The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how discount retailer stocks fared in Q4, starting with Ollie's (NASDAQ: OLLI).
Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.
The 5 discount retailer stocks we track reported a slower Q4. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2.2% below.
Thankfully, share prices of the companies have been resilient as they are up 5.4% on average since the latest earnings results.
Ollie's (NASDAQ: OLLI)
Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ: OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.
Ollie's reported revenues of $667.1 million, up 2.8% year on year. This print fell short of analysts’ expectations by 1.2%. Overall, it was a mixed quarter for the company with a solid beat of analysts’ gross margin estimates but full-year EPS guidance missing analysts’ expectations.
“We were very pleased with our financial results and the underlying trends in our business. At a time when consumers need it most, we are delivering unprecedented value through an ever-changing assortment that combines quality, national brands, and pricing in a way that can only be found at Ollie’s,” said Eric van der Valk, President and Chief Executive Officer.
Ollie's delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. Interestingly, the stock is up 7% since reporting and currently trades at $106.
Is now the time to buy Ollie's? Access our full analysis of the earnings results here, it’s free.
Best Q4: Five Below (NASDAQ: FIVE)
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ: FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Five Below reported revenues of $1.39 billion, up 4% year on year, outperforming analysts’ expectations by 1%. The business performed better than its peers, but it was unfortunately a mixed quarter with EPS guidance for next quarter exceeding analysts’ expectations but full-year EPS guidance missing analysts’ expectations.
Five Below delivered the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 12.8% since reporting. It currently trades at $85.25.
Is now the time to buy Five Below? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Ross Stores (NASDAQ: ROST)
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ: ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Ross Stores reported revenues of $5.91 billion, down 1.8% year on year, in line with analysts’ expectations. It was a slower quarter as it posted full-year EPS guidance missing analysts’ expectations.
Ross Stores delivered the slowest revenue growth in the group. The stock is flat since the results and currently trades at $135.49.
Read our full analysis of Ross Stores’s results here.
Burlington (NYSE: BURL)
Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE: BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.
Burlington reported revenues of $3.28 billion, up 4.8% year on year. This print beat analysts’ expectations by 0.9%. More broadly, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations.
Burlington scored the fastest revenue growth among its peers. The stock is up 2.6% since reporting and currently trades at $243.74.
Read our full, actionable report on Burlington here, it’s free.
TJX (NYSE: TJX)
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
TJX reported revenues of $16.35 billion, flat year on year. This number surpassed analysts’ expectations by 1%. Aside from that, it was a slower quarter as it logged EPS guidance for next quarter missing analysts’ expectations.
TJX pulled off the biggest analyst estimates beat among its peers. The stock is up 4.9% since reporting and currently trades at $128.70.
Read our full, actionable report on TJX here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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