Ollie's Bargain Outlet Holdings, Inc.OLLI
Ollie's Bargain Outlet Holdings, Inc. Revenue Disclosure
| (2) |
Net Sales
|
Ollie’s recognizes retail sales in its stores when merchandise is sold and the customer takes possession of merchandise. Also included in net
sales is revenue allocated to certain redeemed discounts earned via the Ollie’s Army loyalty program, revenue from Ollie’s co-branded credit card, and gift card breakage. Net sales are presented net of returns and sales tax. The Company provides an
allowance for estimated retail merchandise returns based on prior experience.
Revenue Recognition
Revenue is deferred for the Ollie’s Army loyalty program where members
accumulate points that can be redeemed for discounts on future purchases. The Company has determined it has an additional performance obligation to Ollie’s Army members at the time of the initial transaction. The Company allocates the transaction
price to the initial transaction and the discount awards based upon its relative standalone selling price, which considers historical redemption patterns for the award. Revenue is recognized as those discount awards are redeemed. Discount awards
issued upon the achievement of specified point levels are subject to expiration. Unless temporarily extended, the maximum redemption period is 45 days. At the end of each fiscal period, unredeemed discount awards and accumulated points to earn a future discount award are reflected as a
liability. Discount awards are combined in one homogeneous pool and are not separately identifiable. Therefore, the revenue recognized consists of discount awards redeemed that were included in the deferred revenue balance at the beginning of
the period as well as discount awards issued during the current period.
The following table is a reconciliation of the liability related to this program:
|
Fiscal year ended
|
||||||||||||
|
February 1,
|
February 3,
|
January 28,
|
||||||||||
|
2025
|
2024
|
2023
|
||||||||||
| (in thousands) |
||||||||||||
|
Beginning balance
|
$
|
10,159
|
$
|
8,130
|
$
|
7,782
|
||||||
|
Revenue deferred
|
19,952
|
16,141
|
14,446
|
|||||||||
|
Revenue recognized
|
(16,872
|
)
|
(14,112
|
)
|
(14,098
|
)
|
||||||
|
Ending balance
|
$
|
13,239
|
$
|
10,159
|
$
|
8,130
|
||||||
Gift card breakage for gift card liabilities not subject to escheatment is recognized as revenue in proportion to the redemption of gift cards. Gift
cards do not expire. The rate applied to redemptions is based upon a historical breakage rate. Gift cards are combined in one homogenous pool and are not separately identifiable. Therefore, the revenue recognized consists of gift cards that were
included in the liability at the beginning of the period as well as gift cards that were issued during the period. The following table is a reconciliation of the gift card liability:
|
Fiscal year ended
|
||||||||||||
|
February 1,
|
February 3,
|
January 28,
|
||||||||||
|
2025
|
2024
|
2023
|
||||||||||
| (in thousands) | ||||||||||||
|
Beginning balance
|
$
|
2,650
|
$
|
2,527
|
$
|
2,291
|
||||||
|
Gift card issuances
|
5,568
|
5,150
|
4,948
|
|||||||||
|
Gift card redemption and breakage
|
(5,452
|
)
|
(5,027
|
)
|
(4,712
|
)
|
||||||
|
Ending balance
|
$
|
2,766
|
$
|
2,650
|
$
|
2,527
|
||||||
Sales return allowance is recorded on a gross basis on the consolidated balance sheets as a refund liability and an asset for recovery. The allowance
for estimated retail merchandise returns is based on prior experience.
The following table provides a reconciliation of the activity related to the Company’s sales returns allowance:
|
Fiscal year ended
|
||||||||||||
|
February 1,
|
February 3,
|
January 28,
|
||||||||||
|
2025
|
2024
|
2023
|
||||||||||
| (in thousands) | ||||||||||||
|
Beginning balance
|
$
|
1,070
|
$
|
1,170
|
$
|
1,101
|
||||||
|
Provisions
|
56,742
|
57,684
|
56,989
|
|||||||||
|
Sales returns
|
(56,934
|
)
|
(57,784
|
)
|
(56,920
|
)
|
||||||
|
Ending balance
|
$
|
878
|
$
|
1,070
|
$
|
1,170
|
||||||
In fiscal 2024, the Company’s launched a co-branded credit card can be used by customers purchases at Ollie’s and everywhere else co-branded credit card is accepted, and credit is
extended to such customers by a third-party financial institution on a non-recourse basis to the Company. The co-branded credit card includes a performance obligation for the Company which includes marketing and promoting the program on behalf of
the back and the operation of the Company’s loyalty rewards program. Loyalty members earn points through purchases made using the card.
The third party reimburses the Company for certain credit card program costs such as advertising and loyalty points, which help promote the credit card program. The Company recognizes revenue when collectability is reasonably assured, under the assumption the amounts are not constrained and it is probable that a significant revenue reversal will not occur in future periods, which is generally the time at which the actual usage of the credit cards or specified transaction occurs.
Under the program, the Company receives a percentage of the sales generated by Ollie’s co-branded Credit Card, in exchange for primary marketing functions. As a result, all amounts associated with the program are recognized within net sales on the consolidated statements of income. Additionally, the Company is entitled to certain bonuses based on performance of the program.
The third party reimburses the Company for certain credit card program costs such as advertising and loyalty points, which help promote the credit card program. The Company recognizes revenue when collectability is reasonably assured, under the assumption the amounts are not constrained and it is probable that a significant revenue reversal will not occur in future periods, which is generally the time at which the actual usage of the credit cards or specified transaction occurs.
Under the program, the Company receives a percentage of the sales generated by Ollie’s co-branded Credit Card, in exchange for primary marketing functions. As a result, all amounts associated with the program are recognized within net sales on the consolidated statements of income. Additionally, the Company is entitled to certain bonuses based on performance of the program.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.