Ollie's Bargain Outlet's (OLLI) Q2 results should give investors confidence that the company has found a "fundamental bottom," with comparable sales accelerating throughout the quarter and gross margin holding strong, RBC Capital Markets said in a note emailed Thursday.
The retailer should see the momentum continuing throughout September as it benefits from Labor Day being a week later and it cycles the easiest compare of the quarter, RBC said, while keeping its estimates for Q3 and Q4 largely unchanged.
RBC further said that the consumer backdrop remains challenging with the company attributing comparable sales softness in Q2 to a tough multi-year stack, unfavorable weather as well as continued economic pressure on the consumer, and an elevated promotional environmental.
For 2026, RBC now expects comparable sales to shrink 0.1% from 0.1% growth previously and adjusted EPS of $4.58 from $4.34 previously.
For 2027, RBC expects comparable sales of 2% along with adjusted EPS of $4.95 compared with previous estimate of $4.86.
RBC raised its price target to $124 from $121 and maintained its outperform rating.
Price: $72.89, Change: $-0.98, Percent Change: -1.33%