Ollie's Bargain Outlet added as a new short at Hedgeye

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Ollie's Bargain Outlet (NASDAQ:OLLI [https://seekingalpha.com/symbol/OLLI]) was added as a new short idea at Hedgeye with potential for a lot of downside.

"We think the risk/reward skews massively to the downside for OLLI with the stock at $135," Hedgeye analys Brian McGough wrote in a note on Thursday. "We think there are several critical factors in the model that are emerging, and will change/erode the growth and cash flow trajectory materially over the next 12 months."

McGough argues that the Big Lots (OTC:BIGGQ [https://seekingalpha.com/symbol/BIGGQ]) bankruptcy is not as positive as the market seems to think.

"1) Our analysis of the OLLI locations near shuttered BIG stores suggests virtually Zero comp uplift from the Ch11, " McGough wrote. "And 2) The leases acquired by OLLI appear to be at lower than average productivity levels."

McGough believes that growth at Ollies (NASDAQ:OLLI [https://seekingalpha.com/symbol/OLLI]) "is very non-linear and not without hiccups. At a minimum, OLLI can't add many more stores, based on our analysis, without materially eroding its margin and return structure. A 10x EBITDA multiple can't handle that — nevermind 21x."

Shares of Ollie's (OLLI [https://seekingalpha.com/symbol/OLLI]) fell 1.2% on Thursday. The stock has jumped 55% over the past year. Ollie's has short interest of 6.1%. [https://seekingalpha.com/symbol/OLLI]

MORE ON OLLIE'S BARGAIN OUTLET

* Ollie's Bargain Outlet Holdings: Double-Digit Revenue Growth Is Doable [https://seekingalpha.com/article/4792541-ollies-bargain-outlet-holdings-double-digits-revenue-growth-is-doable]
* Ollie's Bargain Outlet: Discount Retailer Beating Expectations, Shares Fairly Valued [https://seekingalpha.com/article/4792272-ollies-bargain-outlet-discount-retailer-beating-expectations-shares-fairly-valued]
* Ollie's Bargain Outlet Holdings, Inc. (OLLI) Q1 2025 Earnings Call Transcript [https://seekingalpha.com/article/4792076-ollies-bargain-outlet-holdings-inc-olli-q1-2025-earnings-call-transcript]
* Ollie's reaffirms $2.6B sales outlook while accelerating store expansion and loyalty initiatives [https://seekingalpha.com/news/4455110-ollies-reaffirms-2_6b-sales-outlook-while-accelerating-store-expansion-and-loyalty]
* Ollie's posts Q1 results beat, guides within expectations for FY [https://seekingalpha.com/news/4454865-ollies-posts-q1-results-beat-guides-within-expectations-for-fy]