Retail Resilience: OLLI and FIVE Navigate Tariff Volatility

As tariffs and geopolitical instability—including disruptions in the Strait of Hormuz—create volatility for importers, certain retail business models are proving uniquely insulated from border-related shocks. While many retailers struggle with repricing and supply chain rebuilds, companies like Ollie's Bargain Outlet (OLLI) and Five Below (FIVE) have turned these headwinds into competitive advantages through structural positioning and rapid product adaptation. Ollie's operates as a closeout retailer, benefiting directly from the excess inventory created by tariff-driven packaging changes and competitor bankruptcies. In fiscal 2025, the company expanded its footprint by 86 stores, including 63 locations acquired from Big Lots. Q4 net sales reached approximately $779 million, a 17% year-over-year increase, supported by a loyalty program of 16.6 million members. With no long-term debt and a target of 1,300 locations, Wells Fargo recently set a price target of $130, implying significant upside. Five Below has overcome significant exposure to Chinese imports, which account for roughly 60% of its sourcing. After a sharp decline in April 2025 following 'Liberation Day' tariffs, the company pivoted toward licensed merchandise and viral trends. This strategy yielded a 15.4% surge in comparable sales for Q4 fiscal 2025, with revenue climbing 24.3% to $1.73 billion and adjusted EPS of $4.31 beating estimates. These results suggest that adaptability and a 'disruption-first' business model can mitigate the risks associated with aggressive trade policies and geopolitical chokepoints, providing a blueprint for retail survival in an era of unpredictable trade barriers.