COLUMBUS, Ohio, Aug. 26 /PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE:
BIG) today reported second quarter fiscal 2008 income from continuing
operations of $26.1 million, or $0.32 per diluted share, compared to income
from continuing operations of $22.1 million, or $0.21 per diluted share, in
the second quarter of fiscal 2007. Including the impact of discontinued
operations, second quarter fiscal 2008 net income totaled $26.0 million, or
$0.32 per diluted share, compared to $23.4 million, or $0.22 per diluted
share, in the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO )
For the year to date period ended August 2, 2008, income from continuing
operations totaled $60.6 million, or $0.74 per diluted share, compared to
income from continuing operations of $51.2 million, or $0.47 per diluted
share, for the same period in fiscal 2007. Including the impact of
discontinued operations, year to date fiscal 2008 net income totaled $60.5
million, or $0.74 per diluted share, compared to $52.1 million, or $0.48 per
diluted share, in the prior year.
SECOND QUARTER HIGHLIGHTS
-- Income from continuing operations of $0.32 per diluted share versus
income from continuing operations of $0.21 per diluted share last year
-- Comparable store sales increase of 2.8%
-- Operating profit rate of 3.9%, an increase of 80 basis points compared
to last year
-- Record second quarter inventory turnover
Second Quarter Results
Net sales for the second quarter of fiscal 2008 increased 1.9% to $1,105.2
million, compared to $1,084.9 million for the same period in fiscal 2007.
Comparable store sales for stores open at least two years at the beginning of
the fiscal year increased 2.8% for the quarter, on top of a 5.2% comparable
store sales increase in the second quarter of fiscal 2007.
Operating profit for the second quarter of fiscal 2008 was $43.5 million,
or 3.9% of sales, compared to last year's operating profit of $33.4 million,
or 3.1% of sales. The 30% improvement in operating profit dollars was the
result of our 2.8% comparable store sales increase along with improvement in
the gross margin rate and expense leverage. Our gross margin rate for the
quarter increased 50 basis points compared to last year due to improved
initial markup. Expenses as a percent of sales improved by 30 basis points
primarily due to store and distribution center efficiencies, lower
depreciation expense, and the leveraging impact of a 2.8% comp over certain
fixed expenses.
For the second quarter of fiscal 2008, net interest expense was $1.1
million compared to net interest income of $1.5 million last year. The
incremental $2.6 million of net interest expense was directly attributable to
investments made to repurchase company stock over the past 12 months. The
effective income tax rate for the second quarter of fiscal 2008 was 38.3%
compared to 36.6% last year.
Inventory and Cash Management
Inventory ended the second quarter of fiscal 2008 at $698 million compared
to $714 million last year. The 2% decline in overall inventory resulted from
a combination of a 1% decrease in average store inventory and a 1% reduction
in store count compared to last year. We continue to achieve record inventory
turnover results driven by improving inventory management, record productivity
in our distribution centers, and timely flow of merchandise along with
strength in comparable store sales. We ended the second quarter of fiscal
2008 with debt of $148 million which was directly attributable to $750 million
of share repurchase activity during the March 2007 through February 2008
timeframe.
Discontinued Operations
As discussed in our Form 10-K filed with the SEC on April 1, 2008,
activity related to KB Toys, our former division, as well as the operating
results and costs associated with 130 stores closed in January 2006 are
classified as discontinued operations. Income from discontinued operations
for the second quarter of fiscal 2008 totaled a net loss of $0.1 million
compared to net income from discontinued operations of $1.2 million for the
second quarter of fiscal 2007. For the year to date period ended August 2,
2008, income from discontinuing operations totaled a net loss of $0.1 million
compared to net income from discontinuing operations of $1.0 million for the
same period in fiscal 2007.
2008 OUTLOOK
-- Providing initial Q3 guidance for income from continuing operations of
$0.15 to $0.19 per diluted share versus income from continuing operations of
$0.14 per diluted share for the same period last year
-- Providing initial Q4 guidance for income from continuing operations of
$1.02 to $1.09 per diluted share versus income from continuing operations (on
a non-GAAP basis) of $0.93 per diluted share for the same period last year
-- Increasing fiscal 2008 annual guidance for income from continuing
operations to $1.90 to $2.00 per diluted share versus income from continuing
operations (on a non-GAAP basis) of $1.41 per diluted share last year
-- Estimating fiscal year 2008 operating profit rate to be in the range of
5.5% to 5.7%
For the third quarter of fiscal 2008, we anticipate a 1% to 2% comparable
store sales increase. At this level of comp sales performance, we expect to
generate operating expense leverage and are estimating that our gross margin
rate will be flattish to last year. Given these assumptions, our earnings are
estimated to be in the range of $0.15 to $0.19 per diluted share, compared to
income from continuing operations for the third quarter of fiscal 2007 of
$0.14 per diluted share.
For the fourth quarter of fiscal 2008, we anticipate a 1% to 2% comparable
store sales increase. At this level of comp sales performance, we expect to
generate operating expense leverage and are estimating that our gross margin
rate will improve compared to last year. Given these assumptions, our
earnings are estimated to be in the range of $1.02 to $1.09 per diluted share,
compared to income from continuing operations (on a non-GAAP basis) for the
fourth quarter of fiscal 2007 of $0.93 per diluted share.
Based on the strength of our second quarter operating results and
reaffirming our view of EPS for the second half of fiscal 2008, we raised our
fiscal 2008 guidance for earnings from continuing operations. We now
anticipate fiscal 2008 income from continuing operations will be $1.90 to
$2.00 per diluted share, an increase of 35% to 42%, respectively, compared to
income from continuing operations (on a non-GAAP basis) of $1.41 per diluted
share for fiscal 2007. This EPS guidance is based on an expected fiscal 2008
increase in comparable store sales of approximately 2% and an operating profit
rate in the range of 5.5% to 5.7%.
Conference Call/Webcast
We will host a conference call today at 8:00 a.m. Eastern Time to discuss
our financial results for the second quarter and provide commentary on our
outlook for fiscal 2008. We invite you to listen to the webcast of the
conference call through the Investor Relations section of our website
(www.biglots.com).
An archive of the call will be available through the Investor Relations
section of our website (www.biglots.com) beginning two hours after the call
ends and will remain available through midnight on Tuesday, September 9. A
replay of the call will be available beginning August 26 at 12:00 noon
(Eastern Time) through September 9 at midnight by dialing: 1.800.207.7077
(United States and Canada) or 1.913.383.5767 (International or metro-Seattle).
The PIN number is 6448.
Big Lots is the nation's largest broadline closeout retailer. As of the
end of the second quarter of fiscal 2008 (August 2, 2008), we operated 1,355
BIG LOTS stores in 47 states. Wholesale operations are conducted through BIG
LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and WISCONSIN TOY. Our website is
located at www.biglots.com .
Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, and such
statements are intended to qualify for the protection of the safe harbor
provided by the Act. The words "anticipate," "estimate," "expect,"
"objective," "goal," "project," "intend," "plan," "believe," "will," "should,"
"may," "target," "forecast," "guidance," "outlook," and similar expressions
generally identify forward-looking statements. Similarly, descriptions of our
objectives, strategies, plans, goals or targets are also forward-looking
statements. Forward-looking statements relate to the expectations of
management as to future occurrences and trends, including statements
expressing optimism or pessimism about future operating results or events and
projected sales, earnings, capital expenditures and business strategy.
Forward-looking statements are based upon a number of assumptions concerning
future conditions that may ultimately prove to be inaccurate. Forward-looking
statements are and will be based upon management's then-current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. Although we believe the
expectations expressed in forward-looking statements are based on reasonable
assumptions within the bounds of our knowledge, forward-looking statements, by
their nature, involve risks, uncertainties and other factors, any one or a
combination of which could materially affect our business, financial
condition, results of operations or liquidity.
Forward-looking statements that we make herein and in other reports and
releases are not guarantees of future performance and actual results may
differ materially from those discussed in such forward-looking statements as a
result of various factors, including, but not limited to, the cost of goods,
our inability to successfully execute strategic initiatives, competitive
pressures, economic pressures on our customers and us, the availability of
brand name closeout merchandise, trade restrictions, freight costs, the risks
discussed in the Risk Factors section of our most recent Annual Report on Form
10-K, and other factors discussed from time to time in our other filings with
the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form
8-K. This release should be read in conjunction with such filings, and you
should consider all of these risks, uncertainties and other factors carefully
in evaluating forward-looking statements.
You are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date thereof. We undertake no
obligation to publicly update forward-looking statements, whether as a result
of new information, future events or otherwise. You are advised, however, to
consult any further disclosures we make on related subjects in our public
announcements and SEC filings.
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
AUGUST 2, AUGUST 4,
2008 2007
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $43,521 $108,639
Inventories 698,392 713,838
Deferred income taxes 53,040 58,793
Other current assets 69,956 61,110
Total current assets 864,909 942,380
Property and equipment - net 495,521 491,626
Deferred income taxes 48,034 52,679
Other assets 22,044 21,302
$1,430,508 $1,507,987
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $269,281 $209,389
Property, payroll and other taxes 70,153 69,246
Accrued operating expenses 55,115 97,607
Insurance reserves 35,919 40,816
KB bankruptcy lease obligation 0 8,811
Accrued salaries and wages 32,409 29,893
Income taxes payable 0 2,087
Total current liabilities 462,877 457,849
Long-term obligations 147,700 0
Deferred rent 31,216 34,441
Insurance reserves 44,550 43,591
Unrecognized tax benefits 27,221 30,274
Other liabilities 35,465 34,778
Shareholders' equity 681,479 907,054
$1,430,508 $1,507,987
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
13 WEEKS ENDED 13 WEEKS ENDED
AUGUST 2, 2008 AUGUST 4, 2007
% %
(Unaudited) (Unaudited)
Net sales $1,105,189 100.0 $1,084,891 100.0
Gross margin 434,804 39.3 421,074 38.8
Selling and administrative expenses 370,885 33.6 365,823 33.7
Depreciation expense 20,458 1.9 21,828 2.0
Operating profit 43,461 3.9 33,423 3.1
Interest expense (1,106) (0.1) (105) (0.0)
Interest and investment income 14 0.0 1,592 0.1
Income from continuing operations
before income taxes 42,369 3.8 34,910 3.2
Income tax expense 16,222 1.5 12,775 1.2
Income from continuing operations 26,147 2.4 22,135 2.0
Income (loss) from discontinued
operations, net of tax (benefit)
expense of ($73) and $795,
respectively (122) (0.0) 1,249 0.1
Net income $26,025 2.4 $23,384 2.2
Earnings per common share - basic
Continuing operations $0.32 $0.21
Discontinued operations 0.00 0.01
Net income $0.32 $0.22
Earnings per common share - diluted
Continuing operations $0.32 $0.21
Discontinued operations 0.00 0.01
Net income $0.32 $0.22
Weighted average common shares
outstanding
Basic 80,772 106,490
Dilutive effect of share-based awards 1,196 1,262
Diluted 81,968 107,752
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
26 WEEKS ENDED 26 WEEKS ENDED
AUGUST 2, 2008 AUGUST 4, 2007
% %
(Unaudited) (Unaudited)
Net sales $2,256,778 100.0 $2,213,290 100.0
Gross margin 898,595 39.8 867,987 39.2
Selling and administrative expenses 757,741 33.6 748,509 33.8
Depreciation expense 39,236 1.7 43,592 2.0
Operating profit 101,618 4.5 75,886 3.4
Interest expense (2,518) (0.1) (197) (0.0)
Interest and investment income 26 0.0 4,602 0.2
Income from continuing operations
before income taxes 99,126 4.4 80,291 3.6
Income tax expense 38,493 1.7 29,132 1.3
Income from continuing operations 60,633 2.7 51,159 2.3
Income (loss) from discontinued
operations, net of tax (benefit)
expense of ($59) and $629,
respectively (99) (0.0) 989 0.0
Net income $60,534 2.7 $52,148 2.4
Earnings per common share - basic
Continuing operations $0.75 $0.47
Discontinued operations 0.00 0.01
Net income $0.75 $0.48
Earnings per common share - diluted
Continuing operations $0.74 $0.47
Discontinued operations 0.00 0.01
Net income $0.74 $0.48
Weighted average common shares
outstanding
Basic 80,937 108,204
Dilutive effect of share-based awards 1,027 1,497
Diluted 81,964 109,701
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
13 WEEKS ENDED 13 WEEKS ENDED
August 2, 2008 August 4, 2007
(Unaudited) (Unaudited)
Net cash provided by operating activities $41,962 $98,353
Net cash used in investing activities (34,426) (11,519)
Net cash used in financing activities (7,201) (188,317)
Increase (decrease) in cash and cash
equivalents 335 (101,483)
Cash and cash equivalents:
Beginning of period 43,186 210,122
End of period $43,521 $108,639
BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
26 WEEKS ENDED 26 WEEKS ENDED
August 2, 2008 August 4, 2007
(Unaudited) (Unaudited)
Net cash provided by operating activities $100,599 $97,680
Net cash used in investing activities (52,522) (19,411)
Net cash used in financing activities (41,687) (251,287)
Increase (decrease) in cash and cash
equivalents 6,390 (173,018)
Cash and cash equivalents:
Beginning of period 37,131 281,657
End of period $43,521 $108,639
