Ollie's Bargain Outlet raised its earnings outlook as it expects to invest its tariff refunds in lower prices.
The discount retailer said Wednesday it now expects adjusted earnings per share to be $4.57 to $4.65, up from its previous guidance of $4.45 to $4.55.
The new projections include $28.3 million in tariff refunds received during the second quarter. Ollie's plans to invest the refunds into lower prices, it said.
Shares rose 5% to $76 in premarket trading.
At the same time, Ollie's cut its guide for annual sales to a range of $2.93 billion to $2.94 billion, down from $2.98 billion to $3 billion. Management said the guidance better aligned with current sales trends.
Second-quarter sales were dented by continued economic pressure on Ollie's customers, Chief Executive Eric van der Valk said. Unfavorable weather and higher promotions also created challenges.
Revenue in the second quarter rose 9% to $741.3 million. Analysts surveyed by FactSet forecast revenue of $747.7 million. Same-store sales fell 1.8%, while analysts were expecting a decline of 1.1%.
"Consumers continue to seek value and many of the same pressures affecting our customers are creating buying opportunities across the closeout market," said van der Valk.
Profit was $85.5 million, or $1.42 a share, compared with $61.3 million, or 99 cents a share, a year earlier.
Stripping out certain one-time items, adjusted per-share earnings were also $1.42, ahead of the $1.12 anticipated by analysts, according to FactSet.
Other grocery retailers have flagged similar consumer pressures to Ollie's. Both Dollar Tree and Dollar General said last month that they were reinvesting tariff refunds into bringing down prices, as more shoppers flocked to their stores in search of low-cost goods.
Meanwhile, higher-end grocery stores have seen more of their core grocery customers walk away, as high gas prices squeeze grocery budgets. Albertsons said in July that its consumers were growing more cautious, and many were trading down for groceries at cheaper providers such as Amazon and Aldi.