Company Raises Annual Earnings and Cash Flow Guidance COLUMBUS,
Ohio, May 31 /PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE: BIG)
today reported first quarter fiscal 2007 income from continuing
operations of $29.0 million, or $0.26 per diluted share, compared
to income from continuing operations of $14.5 million, or $0.13 per
diluted share, in the first quarter of fiscal 2006. Including the
impact of discontinued operations, first quarter fiscal 2007 net
income totaled $28.8 million, or $0.26 per diluted share, compared
to $13.7 million, or $0.12 per diluted share, in the prior year. As
discussed in the Company's Form 10-K filed with the SEC on April 4,
2007, the Company's results from continuing operations do not
include the 130 stores closed in January 2006 that are classified
as discontinued operations. (Logo:
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO ) FIRST
QUARTER HIGHLIGHTS -- Record income from continuing operations of
$0.26 per diluted share versus income from continuing operations of
$0.13 per diluted share last year -- Comparable store sales
increase of 4.9% -- Operating profit rate nearly doubles at 3.8%
versus 2.0% last year -- Record inventory turnover First Quarter
Results Net sales for the first quarter ended May 5, 2007,
increased 3.4% to $1,128.4 million, compared to $1,091.6 million
for the same period in fiscal 2006. Comparable store sales for
stores open at least two years at the beginning of the fiscal year
increased 4.9% for the quarter. Operating profit for the first
quarter of fiscal 2007 was $42.5 million, or 3.8% of sales,
compared to last year's operating profit of $21.3 million, or 2.0%
of sales. The operating profit dollar improvement to last year was
the result of significant expense leverage along with the
incremental gross margin dollars driven by the Company's 4.9%
comparable store sales increase. Operating expenses as a percent of
sales improved by 240 basis points due to store and distribution
center efficiencies, lower insurance-related costs, the leveraging
impact of a 4.9% comp, and certain timing differences or non-
recurring items recognized during the quarter. As expected, this
expense leverage was partially offset by pressure in gross margin
rate. The gross margin rate for the quarter declined 60 basis
points compared to last year due to certain lower margin deals and
promotions as well as a slight shift in merchandise mix towards
lower margin categories. For the first quarter of fiscal 2007, the
Company recorded net interest income of $2.9 million, a $2.6
million improvement compared to last year, with the increase
directly attributable to the cash generated by the business over
the last 12 months. The effective income tax rate for the first
quarter of fiscal 2007 was 36.0% compared to 32.8% last year.
Inventory and Cash Management Inventory ended the quarter at $798
million, down 1% compared to last year due to lower store count.
For the fifth consecutive quarter, the Company achieved record
inventory turnover results driven by improving inventory management
and timely flow of merchandise along with strength in comparable
store sales. The Company ended the first quarter of fiscal 2007
with no debt and total cash and investments of $210 million, an
increase of $136 million over the prior year. Share Repurchase
Update On March 9, 2007, the Company announced that the Board of
Directors authorized the repurchase of up to $600.0 million of its
common shares commencing upon authorization and continuing until
exhausted ("2007 Repurchase Program"). The purchases are expected
to be made from time to time in the open market and/or in privately
negotiated transactions at the Company's discretion, subject to
market conditions and other factors. Common shares acquired through
the repurchase program will be available to meet obligations under
equity compensation plans and for general corporate purposes. As
part of the 2007 Repurchase Program, the Company received 2.8
million of its outstanding common shares representing the minimum
number of shares purchased under a $100.0 million guaranteed share
repurchase ("GSR") transaction. Upon receipt, the 2.8 million
shares were removed from the basic and diluted weighted average
common shares outstanding. The GSR includes a forward contract
indexed to the average price of our common stock that subjects the
GSR to a future share settlement based on the average share price
between the contractually specified price inception date of the GSR
and the final settlement date. The forward contract effectively
places a collar around the minimum and maximum number of shares
that will be purchased under the GSR. There are no additional
payments required to be made to the counterparty under the GSR. The
Company may receive up to 0.4 million additional shares of common
stock from the counterparty in settlement of the GSR. If the GSR
had settled on May 5, 2007, the Company would have received
approximately 0.3 million additional common shares from the
counterparty based on the average price of its common stock since
the contractually specified price inception date of the GSR. We
expect the GSR to settle in the fourth quarter of fiscal year 2007.
In addition to the GSR, the Company purchased 0.4 million of its
outstanding common shares in open market transactions at a cost of
$13.7 million during the first quarter of fiscal year 2007. The
remaining repurchase authorization under the 2007 Repurchase
Program was approximately $486.3 million as of May 5, 2007. 2007
OUTLOOK -- Provides initial Q2 guidance for income from continuing
operations of $0.07 to $0.10 per share versus income from
continuing operations of $0.04 per share last year -- Increases
fiscal 2007 annual guidance for income from continuing operations
to $1.25 to $1.30 per share versus income from continuing
operations of $1.01 per share last year -- Increases annual Cash
Flow guidance to approximately $190 million For the second quarter
of fiscal 2007, the Company's guidance calls for a 2% to 4%
comparable store sales increase compared to a 5.2% comparable store
sales increase recorded last year. Based on this level of sales
performance, the Company's earnings are estimated to be in the
range of $0.07 to $0.10 per diluted share, compared to income from
continuing operations for the second quarter of fiscal 2006 of
$0.04 per diluted share. Given the strength of the first quarter
operating results and current expense trends in the business, the
Company raised its fiscal 2007 guidance for earnings and cash flow.
The Company now anticipates fiscal 2007 income from continuing
operations of $1.25 to $1.30 per diluted share, an increase of 24%
to 29% compared to income from continuing operations of $1.01 per
diluted share for fiscal 2006. This EPS guidance is based on an
expected increase in comparable store sales in the range of 3% to
4% along with a decline in the operating expense rate of sales of
approximately 90 to 110 basis points compared to fiscal 2006
levels. The Company estimates that a comparable store sales
increase of less than 1% is needed to leverage the expense
structure of the business. The gross margin rate for fiscal 2007 is
expected to be essentially flat to fiscal 2006. From a cash flow
perspective, the Company now expects cash flow of approximately
$190 million. Conference Call/Webcast The Company will host a
conference call today at 8:00 a.m. Eastern Time to discuss the
Company's financial results for the first quarter of fiscal 2007.
The Company invites you to listen to the webcast of the conference
call through the Investors section of our website
(http://www.biglots.com/). If you are unable to join the live
webcast, an archive of the call will be available at
http://www.biglots.com/ in the Investor Relations section of our
website two hours after the call ends and will remain available
through midnight on Thursday, June 14. A replay of the call will be
available beginning May 31 at 12:00 noon (Eastern Time) through
June 14 at midnight by dialing: 1.866.452.0550 (United States and
Canada) or 1.206.428.2805 (International or metro-Seattle). The PIN
number is 5404. Big Lots is the nation's largest broadline closeout
retailer. As of the end of the first quarter of fiscal 2007 (May 5,
2007) the Company operated 1,376 BIG LOTS stores in 47 states.
Wholesale operations are conducted through BIG LOTS WHOLESALE,
CONSOLIDATED INTERNATIONAL, WISCONSIN TOY and with online sales at
http://www.biglotswholesale.com/. The Company's website is located
at http://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," "target," "forecast" 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) MAY 5 APRIL 29 2007 2006 (Unaudited)
(Unaudited) ASSETS Current assets: Cash and cash equivalents
$210,122 $74,541 Inventories 797,500 805,604 Deferred income taxes
63,648 76,824 Other current assets 54,771 62,971 Total current
assets 1,126,041 1,019,940 Property and equipment - net 494,536
563,661 Deferred income taxes 51,260 23,813 Other assets 22,044
29,218 $1,693,881 $1,636,632 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $222,306 $184,768 Property,
payroll and other taxes 71,579 108,221 Accrued operating expenses
72,500 58,084 Insurance reserves 43,856 47,212 KB bankruptcy lease
obligation 11,730 27,163 Accrued salaries and wages 26,612 22,248
Income taxes payable 7,867 11,254 Total current liabilities 456,450
458,950 Deferred rent 36,625 40,809 Insurance reserves 43,988
44,436 Unrecognized tax benefits 30,039 0 Other liabilities 35,060
19,815 Shareholders' equity 1,091,719 1,072,622 $1,693,881
$1,636,632 BIG LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share data) 13
WEEKS ENDED 13 WEEKS ENDED May 5 April 29 2007 % 2006 % (Unaudited)
(Unaudited) Net sales $1,128,399 100.0 $1,091,622 100.0 Gross
margin 446,913 39.6 438,322 40.2 Selling and administrative
expenses (Note 1) 382,686 33.9 392,389 35.9 Depreciation expense
21,764 1.9 24,653 2.3 Operating profit 42,463 3.8 21,280 2.0
Interest expense (92) (0.0) (90) (0.0) Interest and investment
income 3,010 0.3 394 0.0 Income from continuing operations before
income taxes 45,381 4.0 21,584 2.0 Income tax expense 16,357 1.4
7,080 0.7 Income from continuing operations 29,024 2.6 14,504 1.3
Loss from discontinued operations, net of tax benefit of $166 and
$506, respectively (260) (0.0) (791) 0.0 Net income $28,764 2.5
$13,713 1.3 Income (loss) per common share - basic Continuing
operations $0.26 $0.13 Discontinued operations 0.00 (0.01) Net
income $0.26 $0.12 Income (loss) per common share - diluted
Continuing operations $0.26 $0.13 Discontinued operations 0.00
(0.01) Net income $0.26 $0.12 Weighted average common shares
outstanding Basic 109,919 113,014 Dilutive effect of share-based
awards 1,765 1,494 Diluted 111,684 114,508 Note 1: Includes
approximately $3.9 million of insurance proceeds received in the
first quarter of fiscal year 2007 as recovery for damages related
to fiscal year 2005 hurricanes. BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) 13
WEEKS ENDED 13 WEEKS ENDED May 5, 2007 April 29, 2006 (Unaudited)
(Unaudited) Net cash (used in) provided by operating activities $
(673) $ 109,934 Net cash used in investing activities (7,892)
(5,916) Net cash used in financing activities (62,970) (31,187)
Increase (decrease) in cash and cash equivalents (71,535) 72,831
Cash and cash equivalents: Beginning of period 281,657 1,710 End of
period $ 210,122 $ 74,541
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO
http://photoarchive.ap.org/ DATASOURCE: Big Lots, Inc. CONTACT:
Timothy A. Johnson, Vice President, Strategic Planning and Investor
Relations, Big Lots, Inc., +1-614-278-6622 Web site:
http://www.biglots.com/ http://www.biglotswholesale.com/
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