they continue to acquire some of those former Big Lots locations? Is there anything we should be tracking there?

HJ: Sure. The mix in merchandise has changed dramatically. If you look at the Big Lots mix, as I said, a third of the average store sales Big Lots were in closeout merchandise. That was all in consumables. It wasn't hardline merchandise. So that volume of consumables, which represents about $200 to $300 million of consumables, shifted immediately. And it was noticeable that if you looked at the overall merchandise mix at Ollie's, consumables increased as a result of that. There was also a difficult sourcing environment that they faced as well at the same time from China, which impacted overall availability of merchandise on general merchandise. So the overall shift in mix in merchandise has become very noticeable. Now, if you look at consumables, what's the impact on gross margin? It's caused a slight degradation of gross margin, which they have absorbed very well because if they scale the operation, their overall DCs they've managed to leverage, there's been great availability of general merchandise because of the overall decline in economic activity in Asia, there's been an awful lot of closeout merchandise available and of course with the offset on the tariffs in quarter 2, then that obviously gave them a margin boost as well. So all of these factors have had an impact on gross margin, which I think is sort of slightly overheated at the moment and something to watch. But they change the merchandise mix, it changes the velocity of customers because people come in more often for consumables. So over time one would expect the traffic patterns to improve, but it will reduce average basket size, it may increase frequency, it will change gross margins and potentially reduce them. But the offset of that will be scaling of the business will yield margin improvements. It's safe to say they've got almost full utilization of their DCs. That's included within cost of goods sold, so therefore that will improve their overall gross margin mix. So there's a number of moving parts here, but increasing the overall consumables mix because of the exit of 99 Cents Only in 2024 and the exit of Big Lots in 2025, they have had an impact on the overall business. It's not the same Ollie's it was 2 years ago because their consumables mix is much greater than it was before and the overall impact on margin can be negative as a result of that, but the overall pattern of traffic and average basket size is to reduce average basket size, potentially increasing traffic, which is why I think they've been so successful with the growth of Ollie's Army most recently as well as the promotional spends that they've made. So there's an awful lot packed in there, but Big Lots has a major impact on Ollie's. The challenge is not to become Big Lots 2 and that's really what I think management has to be very careful to avoid that overall scaling problem.

RV: Got it. Got it. Appreciate that. And then just to go back to your point on the macro, because you're right, it was a good part of the discussion on the call. You know, how much of the negative comp do you think could be related to consumer pressure? And are you observing any changes broadly in consumer purchasing habits right now, especially amongst the low-income consumer?

HJ: Well, interestingly enough, then obviously gasoline prices has had a major impact. That's the biggest one. But if we look at pricing regionally in the discount sector, in club sector, in deep discount and mass discount, and what we found very closely is that there is a South-Southeast area of states where they're facing deflation if you take out gas prices. Gas prices risen nationally, so that's across the board and that has had a negative impact. But on the low- income consumer, if you look at overall pricing of the rest of the basket excluding gasoline, we're finding South- Southeast deflation and we're finding in the North-Northeast and in California and the Pacific Northwest high levels of inflation. So when you say macro, we're not looking at a macro environment across the country that's consistent. So therefore, how does that impact Ollie's? And the answer is, if you look at where the aggregation of their locations and concentration of locations is, it's in those areas where they're experiencing something of price deflation, excluding gasoline. And that highlights to some extent why the loss in overall top-line volume, because prices have been declining. We've noticed that the price investment is certainly very real at Ollie's, although I scratch my head because it's an EDLP retailer, and I don't think it really competes on the EDLP price, and so therefore making price investments is when you're 60% below on personal care, then being 62% on personal care doesn't make a damn difference. It means you're giving away gross margin, and I think there's an element of that. But they are located mainly in

10/12/2026 at 06:01 AM UTC

deflationary markets, excluding gasoline. And it's interesting that that explains part of the top-line decline that they're facing. So I look at the consumer, and yes, the low-income consumer is adversely affected by gasoline purchasing. So when we look at the basket of base consumables, we see those going down. What we see on the net net is that we've seen a slight reduction in overall prices in the South-Southeast. So the pressure on the consumer is not as bad as on low-income consumers, and the South-Southeast market is not as bad as is generally thought when you take into account also the rest of the country. So that needs to be looked at. So it's a very fine issue, but you have to look at the regionality because there are vast differences in regional macro performance that we found most recently that never used to be the problem. Because of the concentration of all these locations, they benefit from that. So if you look at the overall macro impact, I think they're in a sort of favorable market from the consumer perspective. However, there is likely to be pressure on them because of deflationary pressures on overall comps and sales comparisons this year versus last.

RV: Got it. And just on your point on price investments as well, Howard, so what are you seeing there and how do you think Ollie's will continue to approach pricing in the coming quarter? Will we see more of this? Will they use it as a tool to drive traffic?

HJ: I think they will, and yet it makes no sense to me. Having come from an EDLP background, I realize that basically if you have a substantial price discount, and we check Ollie's prices against traditional grocery and mass discount prices, more accurately against Walmart, for example, the price gap is considerable. The price gap that they advertise of 60% differential between toothpaste at Ollie's and toothpaste at Walmart is real. Now, what difference does it make of moving that by 2 points? None at all. But it does impact your gross margin. And what essentially you've done is you've given away gross margin. So to me, being an EDLP, a former retail executive, it doesn't make sense. You have to be very careful where you make price investments because price investments can drive traffic and then price investments can just simply reduce gross margin with no impact on traffic. And I think that their focus on pricing to their general customer base is a giveaway on gross margin. Now, if you look at where they are trying to focus their price discounts, if it's event-based and it's targeted on specific groups of loyal customers, then I think it has possibly some impact of increasing overall frequency of purchase. And I think given the overall change in mix on consumables, that makes good sense to me. So I think it has to be very targeted. A lot of their previous promotional activity on pricing has been very general and very generic to everybody else in the marketplace. That doesn't make sense. It needs to be targeted towards their existing customers to try and increase frequency and also because of the change in mix to increase the overall basket share of Ollie's at those customers versus other retailers.

RV: Got it. And just so we have a sense of what the trajectory could look like, Howard, you know, based on what you're seeing, would you expect the comp trend to improve from that down 2% in the next quarter or will it take several quarters?

HJ: I don't think that their guidance of flat to 0 is achievable in the fourth quarter. I don't because I look at the comps of not so much the macros, but the micro as well of Big Lots. And I saw the overall impact that they faced in the tailwind that they faced behind them in comps last year that just drove that business along as the Big Lots business transferred to them. Then I think that's a very big barrier to overcome. I don't think they can do it in the fourth quarter. I think it will take longer than that for it to flow through. So if you look at the timing of the bankruptcy of Big Lots, it was September 9th, 2024. So there's a 12-month, basically, period. So it's almost cycled out in the fourth quarter, but there's still some remnants of it. So I think that the tailwind in 2025 is a problem for them, and also the macro environment being a deflationary environment net of gasoline, I think that and a possible reduction in prices. I don't think they're going to hit the comps. I really don't. I think they will miss them this quarter.

RV: Got it. Yeah. But and then I guess on an ongoing basis, Howard, you know, the company's guiding for 2% comps. Is that realistic?

10/12/2026 at 06:01 AM UTC

HJ: Going forward in 2027, once you take out the Big Lots volume, it's a problem than I think it is because RV: Okay.

HJ: they've got very little competition in the market. You have Family Dollar scaling back under its private equity owners. You've got the only one problem that you see is low-income consumers facing SNAP reductions, but those SNAP reductions have taken place this year. Although Ollie's doesn't take SNAP, it obviously impacts disposable income of low-income customers. So that has had an impact, and that's cycled through this year. So many of the major impacts, both micro and macro, will have cycled through, and I think 2027 will be a good year for them.

RV: Appreciate that. Okay. So, and then just as we think about the consumer demographic at this time, though they are talking about trade down customers, do you think those trade down customers will stick with the company longer term?

HJ: They generally don't, as it turns out. I've sat on more conference calls where people talk about trade up and trade down from Dollar General, Family Dollar, Walmart, etc. And every time, and having watched it both as a marketing executive inside the retailer, they never do.

RV: Okay, makes sense. And I wanted to ask you about Ollie's Army, which we've talked about on a number of our previous conversations, but they said that that growth increased 13% year over year in the prior quarter. Any observations about what they're doing there, the quality of the new members and, you know, kind of the messaging and loyalty piece of it?

HJ: They're doing a better job on targeting. Years ago, I have many Ollie's Army membership cards, which I suppose is an indication to some extent of what the quality of the overall membership base is. But I get one basically every time I go into an Ollie's. Some are inactive and some are active. I was receiving flyers on all of them most of 2025. But in 2026, I've seen the dead cards basically fall off. And so I've seen the flyer activity focused on the cards that are active and live and not on the dead ones. That's good because it means they're not throwing the money away, basically, on mailings to people who either don't exist or will never shop the location or have really no probability of coming back. So that's good. So it means the focus and the return on investment that you get on your marketing spend is better. So that's an improvement. It also means that the effectiveness of those marketing pieces is likely to be better than it would otherwise be. So that's also a positive. So I think they're doing a much better job on marketing events, on targeted marketing events, and also picking out which customers they want. So I think their 5-mile radius definition for targeting of customers for drive time because of gas prices makes a lot of sense to me. So they're doing some better things on Ollie's Army, but I still get concerned that if I look at the average number of members per location, it has dropped, yet there is very little overlap still of locations, and that's one of the things that I think they have to worry about as they scale, is that very few locations cannibalize other locations, and so therefore there shouldn't be a cannibalization of Ollie's Army membership efforts anymore. But they still see a decline in overall Army membership. That's one area where they could definitely improve their operation in targeting, but I think they're at least starting to do that. Previously, they've always done flyers where they send out all flyers to all markets, all members get them, whether they're active or inactive, and the non-shops, for example, get them as well. So they don't spend their money wisely and they don't get a very good return as a result of it. By targeting, they will get a better result. And so therefore I'm seeing some better returns, but they still need to accelerate because they're really not keeping up with the overall growth in scale of business, but I'm seeing at least some positive signs, which is the first time I've seen that for a couple of years.

RV: Yeah, okay. Appreciate that. 1 more question I wanted to ask before getting into the closeout environment generally, Howard, but management had highlighted an elevated promotional environment last quarter. Do you expect that the promotional intensity will stay at these levels through year end or could it heighten even further from here?

10/12/2026 at 06:01 AM UTC

HJ: I think they will probably try... they will spend the money to try and hit the comp number. I don't think they'll be successful, but I think that the level of spend will be maintained at the current level in quarter 2. So that I do expect. So that's definitely it.

RV: Yeah. Okay. Appreciate that. And now let's talk a little bit about the closeout environment. So can you provide some context on the state of supply versus demand as we look ahead into holiday and into 2027 as well? The management did say that deal flow is strong. I just wanted to get your perspective.

HJ: Well, there are 2 things, again, micro and macro. If you look at micro, as they've scaled the organization, they've also improved and invested in their procurement group. So they've got a better group of people. They've got more people. And so, therefore, they're looking at deals from a wider perspective, a wider list of vendors they've had before. So that's certainly, and that's a part of scaling the operation. Also, as they scale the operation, then they become a more attractive target for vendors. So therefore it seems that the bees are attracted to the honey, and the honey is 700 locations plus. And so that's a very attractive component. The second part of it, again, is micro, is the elimination of competitors. Again, getting back to Big Lots, Big Lots was the equivalent of 370, 100% closeout locations. That's a big chunk of volume taken out of the marketplace as a competitor for closeout merchandise, so that really falls essentially to Ollie's, and I think they benefited from that, so the closeout environment on a macro side is certainly positive for them. On the micro side, on the macro side, closeout supply is very strong at the moment if we look at the overall market for closeouts and wholesale. The value, we're looking at about a $13 billion market for consumables and about $27 billion for non-consumable general merchandise. The overall environment in China with the elimination of tariffs has certainly helped supply. There's plenty of merchandise coming out of China and Asia for import and domestic manufacturers certainly provided volume as well. So then the overall environment, if your callers want to convert those numbers into retail sales, just double them. So $27, that'd be $54 billion at retail, closing out general merchandise, and $13 will equate to about $26 billion in overall retail volume. That's a very healthy situation. We've been tracking this since 2018, and that's the highest level that we've seen in all the years that we've been tracking. So very positive availability from both a macro and micro side, limited competition for closeout merchandise from other discount retailers. We're seeing Family Dollar scaling back their organization and scaling back on their overall demand and they're one of the big competitors. The club sector is moving out of the closeout business a little bit less than it has before and they were huge buyers of closeout, so there's less competition from other retailers which obviously all bodes well for Ollie's.

RV: Just to be clear, Howard, who is competing most aggressively for that closeout merchandise right now with Ollie's?

HJ: Dollar General, the clubs, and I would say Family Dollar I would exclude from that because their situation is somewhat fluid at the moment. They're a shrinking organization, so it's less demand. Mass discount I'm not seeing as much. Walmart, for example, can be a big buyer in closeout, but it's been less active; it's been very much on the branded side. So they've been less active, but they, when they put their toe in the water, it's a big toe, trust me, and that makes a big difference. The clubs are still very active. Sam's, under new leadership, has really backed off closeouts and gone more branded. So we've certainly seen that. Costco hasn't changed its overall perspective. So those are also big buyers. But if you look at who the competitors are, the top 10 list of competitors, Ollie's has gone from where it was about number 10 2 years ago on our list to about number 5. So the scaling of the business has a big impact. It's almost a flywheel effect. And it certainly attracts more vendors to them and the overall deal flow does certainly increase. And with the increase in their procurement organization, that's all a positive as well. So they can seek out better deals anyway. So the competition for closeouts is certainly a positive one for Ollie's with the elimination of major competitors, and declines in Family Dollar and some of the other mass discount has also had less demand. Plus, with availability and reduction of tariffs, more product available from Asia. So a good environment. That's why we're at the top levels that we've had since we've been started monitoring closeout volume in 2018.

10/12/2026 at 06:01 AM UTC

RV: Got it, got it, got it. And I guess a year from now, do you think that we'll see, you know, still a strong closeout environment?

HJ: I think you will. I think you'll see a strong closeout environment for Ollie's because RV: Yeah.

HJ: of some of the macro factors, I think... sorry, some of the micro factors that work in their favor as they scale their operation. Closeout supply can be very regionalized because the overall proportion of cost, of transportation cost is such a significant factor. I mean, when you're paying cents on the dollar for the cost of goods sold on the merchandise, the transit costs become a significant component of that. So as they geographically expand, that becomes an important factor in their ability to actually buy very effectively or to buy very efficiently. So I think that the micro impact of the scale of organization is also a benefit that they have.

RV: I appreciate it. Well, Howard, thank you so much for your time. We always are grateful for your perspective on the closeout environment and Ollie's particularly. I do want to remind everyone listening in, if you have any thoughts for Howard, you can reach out to your Guidepoint representative, schedule a one-on-one. He also covers the warehouse stores and other companies in the discount space, so a lot to talk with Howard about. But that's what we have for today. So, Howard, looking forward to the next one, and thanks as always.

HJ: Thanks very much indeed. Good evening. Nice talking to you.

RV: Take care.

HJ: Bye.

RV: We'll talk soon.

HJ: Bye-bye.

RV: Bye.

HJ: Bye-bye.

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10/12/2026 at 06:01 AM UTC