Big Lots, Inc.'s (NYSE:BIG) filing for Chapter 11 bankruptcy protection could signify a growth opportunity for competitor Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), an analyst said.

The Columbus, Ohio-based discount retailer confirmed Monday that it would sell all of its assets and ongoing business operations to an affiliate of investment firm Nexus Capital Management as part of a decision that will also include closing some retail outlets.

Ollie's may have the chance to take over closed Big Lots locations as it strives to increase store count from a current 525 outlets to a long-term saturation target of 1,300 stores, J.P.Morgan Chase analyst Matthew Boss said.

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Ollie's may also benefit from the fact that 430 of its stores are within close proximity to Big Lots stores, he said.

"We see lateral close-out retailer OLLI as a primary beneficiary of traffic gains and accelerated wallet share capture with 80-85% of OLLI's 525 store fleet within five miles of a Big Lots store," he wrote in a note Monday.

Big Lots' plans to close 296 out of 1,392 retail locations as of Aug. 29 could help Ollie's to grow its number of stores by 13.5% during fiscal years 2025 and 2026 after it increases the number of outlets to 560 by the end of the current fiscal year, Boss said. This growth in stores and market share could help Ollie's grow its gross profit margin from 40.5% to 41%.

Price Action: Big Lots stayed at 50 cents per share during Monday's trading but dropped 40.22% in after-hours trading to 30 cents. Ollie's gained 5.92% to close at $92.48 on Monday.

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