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No. of Recommendations: 3
thanks for comments

to be clear, I would like it cheaper - much cheaper

..

Half of categories were negative (i know it was explained later that this was biz usual). still, i would have expected a bit better given the environment.

I've been in the stores (one yesterday) - you remember the old Big Lots, junky, messy, and stuff everywhere? OLLI is worse than that- cluttered, stuff everywhere, you name it, so it is pure treasure hunt - sometimes, they have great deals in coffee (found some last time), but the next visit it is gone gone. So I'm not all surprised by the up and down comments - you go in one time and they have a ton of shampoo and you go in the next a ton of other stuff, so it is hardly surprising some categories are strong and some not. Last time I was in there I got a bunch of the coffees, again cause I knew they wouldn't be there next time. So this is hardly an issue - it corresponds exactly where I hit with my shopping visits.

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LT, the 1-2% SSS target feels not strong enough to get leverage on margins, and their own history shows more fluctuation than the typical off-price/$ stores.

there are very large stores - what, 3.9m in sales? So 1% is a lot on this size. As you know I tend to not worry about these aspects a lot - I figure they can keep GM stable and get leverage on SGA, but I don't project - certainly not at this level. Plus, OLLI is off-off-off price, pure treasure hunt like Big Lots used to be. It is going to fluctuate, but surely as they grow so do opportunities for some margin leverage. We used to make similar arguments with Dollar Tree.

And this is getting priced for perfection. Let's say they open 1000 stores (3.5x from today) @ $4.5 sales/store, and do 10% op margin. That's $450m EBIT vs. $3.7B mkt cap/EV, a multiple where most mature retailers trade at. For sanity check, BIG did $5.3B sales and trades at a $1.8B mkt cap.

yeah, but OLLI is growing its sqft by 14%-15% while spending minimal CapEx while Big Lots is spending more than cash flow on CapEx to not grow at all. OLLI's minimal CapEx makes them much much different than a standard retailer. Lastly, as you know, fast growing retailers retain their PE ratios longer, but I'd be thrilled to get a -1% comp and see it down 30%.

mgmt sounds a bit promotional on the call, though i get a chuckle out of the "one star two star generals".

no....I have talked with these guys, at least the IR = but you know how I judge them - by how they answered that cash question - they are going to use it to pay down debt, which is exactly what I want to hear. Hopefully they take the same approach to growing cash balances (well north of 500+m in 5 years) that they take to bargains. Besides, before you judge them, look at the proxy for the salaries - i think you will be pleased.

you ever look long and hard at that mascot?
It isn't dumb - it is stupid

the only thing I thought was funny is that they said on the call that the customer base was not lowest income - while they gather from other incomes, this is absolutely not true - the base of customers R the working poor - VERY country folk with almost no upper middle class. Think flea market...

...if it matters, store visits might make you not like it.
It works when you find an insane deal - I found, for example, a really good science fiction coffee table book and it completely made the shopping experience so much better the next time when I went in and they still had the 'Best Stocks for 2012' book on the shelf - as they have had every single time I've been in this particular store - because I knew there might be a bargain the next time, even if today's visit was a bust...

just 2c
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