Big Lots (BIG)
Q1 2011 Earnings Call
May 26, 2011 8:00 am ET
Joe Cooper - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Interim Treasurer
Charles Haubiel - Executive Vice President of Legal & Real Estate, General Counsel, Corporate Secretary and Member of Executive Committee
Steven Fishman - Chairman, Chief Executive Officer and President
Timothy Johnson - Vice President of Strategic Planning & Investor Relations
Joseph Feldman - Telsey Advisory Group
David Mann - Johnson Rice & Company, L.L.C.
Meredith Adler - Barclays Capital
Mark Mandel - ThinkEquity LLC
Jeffery Stein - Soleil Securities Group, Inc.
Laura Champine - Cowen and Company, LLC
Previous Statements by BIG
» Big Lots' CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Big Lots CEO Discusses Q2 2010 Results - Earnings Call Transcript
» Big Lots Q1 2010 Earnings Call Transcript
Thanks, Yvonne, and thank you, everyone, for joining us for our first quarter conference call. With me here in Columbus today are Steve Fishman, our Chairman and CEO; Joe Cooper, Executive Vice President and Chief Financial Officer; and Chuck Haubiel, Executive Vice President, Real Estate, Legal and General Counsel.
Before we get started, I'd like to remind you that any forward-looking statements we make on today's call involve risks and uncertainties and are subject to our Safe Harbor provisions as stated in our press release and our SEC filings, and that actual results can differ materially from those described during our forward-looking statements. As discussed in this morning's release, our results include discontinued operations activity. Since we do not view discontinued operations as relevant to ongoing operations of the business, our prepared comments will be based on results from continuing operations.
Additionally, when we get to our forward-looking guidance, please remember that our guidance does not include any impact or provision for our acquisition of Liquidation World, which was also announced earlier this morning. Given our Annual Meeting of Shareholders begins at 9:00 a.m., our comments will be brief to allow for Q&A to be completed by 8:45 a.m.
With that, I'll turn it over to Steve.
Thanks, T.J., and good morning, everyone. From a top line perspective, Q1 proved to be a difficult quarter for our business. Clearly, there were some macro challenges such as weather and gas prices, and our business can certainly be sensitive to those conditions. However, we control our own execution, and that's where I want to focus my comments about our business in Q1 and looking forward.
From a merchandise perspective, Consumables, which is our single largest category, was a bright spot in our results. Consumables comped up low-single digits, with the largest classification, food, comping up low-single digits as well. For those of you who have followed our progress, you know we placed a tremendous amount of effort and focus on this category in the last several months, and the early results are very encouraging.
Sharper deals, deeper and broader assortments and brands, the successful expansion of our International Foods assortment, and certain presentation initiatives, such as the wall of values, have all contributed to the success to date. We know that we're priced competitively, and we believe we can do a better job of communicating and signing our value to our customer.
Furniture comped down low-single digits, up against the nearly 20% comp loss last year. Certain aspects of our Furniture business were real good, namely, mattresses and upholstery, each of which comped positive mid-single digits.
Case Goods was our most challenged business, up against Broyhill and Galleria closeouts from a year ago. We're executing a solid strategy in Furniture, which is different than the traditional Furniture industry. We're confident in the team and the quality of the assortment they are sourcing to the customer, and I continue to believe this is a growth category.
Our Home business comped down low single digits as well, up against strong performance from a year ago, where we're delivering value and newness to customer response. We can execute better in this category, and this could be one of our largest growth opportunities going forward. Doug and the team are very focused on making changes for the fall.
Seasonal merchandise sales were a real challenge for Q1, as you know, you've heard from other major national retailers. Seasonal is one of the most important categories in Q1, not only because of its size in dollars, but also because it's a key reason for customers to shop our stores. So it's transaction driver that encourages traffic and attracts customers not just to shop Seasonal, but build a basket from our other categories on their shopping trip.
Clearly, weather matters in this category. I believe we have a strong assortment of great value and good quality product. During Q1 in certain warmer weather climates, including the southern parts of the United States, Seasonal comps were up in the low to mid-single digits, right where I would have expected them. In contrast, in the northern climates or the balance of the country where comps were down double digits. Seasonal is a very clear differentiator in our strategy, and that won't change going forward, but it's important to understand the risk and reward aspects of this business.
In summary, it was a challenging quarter, but the team made adjustments along the way to inventory and expenses, and we made the best of a tough situation. We recorded record EPS from continuing operations of $0.70 per share versus last year's record at that time of $0.68. Now Joe is going to give you some details on the quarter and how we're looking at our forward guidance. Joe?