Big Lots Q3 Results Miss Estimates, Backs 2014 Outlook

(RTTNews) - Broadline closeout retailer Big Lots, Inc. (BIG) reported Friday a net loss for the third quarter that narrowed from last year, reflecting lower loss from discontinued operations and sales growth. Adjusted loss per share from continuing operations also came in wider than analysts' expectations by a penny, and quarterly sales missed their estimates. The company also raised earnings guidance for the fourth quarter, while reaffirming earnings outlook for full-year 2014.

"For the third consecutive quarter, our comps were positive as we continue to gain traction and build sales consistency in our business," President and CEO David Campisi said.

The Columbus, Ohio-based company reported a net loss of $3.44 million or $0.06 per share for the third quarter, narrower than $9.52 million or $0.17 per share in the prior-year quarter.

Loss from continuing operations for the quarter widened to $3.12 million or $0.06 per share from $1.95 million or $0.03 per share in the year-ago quarter, which included a gain on sale of real estate of $2.18 million or $0.04 per share.

On average, 15 analysts polled by Thomson Reuters expected the company to report a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter edged up 0.2 percent to $1.11 billion from $1.10 billion in the same quarter last year, but missed fifteen Wall Street analysts' consensus estimate of $1.12 billion. Comparable store sales grew 1.4 percent.

"Jennifer, our core customer, is responding positively to our improved merchandising strategies like the recent expansion of our Food category, our Furniture lease-to-purchase program, and our emphasis on the quality, brand, fashion, and value components of our assortments," Campisi added.

Gross margin for the quarter contracted 10 basis points to 38.9 percent from last year's 39 percent.

Inventory at the end of the quarter stood at $1,075 million, down from $1,238 million last year, driven by an 8 percent decline in inventory per store, a lower store count, and the strategic decisions to liquidate Canadian business and wholesale operations.

Separately, Big Lots said its Board of Directors declared a quarterly cash dividend of $0.17 per common share, payable on December 30 to shareholders of record as of the close of business on December 16, 2014.

Looking ahead to the fourth quarter, the company raised income from continuing operations guidance to a range of $1.70 to $1.80 per share from the prior forecast of $1.70 to $1.76 per share, on comparable store sales growth in the low single digits. Analysts estimate earnings of $1.78 per share on revenues of $1.40 billion for the quarter.

For fiscal year 2014, Big Lots continues to anticipate income from continuing operations in the range of $2.40 to $2.50 per share, on projected comparable store sales growth of 1 to 2 percent. Street is currently looking for full-year 2014 earnings of $2.49 per share, on annul revenues of $5.19 billion.

BIG closed Thursday's regular trading session at $47.95, down $0.35 on a volume of 1.57 million shares. In the past 52-week period, the stock has been trading in a range of $25.50 to $51.75.