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Ollie's Shares Tumble After Sudden Death of Discount Chain's CEO

Ollie's Shares Tumble After Sudden Death of Discount Chain's CEO
Jonathan Weiss | Dreamstime.com

Monday, 02 December 2019 03:23 PM

Ollie’s Bargain Outlet Holdings Inc. fell as much as 9.6% after the discount chain’s chief executive and founder Mark Butler died suddenly over Thanksgiving.

Butler, who was 61, had led the company as CEO since 2003. The stock had more than tripled since its 2015 listing, reaching a peak market capitalization value of $6.4 billion in May.

A disappointing second quarter has sent shares down by more than 20% since late August. Missteps included a decline in same-store sales and earnings that fell short of estimates. Loop Capital said at the time that Ollie’s needs to “right the ship” after management failed to foresee supply chain issues. Now, the death of its founder may exacerbate these concerns.

“It’s difficult to argue that Mr. Butler wasn’t a key operational figure in the Ollie’s organization,” RBC analyst Scot Ciccarelli wrote in a note to clients, although he said the retailer had been working on a succession plan for the last two years. Ollie’s operating chief, John Swygert, will take over as interim president and CEO, the company said on Monday.

Bearish bets against the company represent almost 18% of available shares, or $638 million, according to data from financial analytics firm, S3 Partners. Short sellers have made roughly $52 million off today’s stock drop, S3’s Matthew Unterman said by phone. That’s in addition to the $42 million they had made so far this year through last week.

Ollie’s shares (OLLI) fell to as low as $59.09, the lowest since Oct. 16. The stock, which has 11 buy recommendations, four holds and zero sell recommendations by analysts, has fallen about 10% so far this year.

While “Butler’s presence and deep knowledge of the closeout business will be missed,” Ciccarelli wrote, “it is highly unlikely to derail the company’s long-term performance or growth potential.”

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Ollie's Bargain Outlet Holdings Inc. fell as much as 9.6% after the discount chain's chief executive and founder Mark Butler died suddenly over Thanksgiving.
ollies, stocks, shares, ceo, die
300
2019-23-02
Monday, 02 December 2019 03:23 PM
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