11:00 AM EDT, 08/18/2025 (MT Newswires) -- Ollie's Bargain Outlet (OLLI) is likely to raise its full-year guidance and indicate 2026 profit growth as pressure on low-income shoppers and the impact of tariffs should benefit the discount retailer, RBC Capital Markets said in a Monday note.

Ollie's second-quarter results are expected to exceed analyst estimates as transaction data indicate a "very strong June" that likely carried over into July, according to the RBC report.

The brokerage raised its estimates for Ollie's, including those for the second quarter. The company is scheduled to release its quarterly results on Aug. 28.

"The current environment is near ideal for (Ollie's)," RBC analysts, including Steven Shemesh, wrote. "The company is benefitting from low-income consumer pressure, tariff-related supply chain disruption, and retailer bankruptcies."

RBC lifted its adjusted earnings-per-share estimate to $0.98 for the second quarter from $0.95 previously expected, compared with the FactSet-polled consensus of $0.92. The brokerage raised its growth estimate for comparable sales to 3.5% from 1.5%, versus the consensus of 1.3%.

"We expect the company to deliver on a very high bar, raise 2025 guidance and convey confidence in mid-teens EPS growth in 2026," Shemesh said.

In June, Ollie's affirmed its fiscal 2025 adjusted EPS outlook of $3.65 to $3.75, while raising its comparable sales growth outlook to a range of 1.4% to 2.2%. Wall Street is projecting full-year adjusted EPS of $3.75 and comparable sales growth of 2.4%.

Consumer inflation in the world's largest economy slowed down last month on a sequential basis, Bureau of Labor Statistics data showed last week, with analysts saying at the time that businesses are yet to fully pass through tariff-related costs to consumers.

Market share gains following Big Lots' bankruptcy have also helped boost Ollie's comparable sales, Shemesh said. Nearly all of the estimated 449 Ollie's stores near Big Lots locations should now be seeing a low- to mid-single-digit sales lift, the analyst said. All Big Lots stores have now been closed.

RBC raised Ollie's 2025 and 2026 adjusted EPS estimates to $3.93 and $4.49, respectively, from its prior estimates of $3.90 and $4.43. The brokerage is now looking at comparable sales growth of 4.1% for this year, up from its prior growth forecast of 3.6%. For next year, it continues to anticipate Ollie's comparable sales to rise by 2%.

RBC raised its price target on the stock to $144 from $133, while reiterating its outperform rating.

Price: 132.49, Change: -1.04, Percent Change: -0.78