UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-K
For the fiscal year ended January 31, 2026
OR
For the transition period from _______ to ________
Commission file number: 001-37501
Ollie’s Bargain Outlet Holdings, Inc.
(Exact name of registrant as specified in its charter)
6295 Allentown Boulevard Suite 1 Harrisburg, Pennsylvania 17112
(Address of principal executive offices) (Zip Code)
(717) 657-2300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of each exchange on which registered
Common Stock, $0.001 par value OLLI The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large
accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicated by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant
to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant as of August 2, 2025 (the last business day of the registrant’s most recently completed second fiscal quarter), based on the closing sale price per share as reported by the NASDAQ Stock Market LLC on such date, was approximately $8.4 billion. For purposes of this calculation only, the registrant has excluded all shares held in the treasury or that may be deemed to be beneficially owned by executive officers and directors of the registrant. By doing so, the registrant does not concede that such persons are affiliates for purposes of federal securities laws.
The number of outstanding shares of the registrant’s common stock, $0.001 par value, as of March 12, 2026 was 60,956,213.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for the 2026 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed pursuant to Regulation 14A within 120 days after the end of the 2025 fiscal
year, are incorporated by reference into Part III of this Form 10-K.
INDEX
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 26
Item 1C. Cybersecurity 26
Item 2. Properties 29
Item 3. Legal Proceedings 29
Item 4. Mine Safety Disclosures 29
PART II
Item 6. [Reserved] 32
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40
Item 8. Financial Statements and Supplementary Data 41
Item 9A. Controls and Procedures 69
Item 9B. Other Information 71
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 71
PART III
Item 10. Directors, Executive Officers and Corporate Governance 72
Item 11. Executive Compensation 72
Item 14. Principal Accountant Fees and Services 72
PART IV
Item 15. Exhibits and Financial Statement Schedules 73
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Cautionary note regarding forward-looking statements
This Annual Report on Form 10-K 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, prospects, financial performance, and industry outlook.
Examples of forward-looking statements include, but are not limited to, statements we make regarding the outlook for our future business and financial performance, such as those contained in “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” included elsewhere in this Annual Report on Form 10-K.
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:
• changes in consumer confidence and spending;
• risks associated with intense competition;
• factors such as inflation, recession, cost increases, and energy prices;
• changes in market levels of wages;
• our inability to obtain favorable lease or acquisition terms for properties;
• the seasonal nature of our business;
See “Item 1A. Risk Factors” for a further description of these and other factors that could cause our actual results to differ materially from those contemplated by the forward-looking statements. For the reasons
described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Annual Report on Form 10-K. Any forward-looking
statement made by us in this annual report speaks only as of the date on which we make it. 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. We
undertake 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 Securities and Exchange Commission (“SEC”) filings.
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Ollie’s Bargain Outlet Holdings, Inc. operates on a fiscal year, consisting of the 52- or 53-week period ending on the Saturday nearer January 31 of the following calendar year. References to “2025,” “2024” and
“2023” represent the 2025 fiscal year ended January 31, 2026, the 2024 fiscal year ended February 1, 2025, and the 2023 fiscal year ended February 3, 2024, respectively. 2025 and 2024 consisted of 52-weeks and 2023 consisted of 53-weeks.
References to “2026” refer to the 52-week fiscal year ending January 30, 2027.
In this report, the terms “Ollie’s,” the “Company,” “we,” “us” or “our” mean Ollie’s Bargain Outlet Holdings, Inc. and its wholly owned subsidiaries, unless the context indicates otherwise.
PART I
Item 1. Business.
Overview
Ollie’s Bargain Outlet Holdings, Inc. and subsidiaries (collectively referred to as the “Company” or “Ollie’s”) is a leading off-price retailer of brand name household products. Since our founding in 1982, the
Company’s mission has been to sell Good Stuff Cheap®. We do this through a flexible buying model that focuses on closeout merchandise and excess inventory from suppliers and manufacturers around the world. Our stores offer Real Brands! Real
Bargains! ® in a treasure hunt shopping environment at prices up to 70% below traditional retailers.
Our flexible business model, which includes an opportunistic buying strategy, and long history of experience of buying and selling closeout merchandise and excess inventory, differentiates us from traditional
retailers. Our highly experienced merchandise team is constantly scouring the market and leveraging deep, long-standing relationships across the supply chain to find the best products at the best prices. We focus on buying cheap and selling cheap,
and source products as unique buying opportunities present themselves. While the individual products sold in our stores are constantly changing, our overall merchandise mix is designed to save people money on a wide variety of brand name household
products that they need and use in their everyday lives.
We operate one reportable industry segment. See Note 12, “Segment Reporting and Entity-Wide Information,” to our audited consolidated financial statements included elsewhere in this Annual
Report on Form 10-K. On January 31, 2026, we operated 645 retail stores in 34 states. Our stores offer a broad selection of brand name products in a no-frills, warehouse-style treasure hunt shopping experience, and our merchandise assortment is
constantly changing.
Flexible Business Model
We operate a unique and flexible business model that combines an opportunistic buying strategy with a broad and changing assortment of brand name household products sold at no-frills,
warehouse-style stores and supported by low-cost operations to deliver a compelling value proposition and profitable growth. Our buying, product assortment, and inventory management strategies give us flexibility to adjust our merchandise
assortment more frequently than traditional retailers, and our store and distribution operations are designed to support this flexibility.
Opportunistic Buying Strategy
Our mission is to sell Good Stuff Cheap® and our primary point of differentiation against other retailers is the pricing of our products. Our goal is to be the lowest priced retailer of any
product offered by our stores by utilizing a flexible and opportunistic buying model that focuses on closeout merchandise and excess inventory from suppliers and manufacturers around the world.
The closeout industry is large, highly fragmented, and growing. Fueling the growth is the consolidation of retailers and manufacturers around the globe. Larger retailers are being supplied by larger manufacturers and
this is leading to larger order and product flows. In addition, manufacturers are constantly developing and introducing new products, new packaging, and working around endless changes and disruptions in the marketplace and supply chain. This is
driving growth in the number of products being offered for sale by manufacturers at closeout-type prices. At the same time, the retail side of the closeout industry is highly fragmented, with many independent operators and small format stores.
As a result, we purchase our products from a variety of sources, including major manufacturers, wholesalers, distributors, brokers, and retailers. Our merchant team maintains relationships
with a base of existing vendors and is constantly looking to build new relationships with new vendors. This provides us with a steady flow of closeout deals and products to choose from. We believe our growing size and scale allow us better access
to merchandise.
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Our merchants specialize by department in order to build category expertise, in-depth knowledge, and sourcing relationships. We believe our buying approach, coupled with long-standing and
newly formed relationships, enable us to find the best deals from major manufacturers, and pass drastically reduced prices along to our customers. Our merchants maintain direct relationships with brand manufacturers, regularly attend major
tradeshows, and travel the world to source extreme value offerings across a broad assortment of product categories. We are an attractive partner to major manufacturers because our merchants are experienced and empowered to make quick decisions.
Each opportunity is unique, and our merchants negotiate directly with the supplier to lock in a particular deal. Our flexible business model, opportunistic buying strategy, and ever-changing mixture of goods allows us to move in and out of
products and select the deals that we believe deliver the most value to our customers.
Broad and Changing Assortment of Brand Name Household Products
We sell a wide assortment of household goods and consumer products. Our focus is on nationally-branded products that consumers know and recognize. We offer a highly differentiated,
constantly evolving assortment of brand name merchandise across a broad range of categories at drastically reduced prices. We leverage our experienced merchant team, experience in the closeout industry, long-standing relationships with
manufacturers, wholesalers, distributors, brokers, and suppliers of consumer products to procure an ever-changing assortment of great deals for our customers, with products offered at prices up to 70% off the prices offered by traditional
retailers. Our product price tags and marketing allow customers to compare our competitor’s price against Ollie’s price to further highlight the savings they can realize by shopping at our stores. We augment our brand name merchandise with
opportunistic purchases of unbranded goods and our own domestic and direct-import private label brands in underpenetrated categories to further enhance the assortment of products that we offer. We believe our compelling value proposition and the
unique nature of our merchandise offerings differentiate us from traditional retailers. With our opportunistic buying strategy, our product assortment and mix of sales between the departments are constantly changing.
The table below shows the breakdown as a percentage of net sales for the past three fiscal years across the consumables, home, seasonal, and other product
classifications.
Percentage of Net Sales
Consumables are items that are used up and depleted through normal use and must be replaced regularly, and include things such as: health and beauty aids, food, candy, beverages, pet food and treats, laundry related products,
and cleaning supplies. Home are items that are generally used in or around the home to support daily living and comfort, and include
things such as: housewares and kitchen items, home décor products, furniture, household essential type of items, and home maintenance and utility items. Seasonal are items that are generally used or in demand during certain times of the year and around specific seasons, holidays, or recurring events, and include things such as: patio furniture, air conditioners, fans, space
heaters, toys, lawn and garden related products, outdoor items, holiday décor, gifts, and decorations. Other are items that don’t fall
into the consumables, home, or seasonal categories, and include things such as: books, stationery related items, small electronic devices and accessories, clothing, sporting
goods, pet products, automotive products, luggage and other general merchandise.
Low-Cost Operations
We maintain strong expense control and operate with a low-cost structure. Our marketing and advertising strategy is generally focused on building the Ollie’s brand and informing customers about some of our latest
product offerings. Our no-frills, warehouse-style stores are designed to provide a pleasant overall shopping environment without spending heavily on store fixtures or décor. Our real estate strategy focuses on infilling existing geographies as well
as expanding into contiguous markets in order to leverage our distribution infrastructure, field management team, store management, marketing investments and brand awareness. The majority of our stores are leased and we look to open new stores in
existing vacant sites with strong traffic patterns and lower rent structures. Additionally, our distribution network and field management team are designed to run cost effectively.
No-Frills, Warehouse-Style Stores
Our stores offer a no-frills, warehouse-style treasure hunt shopping experience and operate under the Ollie’s brand name and logo. Our average store size is approximately 32,000 square feet
and generates consistent financial returns across all vintages, geographic regions, population densities, demographic groups, and real estate formats. The majority of our stores are leased and we look to open new stores in existing vacant sites
with strong traffic patterns and lower rent structures. Stores are organized by department in a racetrack type fashion. Our stores welcome our customers with vibrant and colorful caricatures together with witty signage. We believe the store
layout and merchandising strategy help to encourage a “shop now” sense of urgency and increase frequency of customer visits as customers never know what they might find in our stores. We make it easy for our customers to browse our stores by
displaying our frequently changing assortment of products on rolling tables, pallets and other display fixtures. Our store team leaders are responsible for maintaining our treasure hunt shopping experience, keeping the stores clean and well-lit,
and ensuring our customers are engaged. We believe our humorous brand image, compelling values, and welcoming stores resonate with our customers and define Ollie’s as a unique and comfortable shopping destination.
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Contiguous New Store Growth Strategy
Ollie’s first store was opened in Mechanicsburg, PA in 1982. From the beginning, the Company has been focused on the buying and selling of closeout and excess inventory of name brand
household goods and consumer products. Ollie’s was founded based on the idea that “everyone in America loves a bargain,” and our mission today is the same as it was over 40 years ago; saving people money by selling Good Stuff Cheap®.
Historically, we have expanded our store base by opening new stores organically. More recently, we have expanded our store base through acquiring former store locations of bankrupt retailers through the bankruptcy
store auction process. We follow a unit growth strategy that combines backfilling existing markets and states with entering new markets and states in a contiguous manner. On January 31, 2026, we operated 645 stores in 34 states, as depicted in the
map below.
We believe we can profitably expand our store count on a national scale to more than 1,300 locations in the United States. Our real estate strategy
focuses on infilling existing geographies as well as expanding into contiguous markets in order to leverage our distribution infrastructure, field management team, store management, marketing investments and brand awareness. We target a store
size between 25,000 to 35,000 square feet. We utilize a rigorous site selection and real estate approval process in order to leverage our infrastructure, marketing investments, and brand awareness. Our flexible store layout allows us to quickly
take over a variety of low-cost, second-generation sites, including former big box retail and grocery stores. By focusing on key characteristics such as proximity to the nearest Ollie’s store, ability to leverage distribution infrastructure,
visibility, traffic counts, population densities, and low rent per square foot, we have developed a new store real estate model that has consistently delivered attractive returns on invested capital.
We maintain a healthy pipeline of real estate sites that have been approved by our real estate committee. Our recent store growth is summarized in the following table:
Stores closed - (3 ) (1 )
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Pricing
Our stores sell high quality brand name household products that consumers use in their everyday lives at retail prices that are up to 70% below traditional retailers. We do this through a
flexible buying model that focuses on closeout merchandise and excess inventory from suppliers and manufacturers around the world. Other than end of season clearance events to sell down certain seasonal products, a few customer appreciation
events, and special incentives for our Ollie’s Army loyalty members, we generally do not engage in promotional pricing activities on a regular basis throughout the year.
Marketing and Advertising
Our marketing and advertising activities are designed to communicate the value and assortment of merchandise available in our stores and to drive store traffic. Our messaging emphasizes the availability of brand name
merchandise, closeout opportunities, and price discounts relative to traditional retail prices. A central element of our merchandising approach is the “treasure hunt” nature of our assortment. Because we source a significant portion of our
inventory through opportunistic closeout purchases, our merchandise mix changes frequently and often includes limited quantities of brand name products. Our marketing highlights these changing assortments and encourages customers to visit our
stores regularly to view newly available merchandise. Our closeout sourcing model and frequently changing merchandise assortment influence our marketing approach. New deals and branded merchandise opportunities arrive throughout the year, and our
advertising communicates current values and recently arrived merchandise in order to encourage repeat store visits.
We utilize analytical tools to evaluate the effectiveness of our advertising investments and allocate marketing spending across channels. As part of this process, we use media mix modeling and related analytical
techniques to assess the relative effectiveness of various marketing channels and inform decisions regarding marketing allocation and campaign planning. Our marketing strategy is designed to maintain marketing expenses at a relatively modest level
as a percentage of net sales while continuing to support customer engagement and store traffic. We utilize a range of marketing channels to reach both existing and prospective customers, including the following:
Ollie’s Army Loyalty Program
We operate a customer loyalty program called Ollie’s Army. Membership in the program is free, and members earn points for every dollar spent in our stores that accumulate toward rewards redeemable for future
purchases. Members also receive coupons, early notification of promotional events and other communications throughout the year. As of January 31, 2026, the program had approximately 17 million members. During 2025, Ollie’s Army members accounted
for more than 80% of net sales and spent approximately 40% more per transaction than non-members. Information generated through the Ollie’s Army program, including demographic, behavioral and purchasing data, supports our marketing activities and
customer communications.
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Co-Branded Credit Card Program
In fiscal 2024, we launched a co-branded Visa® credit card program in connection with the Ollie’s Army loyalty platform. The card program is administered by Sunbit. Customers may apply for the card in stores or
online, and individuals who are not already members are automatically enrolled in the Ollie’s Army program upon approval. The card does not charge an annual fee and allows customers to earn additional loyalty points when making purchases at
Ollie’s and at other merchants that accept Visa®.
Distribution
We operate four distribution centers encompassing approximately three million square feet. The locations for our distribution centers are selected to minimize logistics costs and optimize shipping efficiencies to our
stores. Our distribution centers, located in Pennsylvania, Georgia, Texas, and Illinois are built to suit our specific business model, with a combination of automated systems and manual processes to manage the wide variety of merchandise we
acquire. We have made significant investments in our distribution network and personnel to support our growth and expansion. We built and opened our fourth distribution center in 2024 and plan to expand two existing distribution centers in 2026 and
2027. Our distribution centers utilize warehouse and labor management tools that support the processing of inventory. We use various third-party freight carriers to ship items to and from our distribution centers and our stores.
Competition
We operate in a highly competitive retail industry, success in which is based on many factors, such as price, merchandise quality and assortment, store location, convenience, and customer
service. We compete with local, regional, national, and international discount, closeout, off-price, mass merchant, warehouse, department, grocery, drug, convenience, hardware, variety, and other specialty stores and retailers selling products in
stores, online, and other media or channels. Our primary point of differentiation against other retailers is the pricing of our products. Our goal is to be the lowest priced retailer of any product offered by our stores by utilizing a flexible
buying model that focuses on closeout merchandise and excess inventory from suppliers and manufacturers around the world. Our stores offer Real Brands! Real Bargains! ® in a treasure hunt shopping environment at prices up to 70% below traditional
retailers.
Seasonality
Our business is seasonal. Historically, our sales and profits have been highest in the fourth fiscal quarter, followed by the second fiscal quarter because of the sale of seasonal products. To prepare for the
holiday sales season, we must order and keep in stock more merchandise than we carry during other times of the year and generally engage in additional marketing efforts. We expect inventory levels, along with accounts payable and accrued expenses,
to reach their highest levels in our 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, we
experience fluctuations in net sales and working capital requirements during the year. Because we offer a broad selection of merchandise at extreme values, we believe we are generally less impacted than other retailers by economic cycles, which
correspond with declines in general consumer spending habits, and we believe we still benefit from periods of increased consumer spending.
Trademarks and Other Intellectual Property
We believe that our trademarks, trade names, copyrights, proprietary processes, trade secrets, trade dress, domain names and similar intellectual property are valuable to our business. We have registered, or applied
for the registration of, a number of U.S. domain names, trademarks, service marks and copyrights. Our trademark registrations have various expiration dates; however, assuming that the trademark registrations are properly renewed, they have a
perpetual duration. We rely on trademark, copyright, and patent laws, trade-secret protection, and confidentiality and/or license agreements to protect our proprietary rights.
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Government Regulation
We are subject to state and federal laws including labor and employment laws, including minimum wage requirements and wage and hour laws, advertising laws, privacy laws, safety regulations, environmental laws and
regulations, and other laws, including consumer protection regulations, and laws that govern retailers and/or product standards, the promotion and sale of merchandise, and the operation of stores and warehouse facilities. We monitor changes in
these laws and believe that we are in material compliance with all applicable laws.
We source a portion of our 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. Our policies and our vendor code of conduct mandate compliance with applicable laws, including these laws and regulations.
Human Capital
Attracting, developing, and retaining quality talent is key to our growth, and our success depends on cultivating an engaged and motivated workforce. We work hard to create an environment where Ollie’s team
members can build fulfilling careers and we take pride in providing opportunities for growth and development.
As of January 31, 2026, we employed over 13,000 associates, with more than half of these as full-time associates. Of our total associate base, approximately 1,300 were based at our store
support center and distribution centers, and the remaining were store and field associates. The number of associates in a fiscal year fluctuates depending on the business needs at different times of the year. None of our associates belong to a
union or are party to any collective bargaining or similar agreement.
Workplace and Culture
We seek to build a workplace of belonging where we can leverage our collective talents, striving to ensure that all associates are treated with dignity and respect. We believe that a workforce with a diversity of
viewpoints, background, experience, and industry knowledge is key to our culture and long-term success. We are committed to providing equal employment opportunities and advancement consideration to all individuals based on job-related
qualifications and ability to perform the job as well as maintaining an environment that is free of intimidation or harassment. We value the talents and contributions of our associates, and by focusing on our team members, we know that the entire
Ollie’s community will be well served.
Oversight and Management
Our Human Resources department manages all associate matters, including recruiting, hiring, compensation and benefits, performance management, and associate training. In addition, our management team works closely
with the Human Resources department to evaluate associate management issues such as retention and workplace safety. As we strive to retain and engage talent at all levels of our business, our Human Resources department also reviews our retention
and turnover rates and administers our talent and training programs and review process to support the development of our talent pipeline.
Associate Training and Development Programs
We offer a compelling work environment with meaningful growth and career-development opportunities. We provide opportunities for our associates to do challenging work and learn on the job, and we supplement those
opportunities with programs and continuous learning that help our team build skills to advance. We encourage a “promote-from-within” environment when internal resources permit. We also provide internal leadership development programs designed
to prepare our high-potential team members for greater responsibility. We believe internal promotions, coupled with the hiring of individuals with previous retail experience, will provide the management structure necessary to support our
long-term strategic growth initiatives.
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Our Ollie’s Leadership Institute (“OLI”) equips field associates with the ability to advance their career. Each OLI participant receives an individual development plan, designed to prepare
them for their next level position. Reflecting our belief in our “home grown” talent, OLI is our preferred source for new supervisors and team leaders. In 2025, over 65% of our current district team leaders were internally promoted to their
positions. Company-wide, over 60% of our field positions were filled by internal promotions. We believe our training and development programs help create a positive work environment and result in stores that operate at a high level.
Compensation and Benefits
We are committed to providing market-competitive compensation for all positions. Eligible team members participate in one of our various bonus incentive programs, which provide the opportunity to receive additional
compensation based upon store and/or Company performance. In addition, we provide our eligible team members the opportunity to participate in a safe harbor 401(k) retirement savings plan with a Company-sponsored match. We also share in the cost
of health insurance provided to eligible team members, and team members receive a discount on merchandise purchased from the Company. We additionally provide eligible team members with paid time off.
Workplace Health and Safety
Maintaining a safe and secure work environment is very important to us and we conduct our business in an environmentally sound manner based on customer needs and local requirements. To further promote a safe work
environment, we have established safety training programs. This includes administering an occupational injury- and illness-prevention program, together with an employee assistance program for team members.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 are available free of charge on our website, www.ollies.com, as soon as reasonably practicable after the electronic filing of such reports with the Securities and Exchange Commission (“SEC”). The contents of our website are not, however, a
part of this report or intended to be incorporated by reference in any other report or document we file with the SEC. The SEC also maintains a website (www.sec.gov) that contains reports, proxy, and information statements and other information
regarding issuers that file electronically with the SEC.
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ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as other information in this Annual Report on Form 10-K, before
deciding whether to invest in the shares of our common stock. The occurrence of any of the events described below could have a material adverse effect on our business, financial condition, or results of operations. In the case of such an event,
the trading price of our common stock may decline, and you may lose all or part of your investment.
RISK FACTOR SUMMARY
We are providing the following summary of the risk factors contained in our Form 10-K to enhance the readability and accessibility of our risk factor disclosures. We encourage our stockholders to carefully review
the full risk factors contained in this Form 10-K in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from recent results or from our anticipated future results.
Risks Related to Business and Operations
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Risks Related to Legal and Regulatory Issues
Risks Related to Technology and Cybersecurity
Risks Related to Accounting and Financial Matters
Risks Related to Ownership of Our Common Stock and Corporate Governance
Risks Related to Our Indebtedness and Capitalization
For a more complete discussion of the material risks facing our business, see below.
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BUSINESS AND OPERATIONS
We may not be able to execute our opportunistic buying strategy, adequately manage our supply of inventory, or anticipate customer demand, which could have a material adverse
effect on our business, financial condition, and results of operations.
Our business is dependent on our ability to strategically source a sufficient volume and variety of brand name merchandise at opportunistic pricing. We do not have significant control over the supply, design,
function, cost, or availability of much of the merchandise that we offer for sale in our stores. Additionally, because we source a substantial amount of our merchandise from suppliers on a closeout basis, or with significantly reduced prices for
various reasons, we are not always able to purchase specific merchandise on a recurring basis. We do not have long-term contracts with our suppliers and, therefore, we have no contractual assurances of pricing or access to merchandise, and any
supplier could discontinue sales to us at any time or offer us less favorable terms on future transactions. Our merchant team generally makes individual purchase decisions for merchandise that becomes available, and these purchases may be for
large quantities that we may not be able to sell on a timely or cost-effective basis. To the extent that certain of our suppliers are better able to manage their inventory levels and reduce the amount of their excess inventory, the amount of
discount or closeout merchandise available to us could also be materially reduced, potentially compromising our profit margin goals for procured merchandise. Due to economic uncertainties, governmental orders, or other challenges, one or more of
our suppliers could become unable to continue supplying discounted or closeout merchandise on terms or in quantities acceptable or desirable to us. We also compete with other retailers, wholesalers, and jobbers for discounted and closeout
merchandise to sell in our stores. Those businesses may be better able to anticipate customer demand or procure desirable merchandise. Shortages or disruptions in the availability of brand name or unbranded merchandise of a quality acceptable to
our customers and to us could have a material adverse effect on our business, financial condition, and results of operations and also may result in customer dissatisfaction. In addition, we may significantly overstock merchandise that proves to be
undesirable and be forced to take significant markdowns. We cannot ensure that our merchant team will continue to identify the appropriate customer demand and take advantage of appropriate buying opportunities, which could have a material adverse
effect on our business, financial condition, and results of operations.
Risks associated with or faced by our suppliers could adversely affect our results of operations and financial performance.
We source our merchandise from a variety of suppliers, and we depend on them to supply merchandise in a timely and efficient manner. If one or more of our current suppliers became unable to supply merchandise,
seeking alternative sources could increase our merchandise costs and supply chain lead time, potentially resulting in temporary reductions in store inventory levels, and could reduce the selection and quality of our merchandise. An inability to
obtain alternative sources could materially decrease our sales. Additionally, if a supplier fails to deliver on its commitments, we could experience merchandise out-of-stocks that could lead to lost sales and reputational harm. Further, failure
of suppliers to meet our compliance protocols could prolong our procurement lead time, resulting in lost sales and adverse margin impact. Changes to the prices and flow of certain merchandise is, at times, beyond our control for reasons that
include, among others: political or civil unrest, acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in countries in which foreign suppliers are located, the financial
instability of suppliers, failure to meet our terms and conditions or our standards, issues with our suppliers’ labor practices or labor disruptions they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs
during and following the disruption), the availability and cost of raw materials, pandemic outbreaks, merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport security, inflation, and other
factors relating to suppliers. Any such circumstances could adversely affect our results of operations and profitability.
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Fluctuations in comparable store sales and results of operations, including fluctuations on a quarterly basis, could cause our business performance to decline substantially.
Our results of operations have fluctuated in the past, including on a quarterly basis, and can be expected to continue to fluctuate in the future.
Our comparable store sales and results of operations are affected by a variety of factors, including without limitation:
• national and regional economic trends in the United States;
• changes in gasoline prices;
• changes in shipping and transportation costs;
• changes in our merchandise mix;
• the weather;
• changes in pricing;
• changes in the timing of promotional and advertising efforts; and
• holidays or seasonal periods.
If our future comparable store sales fail to meet expectations, then our cash flow and profitability may decline substantially, which could have a material adverse effect on our business, financial condition, and
results of operations.
We rely on third parties to move merchandise through ports and transport them from ports to our centralized distribution centers.
Our ability to timely and effectively deliver merchandise to our stores relies in part on shipping and transportation partners to timely and safely move our merchandise from manufacturing facilities to ports and then
onto oceangoing carriers. The demand for space onboard oceangoing vessels can vary and costs to secure space can vary greatly. We may be subject to higher transportation costs or be unable to secure space for containers on economically reasonable
terms. There also may be labor or other disputes at either ports of departure or at ports of entry that may delay or otherwise hinder the flow of merchandise. Additional factors, such as customs or border control policies and enforcement and new
or changing tariffs or trade sanctions, such as additional or new import tariffs, may further delay or hinder transportation of merchandise or the costs to obtain them. There are multiple factors in the transportation of merchandise that are both
outside of our control and which may negatively impact the cost of the merchandise or the timeframes in which we receive the same.
Factors such as inflation, tariffs, cost increases, and energy prices could have a material adverse effect on our business, financial condition, and
results of operations.
Future increases in costs, such as the cost of labor, merchandise, shipping rates, freight and other transportation costs (including import costs), and store occupancy costs, may reduce our profitability, given our
pricing model. These cost increases may be the result of inflationary pressures, geopolitical factors, or public policies, which could further reduce our sales or profitability. Increases in other operating costs, including changes in energy
prices, wage rates, and lease and utility costs, may increase our cost of merchandise sold or selling, general, and administrative expenses. Our low-price model and competitive pressures in our industry may inhibit our ability to reflect these
increased costs in the prices of our merchandise and, therefore, reduce our profitability and have a material adverse effect on our business, financial condition, and results of operations.
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Our ability to generate revenue is dependent on consumer confidence and spending, which may be subject to factors beyond our control, including changes in economic and political
conditions, as well as health concerns.
The success of our business depends, to a significant extent, on the level of consumer confidence and spending. A number of factors beyond our control affect the level of customer confidence and spending on the
merchandise that we sell, including, among other items:
• energy and gasoline prices;
• shipping and transportation costs;
• interest rates and inflation;
• discounts, promotions, and merchandise offered by our competitors;
• negative reports and publicity about the discount retail industry;
• general economic and industry conditions;
• food prices;
• the state of the housing market;
• customer confidence in future economic conditions;
• fluctuations in the financial markets;
• tax rates and policies;
• tariffs and trade sanctions on imported goods;
• civil unrest, natural disasters, war, terrorism, and other hostilities.
Reduced customer confidence and spending may result in reduced demand for our merchandise, including discretionary items, and may force us to take inventory markdowns. Reduced demand also may require increased
selling and promotional expenses. Adverse economic conditions and any related decrease in customer demand for our merchandise could have a material adverse effect on our business, financial condition, and results of operations.
Many of the factors identified above also affect commodity rates, transportation costs, costs of labor, insurance, and healthcare, the strength of the U.S. dollar, lease and other site acquisition costs, measures
that create barriers to or increase the costs associated with international trade, changes in other laws and regulations, and other economic factors, all of which may impact our cost of merchandise sold and our selling, general, and administrative
expenses, which could have a material adverse effect on our business, financial condition, and results of operations.
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We do not compete in the growing online and omnichannel retail marketplace, which could have a material adverse effect on our business, financial condition, and results of
operations.
Our long-term business strategy does not presently include the development of online retailing capabilities or offering of an omnichannel shopping experience. To the extent that we implement online operations, we
would incur substantial expenses related to such activities and would be exposed to additional risks, including additional cybersecurity risk. Furthermore, the development of an online retail marketplace is a complex undertaking, and there is no
guarantee that the resources we apply to this effort would result in any material increased revenues or better overall operating performance. However, with the growing acceptance of online and omnichannel shopping, both among consumers who
previously shopped online and consumers who did not previously do so, or did not do so as frequently, we may continue to face challenges related to customers shopping in brick-and-mortar stores. In addition, the increased proliferation of mobile
devices and enhanced and robust connections to mobile networks and competition from other retailers in the online and omnichannel retail marketplace are expected to continue to increase and may negatively impact our results of operations. A number
of traditional online retailers have established robust online and omnichannel operations. Increased competition from online or omnichannel retailers and our lack of an online or omnichannel retail presence may reduce our customers’ desire to
purchase merchandise from us and could have a material adverse effect on our business, financial condition, and results of operations. If consumers elect to shop more online due to cultural or health concerns, those consumers may be less likely to
return to brick-and-mortar retailers in the future.
We face intense competition, which could limit our growth opportunities and adversely impact our financial performance.
We compete with a highly fragmented group of competitors, including discount, closeout, mass merchant, department, grocery, drug, convenience,
hardware, variety, online, and other specialty stores. We compete with these retailers with respect to product cost and price, store location, supply and quality of merchandise, assortment and presentation, and customer service among other
items. This competitive environment subjects us to the risk of an adverse impact to our financial performance because of the lower prices, and thus the lower margins, that are required to maintain our competitive position. A number of different
competitive factors outside of our control could impact our ability to compete effectively, including without limitation:
• entry of new competitors in our markets;
• vertical integration of competitors;
• increased operational efficiencies of competitors;
• online and omnichannel retail capabilities of our competitors;
• continued and prolonged promotional activity by our competitors;
• geographic expansion by competitors into markets in which we operate; and
A number of our competitors also have greater financial, operational, and other resources, greater brand recognition, longer operating histories, and a broader geographic presence than us. We may be vulnerable to
the marketing power and high level of customer recognition of these larger competitors and to the risk that these or other competitors could attract our customer base, including members of Ollie’s Army.
In addition, if any of our competitors were to consolidate their operations, such consolidation may result in competitors with greatly improved financial resources, improved access to merchandise, greater market
penetration, and other improvements in their competitive positions, as well as result in the provision of a wider variety of merchandise at competitive prices by these consolidated companies, which could have a material adverse effect on our
business, financial condition, and results of operations.
We cannot guarantee that we will continue to be able to successfully compete against either existing or future competitors. Our inability to respond effectively to competitive pressures, improved performance by our
competitors, and changes in the retail markets could result in lost market share and could have a material adverse effect on our business, financial condition, and results of operations.
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We may not be able to retain the loyalty of our customers, particularly our Ollie’s Army members, which could have a material adverse effect on our business, financial
condition, and results of operations.
We depend on our loyal customer base, particularly our members of Ollie’s Army, for our consistent sales and sales growth. Competition for customers has intensified as competitors have moved into, or increased their
presence in, our geographic markets and from the use of mobile and web-based technology that facilitates online and omnichannel shopping and real-time product and price comparisons. We expect this competition to continue to increase. Our
competitors may be able to offer consumers promotions or loyalty program incentives that could attract our customers, including members of Ollie’s Army, or divide their loyalty among several retailers. If we are unable to retain the loyalty of our
customers, our net sales could decrease, and we may not be able to grow our store base as planned, which could have a material adverse effect on our business, financial condition, and results of operations.
Our co-branded credit card program could pose reputational risk if not properly executed.
On July 23, 2024, we announced our partnership with Sunbit, a leading financial technology company, to launch a co-branded Visa® credit card, our first-ever co-branded credit card program. We intend the partnership
to bring greater flexibility to our customers and enhance loyalty with our members, but if the program is not properly executed, is renewed on less favorable terms, or is terminated, it could adversely affect our operations and harm our brand,
reputation, and relationship with our loyal customer base, including our Ollie’s Army loyalty program members.
Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the
leases negotiated in the past.
We lease the majority of our stores, our corporate headquarters, and our distribution centers in York, PA and Commerce, GA. Our stores are leased from third parties, with typical initial lease terms of approximately
seven years with options to renew for successive five-year periods. Historically, we have been able to negotiate favorable rental rates due in large part to the general state of the economy, the increased availability of vacant big box retail
sites, and our careful identification of favorable lease opportunities. While we continually seek to identify the most advantageous lease opportunities, there is no guarantee that we will continue to be able to find low-cost second-generation
sites or obtain favorable lease terms. Many of our lease agreements have defined escalating rent provisions over the initial term and any extensions. Increases in our occupancy costs and difficulty in identifying economically suitable new store
locations could have significant negative consequences to our business, including without limitation:
We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flows from operating activities to fund these expenses and
needs and sufficient funds are not otherwise available to us, we may not be able to service our lease expenses, grow our business, respond to competitive challenges, or fund our other liquidity and capital needs, which could harm our business.
Additional sites that we lease may be subject to long-term non-cancelable leases if we are unable to negotiate our current standard lease terms. If an existing or future store is not profitable, and we decide to close it, we may nonetheless be
committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual
requirements for early cancellation under that lease. In addition, if we are not able to enter into new leases or renew existing leases on terms acceptable to us, this could have a material adverse effect on our business, financial condition, and
results of operations.
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If we fail to open new profitable stores on a timely basis, successfully enter new markets, or implement other elements of our long-term growth strategy, our financial
performance could be materially adversely affected.
Our primary growth strategy is to open new profitable stores and expand our operations into new geographic regions. Our ability to timely open new stores depends in part on several factors, many of which are beyond
our control, including the availability of attractive rents and store locations; the absence of occupancy delays; the ability to negotiate and enter into leases, or acquire ownership of properties, on acceptable terms; our ability to obtain and
retain permits and licenses; our ability to hire, train, and retain new personnel, especially store opening teams and store managers, in a cost effective manner; our ability to adapt and grow our distribution and other operational and management
systems to an increasing and ever evolving network of stores; the availability of capital funding for expansion; our ability to respond to the demographic shifts and general economic conditions in the many different geographic markets where our
stores and distribution centers are located. See “Item 1. Business (Growth Strategy)” and “Item 7. MD&A” for more information.
We may not anticipate all of the challenges imposed by the expansion of our business operations into new geographic markets. Some new stores may be located in areas with different competitive and market conditions,
customer demographics and tastes, and discretionary spending patterns than our existing markets. We may face a higher cost of entry, difficulties attracting labor, alternative customer demands, reduced brand recognition, and minimal operating
experience in these geographic markets. Although we are extremely sensitive to cannibalizing existing stores, opening new stores in our established markets may also result in inadvertent oversaturation, sales volume transfer from existing stores
to new stores, and reduced comparable store sales, thus adversely affecting our overall results of operations and financial performance. We may not manage our expansion effectively, and our failure to achieve or properly execute our expansion
plans could limit our growth or have a material adverse effect on our business, financial condition, and results of operations.
The failure to timely acquire, develop, open, and operate, or the loss of, disruption to, or interruption in the operations of, our centralized distribution centers could
materially adversely affect our business and operations.
With limited exceptions, inventory is shipped directly from suppliers to our distribution centers in York, PA, Commerce, GA, Lancaster, TX, and Princeton, IL, where the inventory is processed, sorted, and shipped to
our stores. We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our distribution centers. Increases in transportation
costs (including increases in fuel and other variable costs), supplier-side delays, reductions in the capacity of carriers, changes in shipping companies, the impact of pandemics or health crises on our workforce, labor strikes, or shortages in the
transportation industry, war, civil unrest, geopolitical tensions, trade wars, and other unexpected delivery interruptions also have the potential to derail our orderly distribution process. We also may not anticipate changing demands on our
distribution system or timely develop and open any necessary additional facilities. In addition, events beyond our control, such as disruptions in operations due to fire or other catastrophic events or labor disagreements, may result in delays in
the delivery of merchandise to our stores. While we maintain business interruption insurance, in the event one or more of our distribution centers are disrupted or shut down for any reason, such insurance may not be sufficient, and any related
insurance proceeds may not be timely paid to us. In addition, our new stores receiving shipments may be further away from our distribution centers, which may increase transportation costs and may create transportation scheduling strains. Any
repeated, intermittent, or long-term disruption in the operations of our distribution centers would hinder our ability to provide merchandise to our stores and could have a material adverse effect on our business, financial condition, and results
of operations.
Our new store growth is dependent on our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could adversely affect
our performance.
We maintain distribution centers in York, PA, Commerce, GA, Lancaster, TX, and Princeton, IL, to support our existing and new stores as well as our store growth objectives. We continuously assess ways to maximize
the productivity and efficiency of our existing distribution centers and evaluate opportunities for additional distribution centers. Processing delays or difficulties in operations at our existing distribution centers or delays in opening,
processing delays, or difficulties in operations at our new distribution centers, could adversely affect our current operations by causing existing stores to have insufficient inventory, and could adversely affect future operations by slowing store
growth, which could, in turn, reduce sales growth. In addition, any distribution-related construction or expansion projects entail risks which could cause delays and cost overruns, such as shortages of materials, shortages of skilled labor, work
stoppages, unforeseen construction issues, scheduling, engineering, environmental or geological problems, or other pandemics or types of contagion, weather interference, fires or other casualty losses, and unanticipated cost increases. The
completion date and ultimate cost of future projects could differ significantly from initial expectations due to construction-related or other reasons. We cannot guarantee that any project will be completed on time or within established budgets.
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If we are not successful in managing our inventory balances, it could have a material adverse effect on our business, financial condition, and results of operations.
Efficient inventory management is a key component of our profitability and ability to generate revenue. To be successful, we must maintain sufficient inventory levels and an appropriate product mix to meet our
customers’ demands without allowing those levels to increase to such an extent that the costs to store and hold merchandise adversely impact our results of operations. If our buying decisions do not accurately correspond to customer preferences,
if we inappropriately price merchandise, or if our expectations about customer confidence or spending levels are inaccurate, we may have to take unanticipated markdowns to dispose of any excess inventory, which could have a material adverse effect
on our business, financial condition, and results of operations. We continue to focus on ways to reduce these risks, but we cannot ensure that we will be successful in our inventory management.
Inventory shrinkage could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to the risk of inventory loss and theft. We cannot ensure that actual rates of inventory loss and theft in the future will be within our estimates or that the measures we are taking will effectively
reduce the problem of inventory shrinkage. Although some level of inventory shrinkage is an unavoidable cost of doing business, if we were to experience higher rates of inventory shrinkage or incur increased security costs and other costs to
combat inventory theft, it could have a material adverse effect on our business, financial condition, and results of operations.
Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
We have experienced in the past, and expect to continue to experience, increased labor shortages at some of our stores and distribution centers. While we have historically experienced some level of ordinary course
turnover of employees, a number of factors have had and may continue to have adverse effects on the labor force available to us, including reduced employment pools, federal unemployment subsidies, and other government regulations, which include
laws and regulations related to workers’ health and safety, wage and hour practices, and immigration. Labor shortages and increased turnover rates involving our team members have led to, and could in the future lead to, increased costs, such as
increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our facilities or otherwise operate at full capacity. An overall or prolonged labor shortage,
lack of skilled labor, increased turnover, or labor inflation could have a material adverse effect on our business, financial condition, and results of operations.
Our success depends on our executive officers, our merchant team, and other key personnel. If we lose key personnel or are unable to hire additional qualified personnel, it could have a material
adverse effect on our business, financial condition, and results of operations.
Our success depends to a significant degree on the skills, experience and efforts of our executive officers, our merchant team, support center and field management, and other key personnel. The unexpected loss of
services of any of our executive officers, senior members of our merchant team, or senior management could materially, adversely affect our business and operations. Competition for skilled and experienced management in the retail industry is
intense, and our future success will depend on our ability to attract and retain qualified personnel, including our merchant team, which is responsible for purchasing, and negotiating the terms of, our merchandise. Failure to attract new and
retain existing qualified personnel could have a material adverse effect on our business, financial condition, and results of operations.
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If we are unable to attract, train, and retain highly qualified managerial personnel and sales associates in our stores and our distribution centers, our sales, financial
performance, and business operations may be materially adversely affected.
We focus on providing our customers with a memorable and engaging shopping experience. To grow our operations and meet the needs and expectations of our customers, we must attract, train, and retain a large number
of highly qualified store management personnel and sales associates, while controlling labor costs. Our ability to control labor costs is subject to numerous external factors and compliance with laws and regulatory structures, including
competition for, and availability of, qualified personnel in a given market, unemployment levels within those markets, governmental regulatory bodies such as the Equal Employment Opportunity Commission (“EEOC”) and the National Labor Relations
Board (“NLRB”), prevailing wage rates and wage and hour laws, minimum wage laws, the impact of legislation governing labor and employee relations or benefits, such as the Affordable Care Act (“ACA”), costs of health insurance and other health
benefits, healthcare costs, and our ability to maintain good relations with our associates. We compete with many other retail businesses for many of our store management personnel, and sales associates in hourly and part-time positions. These
positions have had historically high turnover rates, which lead to increased training and retention costs. The accelerated pace at which we have been, and plan to continue, opening new stores, both in existing and new markets, could make it
increasingly difficult to recruit, hire, and retain employees that will be able to properly execute our business goals and offer our customers a quality experience in those new stores. Further, changes in immigration laws, regulations, and
enforcement could adversely affect the pool of candidates legally available to fill positions.
We also rely on associates in our distribution centers to ensure the efficient processing and delivery of merchandise from our suppliers to our stores. If we are unable to attract and retain quality associates and
management personnel, fail to comply with the regulations and laws impacting personnel, or have difficulty accurately predicting employee-related costs (including healthcare costs), and establishing accurate budgetary reserves for such costs, it
could have a material adverse effect on our business, financial condition, and results of operations.
Our success depends on our marketing, advertising, and promotional efforts. If we are unable to implement those efforts successfully, or if our competitors engage in more
effective marketing, advertising, and promotional efforts than we are, it could have a material adverse effect on our business, financial condition, and results of operations.
We use marketing and promotional programs to attract customers to our stores and to encourage purchases by our customers. Although we use various media for our promotional efforts, including regular and Ollie’s Army
mailers, email campaigns, radio and television advertisements, and sports marketing, we primarily advertise our in-store offerings through printed flyers. In 2025, over 40% of our advertising spend was for the printing and distribution of flyers.
If the efficacy of printed flyers as an advertising medium declines, or if we fail to successfully develop and implement new marketing, advertising, and promotional strategies, such as an effective social media strategy, our competitors may be able
to attract the interest of our customers, which could reduce customer traffic in our stores. Changes in the amount and degree of promotional intensity or merchandising strategy by our competitors could cause us to have difficulties in retaining
existing customers and attracting new customers. Further, social media allows for an increased speed at which publicity, both positive and negative, can be transmitted. Information spread over social media, whether based on actual or perceived
conditions or events, could be disseminated before we can meaningfully investigate and respond to the underlying issue, if any. Negative online postings or comments about our business, including as a result of inaccurate, fictitious, or even
malicious postings or social media content, could adversely affect our business and cause damage to the value of our brand.
If the efficacy of our marketing or promotional activities declines, if such activities of our competitors are more effective than ours, or if for any other reason we lose the loyalty of our customers, including our
Ollie’s Army members, it could have a material adverse effect on our business, financial condition, and results of operations.
Because our business is seasonal, with the highest volume of net sales during the holiday season, adverse events during our fourth fiscal quarter could materially adversely
affect our business, operations, cash flows, and financial condition.
We generally recognize our highest volume of net sales in connection with the holiday sales season, which occurs in the fourth quarter of our fiscal year. In anticipation of the holiday sales season, we purchase
substantial amounts of seasonal inventory and hire many part-time associates. Because a significant percentage of our net sales and operating income are generated in our fourth fiscal quarter, we have limited ability to compensate for shortfalls
in our fourth fiscal quarter sales or earnings by changing our operations or strategies in other fiscal quarters. Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions,
errors in anticipating consumer demand for our merchandise, or unanticipated adverse or unseasonable weather conditions could result in lower than planned sales during the holiday sales season. If our fourth fiscal quarter sales results were
substantially below expectations, we would realize less cash flows from operations, and may be forced to mark down our merchandise, especially our seasonal merchandise, which could have a material adverse effect on our business, financial
condition, and results of operations.
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Risks associated with the current geopolitical climate could adversely affect our business, financial condition, and results of operations.
Our business, financial condition, and results of operations may differ materially as we cannot predict the impact of the current geopolitical climate. Risks associated with heightened geopolitical instability
include, among others, reductions in consumer confidence, heightened inflation, production disruptions, cyber disruptions or attacks, higher natural gas costs, higher manufacturing costs, and higher supply chain costs.
Climate-related conditions and changes, natural disasters, unusual weather conditions, epidemic or pandemic outbreaks, terrorist acts, and political events could disrupt our
business and result in lower sales and otherwise adversely affect our financial performance.
There are inherent climate-related risks wherever our business is conducted. Changes in market dynamics, shareholder expectations, local, national, and international climate change policies, and the frequency and
intensity of extreme weather events on critical infrastructure in the United States and abroad, all have the potential to disrupt our business and operations. The occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires,
floods, and earthquakes, epidemic outbreaks, and unusual weather conditions in regions where our stores are located could adversely affect our business and result in lower sales. Additionally, climate-related events and circumstances have
resulted, and likely will continue to result, in increased costs for property insurance policies. Severe weather, such as heavy snowfall or extreme temperatures, may discourage or restrict customers in a particular region from traveling to our
stores, thereby reducing our sales and profitability. If severe weather conditions occur during the second or fourth quarter of our fiscal year, the adverse impact to our sales and profitability could be even greater than at other times during the
year because we generate a larger portion of our sales and profits during these periods. The frequency and/or severity of such natural disasters, such as tornadoes, hurricanes, floods, and earthquakes, may be unpredictable, and we have a growing
number of stores in areas that may be impacted by weather events and natural disasters such as the types listed above. To the extent that such weather events or natural disasters may damage our stores or other operations, we may be unable to
operate stores or other facilities and our consolidated financial results may be materially adversely affected. Epidemic or pandemic outbreaks, terrorist attacks, war, protests, civil unrest, and disruptive political events in regions where our
stores are located could impact our management and sales associates, our inventory supply, our delivery schedules, or our ability to keep our stores open due to mandatory governmental restrictions or may cause our customers to avoid shopping at
brick-and-mortar retailers or reduce the number of trips they will make to our stores. Also, to the extent these events impact one or more of our key suppliers or result in the closure of one or more of our distribution centers or our corporate
headquarters, we may be unable to maintain delivery schedules or provide other support functions to our stores. These conditions could have a sustained material adverse effect on our business, financial condition, and results of operations.
LEGAL AND REGULATORY
We are subject to governmental regulations, requirements, and procedures. A significant change in, or noncompliance with, these regulations, requirements, and procedures could
have a material adverse effect on our business, financial condition, and results of operations.
We routinely incur significant costs in complying with federal, state, and local laws and regulations. The complexity of the regulatory environment in which we operate, and the related costs of compliance, are
increasing due to expanding and additional legal and regulatory requirements and increased or uncertain enforcement efforts. New laws or regulations, including, but not limited to those dealing with healthcare and healthcare reform, product
compliance and safety, consumer credit, privacy and information security, the environment, and labor and employment, among others, or changes in existing federal, state, and local laws and regulations, particularly those governing the sale of
merchandise and food safety and quality (including changes in labeling or disclosure requirements), federal or state wage requirements, employee rights, health care, social welfare or entitlement programs such as health insurance, paid leave
programs, other changes in workplace regulation, and compliance with laws regarding public access to our stores, may result in significant added expenses or may require extensive system and operating changes that may be difficult to implement
and/or could materially increase our cost of doing business. Untimely compliance or noncompliance with applicable laws or regulations or untimely or incomplete execution of a mandated governmental action, such as a product recall, can result in
the imposition of penalties, including loss of licenses or significant fines or monetary penalties, store or distribution center closures, or class action litigation or other litigation, in addition to reputational damage. Additionally, changes in
tax laws, the interpretation of existing laws, or our failure to sustain our reporting positions on examination could materially adversely affect our effective tax rate and could have a material adverse effect on our business, financial condition,
and results of operations.
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We rely on manufacturers located in foreign countries for merchandise and a significant amount of our domestically-purchased merchandise is manufactured abroad. Our business
may be materially adversely affected by legal and regulatory risks associated with international trade.
We purchase merchandise from suppliers located outside of the United States. During fiscal 2025, the majority of our private label inventory purchases were imports. Additionally, a significant amount of our
domestically purchased merchandise is manufactured in foreign countries. Our ability to identify qualified suppliers and to access merchandise in a timely and efficient manner is a significant challenge, especially with respect to merchandise
sourced outside of North America. Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control, including possible changes to U.S. trade policy, increased shipping costs, the timing of shipments, increased import
duties, more restrictive quotas, loss of most favored nation trading status, currency exchange rates, work stoppages, transportation delays, port of entry issues, economic uncertainties such as inflation, foreign government regulations, civil and
political unrest, natural disasters, war, terrorism, trade restrictions, political instability, the financial stability of vendors, merchandise quality issues, unexpected contagion, existing viruses or illnesses, and tariffs or trade sanctions, as
well as international trade disputes or changes in trading relationships resulting from current and future political environments. Moreover, negative press or reports about internationally manufactured merchandise may sway public opinion, and thus
customer confidence, away from affected merchandise sold in our stores. Although we have implemented and maintain policies and procedures to promote our suppliers’ compliance with laws and regulations relating to foreign markets and imports, and
to monitor the compliance of our suppliers, this does not guarantee that suppliers and other third parties with whom we do business will not actually or allegedly violate such laws or regulations, or our policies. These and other issues affecting
our international vendors could have a material adverse effect on our business, financial condition, and results of operations.
The cost of compliance with product safety regulations and risks related to product liability claims, lawsuits, and product recalls could damage our reputation, increase our
cost of doing business, and have a material adverse effect on our business, financial condition, and results of operations.
Federal and state legislation, including new product safety laws and regulations, may negatively impact our operations. Future changes in product safety laws or regulations may lead to product recalls and the
disposal or write-off of merchandise. While we work to comply in all material respects with applicable laws and regulations, and to execute product recalls in a timely manner, if our merchandise does not meet applicable governmental safety
standards or our customers’ expectations regarding quality or safety, we could experience lost sales and increased costs, be exposed to legal and reputational risk, and face fines or penalties which could materially adversely affect our financial
results. We also purchase a material portion of our merchandise on a closeout basis. Some of this merchandise is obtained through brokers or intermediaries rather than directly from manufacturers. The closeout nature of a portion of our business
sometimes makes it more difficult for us to investigate all aspects of this merchandise. Furthermore, customers have asserted claims, and may in the future assert claims, that they have sustained injuries from merchandise purchased from us, and we
may be subject to lawsuits relating to these claims. There is a risk that these claims may exceed, or fall outside the scope of, our insurance coverage. Even with adequate insurance and indemnification from third-party suppliers, such claims,
even if unsuccessful or not fully pursued, could significantly damage our reputation and customer confidence in our merchandise. If this occurs, it may be difficult for us to regain lost sales, which could have a material adverse effect on our
business, financial condition, and results of operations.
Our current insurance program may expose us to unexpected costs and negatively affect our financial performance.
Our insurance coverage reflects deductibles, self-insured retentions, limits of liability, and similar provisions that we believe are prudent based on the nature of our operations. However, there are types of losses
we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain other crimes, wage and hour claims, and certain other employment-related
claims, public accommodation claims, class actions, shareholder claims, and some natural disasters. If we incur these losses and they are material, our business could suffer. Certain material events may result in sizable losses for the insurance
industry and adversely impact the availability of adequate insurance coverage or result in excessive premium increases. To offset negative insurance market trends, we may elect to self-insure, accept higher deductibles, or reduce the amount of
coverage in response to these market changes. In addition, we self-insure a significant portion of expected losses under our workers’ compensation, general liability, and group health insurance programs. Unanticipated changes in any applicable
actuarial assumptions and management estimates underlying our recorded liabilities for these losses, including expected increases in medical and indemnity costs, could result in materially different expenses than expected under these programs,
which could have a material adverse effect on our results of operations and financial condition. We maintain insurance for catastrophic events at our store support center, distribution centers, and stores. In addition, because of ongoing changes
in healthcare law, among other items, we may experience an increase in participation in our group health insurance programs, which may lead to a greater number of medical and related claims. While we have coverage for some cyber-related incidents,
the nature and scope of any potential attack or breach may result in substantial costs that could exceed the scope of coverage or limits of coverage. If we experience a greater number of these losses than we anticipate, it could have a material
adverse effect on our business, financial condition, and results of operations.
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We face litigation risks from customers, associates, suppliers, stockholders, and other third parties in the ordinary course of business.
Our business is subject to the risk of litigation by customers, current and former associates, suppliers, stockholders, intellectual property rights holders, government agencies, and others, through private actions,
class actions, collective actions, administrative proceedings, regulatory actions, or other litigation. From time to time, such lawsuits are filed against us and the outcome of any litigation, particularly class or collective action lawsuits and
regulatory actions, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential losses relating to such lawsuits may remain unknown for
substantial periods of time. The cost to defend any such lawsuits may be significant and may negatively affect our operating results if changes to our business operations are required. There may also be negative publicity associated with
litigation that could decrease customer acceptance of merchandise offerings, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation could have a material adverse effect on our business,
financial condition, liquidity, and results of operations.
If we fail to protect our intellectual property portfolio, including without limitation brand names and other trademarks, the value of these assets may be diluted.
We may be unable or unwilling to strictly enforce our intellectual propertyin each jurisdiction in which we do business. For example, we may not always be
able to successfully enforce our trademarks against competitors or against challenges by others, and our failure to successfully protect our trademarks could diminish the value and efficacy of our brand recognition and may cause customer
confusion. Any failure to adequately protect or manage our intellectual property portfolio could have a material adverse effect on our business, financial condition, and results of operations.
TECHNOLOGY AND CYBERSECURITY
Any disruptions to our information technology systems or breaches of our network security could disrupt or interrupt our operations, compromise our reputation, expose us to
litigation, government enforcement actions, and costly response measures and may have a material adverse effect on our business, financial condition, and results of operations.
We rely on the integrity, security, and successful functioning of our information technology systems and network infrastructure across our operations, including point-of-sale processing at our stores. In connection
with sales, we make every effort not to transmit confidential credit and debit card information. Instead, we work with a third-party processing agent to provide us with a token to use in our payment process, in lieu of having to store such
information. In doing so, we must rely on our third-party provider’s uninterrupted and secure services, and if there is a failure or disruption in that process, there may be limited circumstances in which we are required to transmit encrypted
confidential information.
We are compliant with the Payment Card Industry Data Security Standard (“PCI”) issued by the Payment Card Industry Security Standards Council. However, there can be no assurance that in the future we will be able to
operate our facilities and our customer service and sales operations in accordance with PCI or other industry recommended or contractually required practices. We expect to incur additional expenses, and the time and effort of our information
technology staff, to maintain PCI compliance. Even though we are compliant with such standards, we still may not be able to prevent or timely detect security breaches.
An increasingly significant portion of our sales depends on the continuing operation of our information technology and communications systems, including, but not limited to, our point-of-sale system and our credit
card processing systems. Our information technology, communications systems, and electronic data may be vulnerable to damage or interruption from malicious code, phishing, smishing, artificial intelligence deepfakes, computer viruses, other
malware attacks, ransomware attacks, loss of data, unauthorized data breaches, usage errors by our associates or our contractors, or other attempts to harm our systems, including cyber-security attacks or other breaches of cardholder data,
earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and outages, and computer and telecommunications failures. Some of our systems are not fully redundant, and our disaster recovery planning cannot
account for all eventualities. The nature and scope of threats from artificial intelligence, in particular, represents a new, unpredictable frontier. The occurrence of intentional sabotage, unauthorized access, natural disaster, or other
unanticipated problems could result in lengthy interruptions in our service. Any errors or vulnerabilities in our systems, or damage to or failure of our systems, could result in interruptions in our services, non-compliance with certain
regulations, substantial remediation costs, and liability for lost or stolen information, any of which could have a material adverse effect on our business, financial condition, and results of operations.
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Data protection requirements increase our operating costs, and a breach of information privacy or other related risks could negatively impact our operations.
We have access to collect or maintain private or confidential information regarding our customers, associates, and suppliers, as well as our business. The protection of our customer, associate, supplier, and company
data is critical to us. In recent years, there has been increasing regulation, enforcement, and litigation activity in the area of privacy, data protection, and information security in the United States and in various other countries, with the
frequent imposition of new and changing requirements across the many states in which we conduct our business. State privacy laws and regulations, such as The Connecticut Data Privacy Act, The New York Privacy Act, The California Consumer Privacy
Act of 2018, The California Privacy Rights Act, and others, have imposed and likely will impose additional data protection obligations on companies considered to be doing business in such applicable states and provides for substantial fines for
non-compliance and, in some cases, a private right of action to consumers who are victims of data breaches. Privacy regulations in particular may shift from federal to state-level regimes, resulting in additional time, effort, and costs to
navigate the inconsistent regulatory landscape for multi-state operators. Complying with existing laws and similar emerging and changing privacy, data protection, and information security requirements may cause us to incur substantial costs or
compliance risks due to, among other things, system changes and the development of new processes and business initiatives. Our failure to comply with privacy, data protection, and information security laws could result in potentially significant
regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, and customer attrition.
In addition, our customers have a high expectation that we will adequately protect their personal information from cyber-attack or other security breaches. We have procedures in place to evaluate the integrity of