Ollie's stock rises following Big Lots store closures

Investing.com -- Shares of Ollie's Bargain Outlet (NASDAQ:OLLI) climbed 3.5% as the market responded to the news of Big Lots (NYSE:BIG )' decision to close all stores and cancel its proposed sale to Nexus Capital Management.

Analysts from Truist and KeyBanc have identified Ollie's as a primary beneficiary of these closures, noting the potential for the company to capture a portion of Big Lots' market share.

The positive sentiment is bolstered by prior analysis indicating that if the approximately 425 Big Lots stores with direct overlap with an Ollie's location (within 5 miles) were to close, and Ollie's captured just 5% of that store's non-furniture business, it could lead to an incremental 200-250 basis points in comparable sales gains for Ollie's.

This scenario is now seen as increasingly likely, according to Truist analyst Scot Ciccarelli.

Ciccarelli commented on the situation, stating, "While Big Lots store closures have created some headwinds for some of our other retailers (~50bps for Ollie’s in 3Q), the permanent closure of these stores will orphan a lot of sales dollars that can flow to competitive retailers, especially Ollie’s.”

KeyBanc analyst Bradley Thomas regards the additional Big Lots store closures as favorable for OLLI, suggesting that the company stands to gain "incremental market share" not only with customers but also with suppliers. Furthermore, the closures may present new real estate opportunities for Ollie's expansion.

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Source: Investing.com