Q2 FY2026
Filed Sep 2, 2026Second-quarter net sales increased 9.1% to $741.3 million, while comparable store sales decreased 1.8%; gross margin increased 360 basis points to 43.5% and the Company updated fiscal 2026 outlook.
New-store expansion, a 360-basis-point gross-margin increase, and 43.4% growth in adjusted net income per diluted share drove strong earnings growth, but comparable store sales decreased 1.8% and the Company lowered its fiscal 2026 net sales and comparable-store-sales outlook.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| New store openings | 75 | 15 | n/a |
| Net sales | $2.980 to $3.000 billion | $ 741,305 | n/a |
| Comparable store sales growth | ~2% | (1.8 %) | n/a |
| Gross margin | ~40.7% | 43.5 % | n/a |
| Operating income | $340 to $348 million | 108,475 | n/a |
| Adjusted net income | $271 to $277 million | $ 85,447 | n/a |
| Adjusted net income per diluted share | $4.45 to $4.55 | $ 1.42 | n/a |
| Annual effective tax rate | ~25% | Not reported for fiscal year 2026 | n/a |
| Diluted weighted average shares outstanding | ~60.9 million | 60,236 | n/a |
| Capital expenditures | $103 to $113 million | $ 43,309 | n/a |
| Share repurchases | ~$125 million | $ 83,964 | n/a |
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, thirteen weeks ended August 1, 2026GAAP | $ 741,305 | – | 9.1 % |
| Comparable store sales change, thirteen weeks ended August 1, 2026other | (1.8 %) | – | – |
| Cost of sales, thirteen weeks ended August 1, 2026GAAP | 419,140 | – | – |
| Gross profit, thirteen weeks ended August 1, 2026GAAP | 322,165 | – | – |
| Gross margin, thirteen weeks ended August 1, 2026GAAP | 43.5 % | – | increased 360 basis points |
| Selling, general and administrative expenses, thirteen weeks ended August 1, 2026GAAP | 197,213 | – | – |
| Selling, general and administrative expenses as a percentage of net sales, thirteen weeks ended August 1, 2026GAAP | 26.6 % | – | increased 80 basis points |
| Depreciation and amortization expenses, thirteen weeks ended August 1, 2026GAAP | 11,274 | – | – |
| Pre-opening expenses, thirteen weeks ended August 1, 2026GAAP | 5,203 | – | decreased 42.0% |
| Operating income, thirteen weeks ended August 1, 2026GAAP | 108,475 | – | – |
| Operating income as a percentage of net sales, thirteen weeks ended August 1, 2026GAAP | 14.6 % | – | – |
| Interest income, net, thirteen weeks ended August 1, 2026GAAP | (6,142 ) | – | – |
| Income before income taxes, thirteen weeks ended August 1, 2026GAAP | 114,617 | – | – |
| Income tax expense, thirteen weeks ended August 1, 2026GAAP | 29,163 | – | – |
| Net income, thirteen weeks ended August 1, 2026GAAP | $ 85,454 | – | – |
| Net income as a percentage of net sales, thirteen weeks ended August 1, 2026GAAP | 11.5 % | – | – |
| Basic earnings per common share, thirteen weeks ended August 1, 2026GAAP | $ 1.42 | – | – |
| Diluted earnings per common share, thirteen weeks ended August 1, 2026GAAP | $ 1.42 | – | – |
| Adjusted net income, thirteen weeks ended August 1, 2026non-GAAP | $ 85,447 | – | increased 40.3% |
| Adjusted net income per diluted share, thirteen weeks ended August 1, 2026non-GAAP | $ 1.42 | – | 43.4 % |
| EBITDA, thirteen weeks ended August 1, 2026non-GAAP | 123,367 | – | – |
| Adjusted EBITDA, thirteen weeks ended August 1, 2026non-GAAP | $ 127,095 | – | – |
| Adjusted EBITDA as a percentage of net sales, thirteen weeks ended August 1, 2026non-GAAP | 17.1 % | – | – |
| Net sales, twenty-six weeks ended August 1, 2026GAAP | $ 1,400,233 | – | – |
| Gross profit, twenty-six weeks ended August 1, 2026GAAP | 598,129 | – | – |
| Gross margin, twenty-six weeks ended August 1, 2026GAAP | 42.7 % | – | – |
| Selling, general and administrative expenses, twenty-six weeks ended August 1, 2026GAAP | 385,895 | – | – |
| Operating income, twenty-six weeks ended August 1, 2026GAAP | 178,032 | – | – |
| Net income, twenty-six weeks ended August 1, 2026GAAP | $ 141,854 | – | – |
| Diluted earnings per common share, twenty-six weeks ended August 1, 2026GAAP | $ 2.34 | – | – |
| Adjusted net income, twenty-six weeks ended August 1, 2026non-GAAP | $ 141,353 | – | – |
| Adjusted net income per diluted share, twenty-six weeks ended August 1, 2026non-GAAP | $ 2.33 | – | – |
| Adjusted EBITDA, twenty-six weeks ended August 1, 2026non-GAAP | $ 214,987 | – | – |
| Number of stores, end of periodother | 686 | – | 11.9 % |
| Comparable store count, end of periodother | 575 | – | – |
| Ollie's Army loyalty membersother | 18.1 million members | – | increased 12.7% |
fiscal year 2026 ending January 30, 2027 outlook
- Revenue$2.928 to $2.941 billion
- Gross margin~41.3%
- Tax rate~25%
- NoteNew store openings: 75
- NoteComparable store sales growth: 0% to 0.5%
- NoteOperating income: $345 to $350 million
- NoteAdjusted net income: $275 to $279 million
- NoteAdjusted net income per diluted share: $4.57 to $4.65
- NoteDiluted weighted average shares outstanding: ~60.0 million
- NoteCapital expenditures: $103 to $113 million
- NoteShare repurchases: ~$175 million
- NoteIncludes interest income of approximately $22 million.
- NoteExcludes the excess tax benefits related to stock-based compensation, as the Company cannot predict such estimates without unreasonable effort.
Capital returns
- The Company invested $84.0 million of cash to repurchase 1.107 million shares of its common stock in the second quarter.
- In the first half of the year, the Company repurchased $137.3 million, or 1.6 million shares, of its common stock.
- At the end of the second quarter, $121.5 million remained available for future share repurchases under the current share repurchase authorization.
- Share repurchases, thirteen weeks ended August 1, 2026: $ 83,964; prior year: $ 11,516.
- Fiscal 2026 share repurchases outlook: ~$175 million.
What drove it
- Net sales increased 9.1% to $741.3 million, driven by new store unit growth.
- Comparable store sales decreased 1.8%, driven by a decrease in average basket size.
- Gross margin increased 360 basis points to 43.5%, driven by lower supply chain costs, primarily from IEEPA tariff refunds and lower tariff rates.
- IEEPA tariff refunds benefited gross margin by 380 basis points in this year's second quarter.
- SG&A expenses as a percentage of net sales increased 80 basis points to 26.6%, primarily due to deleverage of fixed costs from the decline in comparable store sales and higher marketing expenses from one additional merchandise flyer.
- Pre-opening expenses decreased 42.0% to $5.2 million, driven primarily by a lower number of new store openings and lower dark rent expense.
- The Company opened 15 new stores and closed one store related to storm damage.
Concerns
- Comparable store sales decreased 1.8% against a 5.0% increase in last year's second quarter.
- The Company said sales results were negatively impacted by less favorable weather, continued economic pressure on the consumer, and an elevated promotional environment.
- The fiscal 2026 net sales outlook was updated to $2.928 to $2.941 billion from $2.980 to $3.000 billion.
- The fiscal 2026 comparable store sales growth outlook was updated to 0% to 0.5% from ~2%.
- The Company intends to reinvest IEEPA tariff refunds in pricing actions to further strengthen its competitive position.
What to watch
- Comparable store sales growth outlook of 0% to 0.5% for fiscal 2026.
- Gross margin outlook of ~41.3%, including the impact of IEEPA tariff refunds of $28.3 million received in the second quarter.
- Execution of 75 gross new store openings, which excludes two store closures related to storm damage.
- Operating income outlook of $345 to $350 million and adjusted net income per diluted share outlook of $4.57 to $4.65.
- Share repurchases outlook of ~$175 million and the $121.5 million remaining under the current share repurchase authorization.
Balance sheet and cash flow
- Cash and cash equivalents as of August 1, 2026: $ 120,765; August 2, 2025: $ 231,163.
- Short-term investments as of August 1, 2026: 66,737; August 2, 2025: 85,893.
- Long-term investments as of August 1, 2026: 319,592; August 2, 2025: 143,206.
- Total cash and investments as of August 1, 2026: $ 507,094; August 2, 2025: $ 460,262.
- Inventories as of August 1, 2026: 704,433; August 2, 2025: 637,236.
- Current portion of long-term debt as of August 1, 2026: $ 809; August 2, 2025: $ 518.
- Long-term debt as of August 1, 2026: 1,420; August 2, 2025: 912.
- Total assets as of August 1, 2026: $ 3,027,596; August 2, 2025: $ 2,801,852.
- Total liabilities as of August 1, 2026: 1,131,997; August 2, 2025: 1,015,942.
- Net cash provided by operating activities, thirteen weeks ended August 1, 2026: $ 108,124; prior year: $ 80,712.
- Net cash provided by operating activities, twenty-six weeks ended August 1, 2026: $ 153,625; prior year: $ 109,414.
- Net cash used in investing activities, thirteen weeks ended August 1, 2026: (101,095 ); prior year: (39,744 ).
- Net cash used in financing activities, thirteen weeks ended August 1, 2026: (83,937 ); prior year: (8,823 ).
- Capital expenditures, thirteen weeks ended August 1, 2026: $ 43,309; prior year: $ 26,416.
- Capital expenditures, fiscal 2026 outlook: $103 to $113 million.
Analysis
Ollie's reported a mixed second quarter. Net sales increased 9.1% to $741.3 million, driven by new store unit growth, as the store base reached 686 from 613 in the prior-year period. However, comparable store sales decreased 1.8%, versus a 5.0% increase in last year's second quarter. The Company attributed the decline to lower average basket size and cited less favorable weather, economic pressure on consumers, and an elevated promotional environment.
Profitability improved sharply. Gross margin increased 360 basis points to 43.5%, with lower supply chain costs, primarily IEEPA tariff refunds and lower tariff rates, identified as the drivers. IEEPA tariff refunds alone benefited gross margin by 380 basis points in the quarter. SG&A as a percentage of net sales rose 80 basis points to 26.6% because fixed costs deleveraged on the comparable-store-sales decline and marketing expense increased due primarily to one additional merchandise flyer. Pre-opening expenses decreased 42.0% to $5.2 million.
The margin improvement carried through earnings. Operating income was 108,475, compared with 76,974 in the prior-year quarter, while net income was $85,454, compared with $61,310. Adjusted net income was $85,447 and adjusted net income per diluted share was $1.42, with the release citing 43.4% year-over-year growth in adjusted net income per diluted share. Adjusted EBITDA was $127,095, or 17.1% of net sales, compared with $93,786, or 13.8% of net sales.
The Company continued unit growth and loyalty expansion, opening 15 stores and closing one storm-damaged store. Ollie's Army membership increased 12.7% to 18.1 million members. Cash and investments totaled $507,094 at quarter end, and net cash provided by operating activities was $108,124 for the thirteen-week period. The Company spent $83,964 on share repurchases during the quarter and stated that $121.5 million remained available under its authorization.
Fiscal 2026 guidance reflects a lower sales outlook but higher profitability and capital-return targets. Net sales guidance moved to $2.928 to $2.941 billion from $2.980 to $3.000 billion, and comparable store sales growth moved to 0% to 0.5% from ~2%. Gross margin guidance increased to ~41.3% from ~40.7%, operating income moved to $345 to $350 million from $340 to $348 million, and adjusted net income per diluted share moved to $4.57 to $4.65 from $4.45 to $4.55. The Company maintained its 75 new-store-opening target and capital-expenditure outlook of $103 to $113 million, while increasing expected share repurchases to ~$175 million from ~$125 million.
Management, verbatim
We delivered strong earnings growth in the second quarter and continued to execute against our key strategic initiatives.
Eric van der Valk, President and Chief Executive Officer
Comparable store sales declined 1.8% against a challenging multi-year stack. We believe our sales results were negatively impacted by the combination of less favorable weather, continued economic pressure on the consumer, and an elevated promotional environment, which all led to a more challenging backdrop than we originally expected.
Eric van der Valk, President and Chief Executive Officer
Consumers continue to seek value and many of the same pressures affecting our customers are creating buying opportunities across the closeout market. We continue to see strong deal flow and remain committed to reinvesting in price and strengthening our competitive position.
Eric van der Valk, President and Chief Executive Officer
Not in the filing
stated, not guessed- Free cash flow was not reported.
- A dividend amount or dividend outlook was not reported.
- Reportable operating segments and segment revenue were not reported.
- Fiscal 2026 operating-expense or SG&A guidance was not reported.
- Prior-quarter comparisons for reported quarterly metrics were not reported.
- Fiscal-year actual results are not available, so the prior fiscal 2026 guidance cannot be assessed against final fiscal-year actual results.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.