Broadline closeout retailer Big Lots, Inc. (BIG) reported Friday higher net profit in its second quarter with increased net sales and comparable store sales, despite weak margins. Further, the company lifted the lower end of its earnings forecast for fiscal 2014, and backed comps growth view.
In pre-market activity, Big Lots shares were gaining $2.53 or 5.36 percent, and trading at $49.73.
CEO and President David Campisi said, "For the second consecutive quarter, our comps were positive and comfortably within the guidance range we provided, and our earnings were above the high end of our range. We believe this is an indication that our core customer, Jennifer, is responding to our improved merchandising strategies and marketing execution."
For the second quarter, net income increased to $19.94 million or $0.36 per share from last year's $18.13 million or $0.31 per share. The latest results included income from discontinued operations of $0.05 per share, while last year's results included loss of $0.07 per share.
On a continuing operations basis, income was $17.21 million or $0.31 per share, compared to $21.94 million or $0.38 per share a year ago.
On average, 13 analysts polled by Thomson Reuters expected the company to report profit per share of $0.30 for the quarter. Analysts' estimates typically exclude special items.
Net sales from continuing operations increased 1.2 percent to $1.20 billion from $1.18 billion in the prior year. Analysts expected sales of $1.20 billion for the quarter.
Comparable store sales increased 1.7 percent for the quarter, compared to expected growth of 1 percent to 3 percent.
In the quarter, gross profit increased from last year, while gross margin remained flat with last year's 39.3 percent. Operating profit margin, meanwhile, declined to 2.3 percent from 3.1 percent a year ago.
Looking ahead for fiscal 2014, Big Lots now expects income from continuing operations between $2.40 and $2.50 per share. Analysts expect earnings per share of $2.48. This is compared to last year's reported earnings of $2.44 per share and adjusted earnings of $2.45 per share.
Previously, the company projected full-year income from continuing operations between $2.35 and $2.50 per share.
Big Lots affirmed its comparable store sales growth guidance range of 1 percent to 2 percent for fiscal 2014. The company estimates this financial performance to result in cash flow of approximately $250 million from continuing U.S. operations.
Further, Big Lots' Board declared a quarterly cash dividend for the third quarter of $0.17 per share payable on September 26, to shareholders of record as of the close of business on September 12.
On August 28, the company's Board approved a new share repurchase program providing for the repurchase of up to $125 million of common shares. The August Share Repurchase Program is eligible to begin on September 3.
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