DOW JONES NEWSWIRES
Big Lots Inc.'s (BIG) fiscal second-quarter earnings rose 9.2%
as higher margins more than overcame lower sales.
The results were better than expected, prompting the close-out
retailer to raise its fiscal-year earnings estimate again, this
time by 7 cents to a range of $1.92 to $2.02 a share.
Big Lots has been striving to enhance its image, working to
improve the appearance of its stores while cutting deals for better
locations as other retailers close. The company - which helps
manufacturers clear their warehouses of discontinued, overproduced
and otherwise unwanted goods - has been adding brands from
manufacturers that previously had shunned it because of its
lower-end image.
Big Lots has been testing a move upscale, taking over a former
Linens N' Things site in Ohio, where it is implementing edgier
presentations, better lighting, wider aisles and other tweaks.
For the quarter ended Aug. 1, the company reported a profit of
$28.4 million, or 34 cents a share, up from $26 million, or 32
cents a share, a year earlier. Big Lots in May forecast 26 cents to
32 cents a share.
Net sales fell 1.7% to $1.09 billion, while comparable-store
sales, or sales at stores open at least two years, declined
2.4%.
Gross margin rose to 40% from 39.3% amid higher prices and lower
freight costs.
The company said earlier this month that consumable, hardline
and seasonal goods were the strongest categories with at least flat
sales. Home and furniture categories posted declines. Sales at Big
Lots' western stores were strongest, while the Southeast,
especially Florida, remained the most challenging.
For the fiscal third quarter, the company expects earnings of 14
cents to 19 cents, while analysts were looking for 16 cents. Big
Lots said same-store sales may fall as much as 2%. Fourth-quarter
earnings are slated to come in between 99 cents and $1.04,
bracketing Street estimates. Same-store sales may rise
slightly.
Shares closed at $24.03 on Monday and didn't trade premarket.
The stock is up two-thirds in 2009, though it remains off 27% from
a year ago.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com