Big Lots Inc.’s BIG first-quarter fiscal 2015 earnings from continuing operations of 60 cents per share came in a penny ahead of the Zacks Consensus Estimate while rising 20% year over year.
Big Lots Inc. – Earnings Surprise | FindTheCompany
Revenues of $1,280.5 million also exceeded the Zacks Consensus Estimate of $1,275 million and were almost flat with the year-ago quarter.
Despite a troubled beginning to the year, traffic at the company’s stores started to pick up with improving weather conditions. Furniture, food and home categories continued to be strong performers. The company also rolled out its freezer coolers facility to more than 1,300 stores.
Big Lots’ merchandising strategies and effective marketing and inventory management are paying off quite well as evident from its unabated comparable-sales (comps) growth. Comps increased 1.6% in the quarter, representing the fifth straight quarter of comps growth.
The company’s gross profit was up 2.1% year over year to $504.2 million while gross margin increased 90 bps to 39.4%. Operating profit came in at $52.6, up 11.6% from the year-ago quarter, and operating margin grew 40 bps to 4.1%.
Other Financial Details
Big Lots ended the quarter with cash and cash equivalents of $67.2 million, flat year over year. Inventories also remained almost the same as the year-ago quarter at $835.4 million as higher inventory per store was offset by reduced outlets.
The company opened a new store, while none of its outlets were closed. As of May 29, 2015, Big Lots’ had 1, 461 stores.
The company had $40.5 million in its long-term obligations at the end of the quarter, which reduced significantly from $53.6 million in the prior-year quarter, under the credit facility.
In the quarter under review, Big Lots’ bought back 0.8 million shares for $35 million and paid $10 million in dividends.
Guidance
For fiscal 2015, Big Lots has pulled up the lower end of its previously provided earnings guidance of $2.75–$2.90 per share, based on its better-than-expected first quarter results and the inherent strength of its strategic initiatives. Earnings are now expected to be in the range of $2.80—$2.90, up 14%—18% year over year. Comps are expected to increase in the low single-digit range, while total sales are expected to remain unchanged year over year. Also, the company expects $175 million of cash flow generation for fiscal 2015 as against $254 million in fiscal 2014.
For the second quarter of fiscal 2015, earnings per share from continuing operations are now expected to be in the range of 31 cents to 35 cents per share compared with 34 cents earned in the prior-year quarter. Comps are expected to grow in the band of 2—3%.
The Zacks Consensus Estimate for the quarter and the fiscal stand at 33 cents per share and $2.87 per share, respectively.
Big Lots currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Gordmans Stores, Inc. GMAN, Citi Trends, Inc. CTRN and Target Corp. TGT. While Gordmans Stores sports a Zacks Rank #1 (Strong Buy), Target and Citi Trends are Zacks Rank #2 (Buy) stocks.
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