What Happened?
Shares of discount retail company Ollie’s Bargain Outlet (NASDAQ: OLLI) fell 3.2% in the afternoon session after Jefferies downgraded the stock to 'Hold' from 'Buy', citing concerns about rising inventory levels.
The investment firm also trimmed its price target on the shares to $111 from $125. Jefferies warned that growth cycles over the past 22 years showed that when inventories exceeded sales growth, it tended to lead to a drop in gross margins and stock returns. The analyst's note cautioned that a "storm is brewing" for consumer discretionary companies, as industry-wide inventories were rising for the first time in two years and were about to outpace sales growth. This observation was the key reason behind the downgrade for Ollie's.
The shares closed the day at $132.95, down 3.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Ollie's? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Ollie’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 3.4% as a significant downward revision of U.S. job creation data raised concerns about the health of the economy.
The Labor Department reported that employers added 911,000 fewer jobs from April 2024 through March 2025 than initially estimated. This revision brings the average monthly job gains during that period down significantly, suggesting a cooler labor market. The downgrades were widespread across various service sectors. The largest revisions were seen in leisure and hospitality, which added 176,000 fewer jobs than first reported, followed by professional and business services and retail. Such data is closely watched by investors and economists as it can influence the Federal Reserve's decisions on interest rates.
JPMorgan Chase CEO Jamie Dimon added that the U.S. economy is "weakening," though he stopped short of predicting a recession. "Whether it's on the way to recession or just weakening, I don't know," he said. Dimon's remarks are closely watched, given his influence as head of one of the nation's largest banks.
Ollie's is up 22.8% since the beginning of the year, and at $132.94 per share, it is trading close to its 52-week high of $140.80 from August 2025. Investors who bought $1,000 worth of Ollie’s shares 5 years ago would now be looking at an investment worth $1,516.
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