Where Ollie's Bargain Outlet Sources Its Real Estate

The majority of its stores are "2nd generation" suites that were vacated by bankrupt retailers

Ollie's Bargain Outlet now operates 546 stores in 31 states.

And the Company continues to grow — it added 50 new stores in 2024 alone and plans to double its store count over time.

So where will the Company find the real estate to add over 500 stores?

Likely from the same primary source of its previous store openings:

"2nd generation" retail space vacated by bankrupt retailers.

In many cases Ollie’s approaches Landlords to lease space after bankrupt tenants like Bed Bath & Beyond vacate.

But this process can take many months to agree on terms and negotiate a lease

And it does not provide certainty that Ollie’s can secure the sites until a lease is signed.

Lately, though, Ollie’s has been short-circuiting this step and acquiring leases directly from the bankruptcy estates of retailers.

This enables Ollie’s to “step into” the bankrupt retailer’s existing lease, does not require negotiation with Landlords and often accelerates new store openings.

Like earlier this year when Ollie's acquired 8 leased sites and 3 owned properties in Texas that were vacated by 99 Cents Only stores following that retailer's April 2024 bankruptcy and liquidation.

Ollie’s acquired the leases in June 2024 and opened the Texas stores in September.

And over the past few months Ollie's purchased 24 leases in the bankruptcy of its Big Box competitor Big Lots.

The acquisition of leases is not an inexpensive exercise.

Ollie’s spends to both acquire the leases in the bankruptcy auctions and pay "dark rent” while the space is built out or renovated for its use.

However, many leases that Ollie’s has acquired are at (or below) market rent, in sizes and locations that match its real estate needs and in hard-to-enter or supply constrained submarkets.

Importantly, lease acquisitions often enable Ollie’s to accelerate its new store opening timelines — like the three short months it took to open after acquiring the 99 Cents Only Store leases.

Plus Ollie's has a long history of taking space vacated by bankrupt retailers:

Roughly 20% of its current stores are located at former Kmart or Toys R Us sites.

So where will Ollie's find the real estate to double its store count over the next several years?

Likely from future bankrupt retailers!