How Does Ollie's Gross Margin Compare to TJX and Burlington as Closeout Deal Flow Tightens?
Ollie's Bargain Outlet posted a 40.3% trailing-twelve-month gross margin through fiscal Q3 2025, placing it squarely between Burlington Stores at 41.9% and well above TJX Companies at 31.1% and Ross Stores at 27.9%. But the headline number masks a troubling trend: OLLI's quarterly gross margin has compressed 180 basis points year-over-year in its most recent quarter, even as TJX expanded margins by 140bps over the same period. For a company whose entire value proposition rests on opportunistic closeout purchasing, the direction matters more than the level.
The Gross Margin Landscape
Using the most recent overlapping quarter (calendar Q4 2025, ending November 2025), the four off-price retailers reveal starkly different margin profiles:
| Metric | OLLI | BURL | TJX | ROST |
|---|---|---|---|---|
| Q4 2025 Gross Margin | 39.6% | 40.6% | 33.0% | 28.0% |
| Q4 2024 Gross Margin | 41.4% | 43.9% | 31.6% | 28.3% |
| YoY Change (bps) | -180 | -330 | +140 | -30 |
| TTM Gross Margin | 40.3% | 41.9% | 31.1% | 27.9% |
The data tells a clear story: the two retailers most dependent on closeout buying — Ollie's and Burlington — are seeing the steepest margin erosion. Burlington's 330bps YoY decline is particularly notable, suggesting the tightening of closeout inventory availability is not OLLI-specific but an industry-wide phenomenon. Meanwhile, TJX's margin expansion reflects its diversified sourcing model, where closeouts are one channel among many rather than the primary one.
Why the Divergence Matters
Ollie's business model is fundamentally different from TJX and Ross. While TJX and Ross operate as off-price retailers with established vendor relationships and pack-and-hold inventory strategies, Ollie's operates as a pure closeout retailer — buying manufacturer overruns, packaging changes, and liquidation inventory at steep discounts. This model delivers higher gross margins when deal flow is abundant but creates vulnerability when supply tightens.
The Q4 2025 operating margin comparison reveals the full picture:
| Metric | OLLI | BURL | TJX | ROST |
|---|---|---|---|---|
| Q4 2025 Operating Margin | 10.2% | 5.7% | 13.0% | 11.6% |
| Q4 2025 Revenue | $614M | $2.71B | $15.1B | $5.60B |
| Revenue YoY Growth | +18.6% | +7.2% | +7.5% | +10.4% |
OLLI's 10.2% operating margin lags TJX's 13.0% and ROST's 11.6%, despite carrying a significantly higher gross margin. The gap is driven by SGA leverage: Ollie's $180M in SGA costs against $614M in revenue yields a 29.4% SGA ratio, compared to TJX's 20.1% and ROST's 16.4%. At roughly 1/25th the revenue of TJX, Ollie's simply cannot match the fixed-cost absorption of its larger peers.
The Tightening Closeout Environment
Ollie's 18.6% revenue growth in Q4 2025 — the fastest among the four — shows the company is still winning on the top line through aggressive store expansion. But margin compression alongside strong revenue growth is a warning signal. It suggests OLLI is either (a) paying more for closeout inventory as competition for deals intensifies, or (b) accepting lower-margin product categories to fill new stores.
The sequential margin trajectory through fiscal 2025 reinforces this concern:
| OLLI Quarter (Calendar) | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|
| Gross Margin | 40.7% | 41.1% | 39.9% | 39.6% |
| Operating Margin | 13.2% | 9.7% | 11.3% | 10.2% |
Gross margins have drifted lower sequentially in the back half, from 41.1% in Q2 to 39.6% in Q4. Seasonality plays a role — OLLI's holiday quarter typically carries slightly lower margins — but the YoY comparisons confirm structural pressure rather than seasonal noise.
Valuation Context
Despite margin headwinds, the market continues to pay a premium for OLLI's growth:
| Metric | OLLI | BURL | TJX | ROST |
|---|---|---|---|---|
| P/E (TTM) | 28.3x | 31.8x | 32.3x | 32.0x |
| Market Cap | $6.3B | $19.1B | $175.7B | $69.2B |
| Revenue CAGR (3Y) | 9.0% | 10.0% | 6.5% | 6.8% |
| EPS Growth (TTM) | +7.7% | +21.9% | +13.7% | +4.9% |
OLLI trades at a slight P/E discount to its peers (28.3x vs 31-32x), reflecting the market's awareness of margin risk. Burlington's 21.9% EPS growth — despite the 330bps gross margin decline — demonstrates that operating leverage and store maturation can offset gross margin pressure at scale, a playbook OLLI will need to replicate.
What to Watch
- Gross margin floor: If OLLI's gross margin dips below 39% for two consecutive quarters, it signals closeout deal flow has materially deteriorated and the company may be forced to supplement with lower-margin regular-way purchases.
- SGA leverage: OLLI needs SGA as a percentage of revenue to decline toward 27% to close the operating margin gap with TJX and ROST. New store productivity and comp growth are the levers.
- Burlington's trajectory: BURL is the closest comp to OLLI's closeout model. If Burlington stabilizes margins in coming quarters, it suggests the tightening is cyclical. If compression continues, it's structural.
- TJX sourcing advantage: TJX's ability to expand margins while peers contract underscores the value of its 21,000+ vendor relationships and global buying offices — a moat OLLI cannot easily replicate at its current scale.
Sources: Company quarterly financial statements (FY2024-FY2025); v_company_snapshot TTM metrics as of March 2026.