Big Lots Inc
) reported second-quarter 2012 earnings of 36 cents a share that
missed the Zacks Consensus Estimate of 42 cents and plunged 28%
from 50 cents earned in the year-ago quarter. Excluding the
Canadian operations, earnings came in at 42 cents.
Total revenue came in at $1,218 million, up 4.4% from the
prior-year period. However, the reported revenue also missed the
Zacks Consensus Estimate of $1,240 million.
Net sales for
inched up 1.7% year over year to $1,183 million during the quarter.
However, comparable store sales for the U.S. stores decreased
During the quarter under review,
net sales came in at $35 million. Big Lots commenced its Canadian
operations with 89 stores and 1000 committed associates, after the
company completed the acquisition of Liquidation World
The company has been exploring numerous options for over two
years in order to foray into the Canadian market. Big Lots expects
the acquisition to be accretive to its top line in the coming
years, while generating long-term growth for the company.
Gross profit for the quarter increased 3.8% year over year to
$477.8 million, whereas gross margin declined 30 basis points to
39.2%. Operating profit marked a significant decline of 34.2% year
over year to $39.3 million, whereas operating margin decreased 190
basis points to 3.2%, reflecting a rise in SG&A expenses as a
percentage of sales.
Sluggish results forced management to lower its guidance for the
second time during the current fiscal. The company now expects
earnings in the range of $2.80 to $2.95 a share on a consolidated
basis for fiscal 2012, down from its prior guidance range of $3.25
For U.S. operations, adjusted earnings are forecasted to be in
the range of $3.05 to $3.15 a share, down from its earlier guidance
range of $3.50 to $3.60.
For fiscal 2012, the company expects U.S. comparable store sales
to decline in the low single digit range, while total U.S. sales
are expected to ascend by 3% to 4%. The company earlier forecasted
comparable store sales to remain flat or increase by 1%, while
total U.S. sales were expected to augment by 5.5% to 6.5%.
Moreover, for fiscal 2012, Canadian sales are forecasted to be
in the range of $152 to $158 million with operating loss of $13 to
Big Lots is returning much of its free cash to shareholders via
share repurchases. Besides, it authorized a $200 million share
repurchase program in May 2012. During the quarter under review,
Big Lots spent $149 million to repurchase 4 million shares.
Year-to-date, the company repurchased shares worth $254 million and
has $45 million remaining under its current share repurchase
Other Financial Details
Based in Columbus, Ohio, Big Lots ended the quarter with cash
and cash equivalents of $61.7 million and shareholders' equity of
$690 million. The company, at the end of the quarter, had $242.8 in
its long-term obligations under bank credit facility.
At the end of the quarter, net cash provided by operating
activities was $88.7 million. Management projects cash flow of $125
million for fiscal 2012.
Big Lots, which operates as a broad-line closeout retailer in
the United States, offers food, health, beauty, plastic, paper,
chemical and pet products as well as home decorative products,
besides other product lines.
Currently, we have a long-term 'Underperform' rating on the
stock. However, Big Lots, which competes with
), holds a Zacks #3 Rank, translating into a short-term 'Hold'
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