Big Lots Inc.
) rallied 13% on the index following the company's
better-than-expected first-quarter fiscal 2014 performance. The
quarterly earnings from continuing U.S. operations came in at 50
cents per share, way ahead of the Zacks Consensus Estimate of 44
cents per share. However, earnings fell 28.6% year over year when
compared with adjusted earnings from continuing U.S. operations.
Big Lots' Canadian operations have been treated as discontinued.
The loss from Canadian operations came in at 44 cents per share as
against expectation of 64-71 cents per share. Lower-than-expected
loss was driven by favorable settlements on lease terminations and
additional deferred tax benefits.
Big Lots, which competes with
Costco Wholesale Corp
Sears Holdings Corp.
Dollar General Corporation
) reported net sales of $1,281.3 million, up 1.1% year over year
and was ahead of the Zacks Consensus Estimate of $1,267.0 million.
Moreover, the company posted positive comparable-store sales
(comps) after 8 consecutive quarters of negative comps. Comps for
the quarter were up 0.9%.
The company's gross profit fell 1.7% to $493.6 million while gross
margin decreased 110 basis points (bps) to 38.5%. Operating profit
fell 23.2% to $47.2 million, whereas operating margin shrunk 110
bps to 3.7%.
Other Financial Details
This Zacks Rank #3 (Hold) company ended the quarter with cash and
cash equivalents of $67.2 million, inventories of $834.6 million
and shareholders' equity of $836.5 million. The company, at the end
of the quarter, had $54.0 million in its long-term obligations
under the bank credit facility. The company expects to generate
$170 million in consolidated cash flow in fiscal 2014 whereas $145
million after taking in to account the impact from closure of
During the quarter, Big Lots' repurchased 2.2 million shares for
$82.5 million to purchase (roughly 3.8% of outstanding shares).
Moreover, following the first quarter, the company bought back the
remaining 3.3 million shares in May 2014, thereby completing the
earlier announced $125 million share buyback program.
In Mar 2014, Big Lots' board of directors had approved a share
repurchase program worth $125 million.
During the quarter, Big Lots opened 8 stores while it shuttered 5
stores in the U.S. At the end of the quarter, the company
operated a total of 1,496 stores across the U.S.
Big Lots expects earnings per share from continuing operations to
be in the range of 24-30 cents for second-quarter fiscal 2014 while
comps are expected to be in the range of 1%-3%.
For fiscal 2014, Big Lots expects earnings from continuing
operations in the range of $2.35-$2.50 per share. Comps are
expected to range from flat to a rise of 1%-2%. Net sales are
expected to remain flat or increase slightly.
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