Company Raises Annual Earnings and Cash Flow Guidance COLUMBUS,
Ohio, May 29 /PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE: BIG)
today reported net income of $34.5 million, or $0.42 per diluted
share, for the first quarter of fiscal 2008 ended May 3, 2008. This
compares to net income of $28.8 million, or $0.26 per diluted
share, for the first quarter of fiscal 2007. Results include both
continuing operations and discontinued operations. Discontinued
operations activity was minimal in the first quarter of both fiscal
2008 and fiscal 2007 and is discussed later in this release. (Logo:
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO )
Continuing Operations For the first quarter of fiscal 2008, income
from continuing operations was $34.5 million, or $0.42 per diluted
share, compared to income from continuing operations of $29.0
million, or $0.26 per diluted share, for the same period of fiscal
2007. For the first quarter of fiscal 2007, results from continuing
operations included insurance proceeds recovered from claims filed
as a result of hurricanes occurring during fiscal 2005 which we
believe are not directly related to our ongoing operations.
Therefore, we have provided supplemental non-GAAP first quarter
results and a complementary schedule entitled "Unaudited Adjusted
Results and Reconciliation" that exclude this item. We believe that
non-GAAP financial measures should facilitate analysis by investors
and others who follow our financial performance. In the
supplemental non-GAAP disclosures, the insurance proceeds excluded
from continuing operations represent net income of $2.4 million, or
$0.02 per diluted share, for the first quarter of fiscal 2007.
Excluding these insurance proceeds, the first quarter of fiscal
2007 income from continuing operations was $26.7 million, or $0.24
per diluted share. FIRST QUARTER HIGHLIGHTS -- Income from
continuing operations of $0.42 per diluted share versus income from
continuing operations (on a non-GAAP basis) of $0.24 per diluted
share last year -- Comparable store sales increase of 3.4% --
Operating profit rate of 5.1%, an increase of 170 basis points
compared to last year -- Record inventory turnover First Quarter
Results (on a non-GAAP basis) Net sales for the first quarter of
fiscal 2008 increased 2.1% to $1,151.6 million, compared to
$1,128.4 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 3.4% for the quarter. Operating profit
for the first quarter of fiscal 2008 was $58.2 million, or 5.1% of
sales, compared to last year's operating profit of $38.6 million,
or 3.4% of sales. The 51% improvement in operating profit dollars
was the result of significant expense leverage driven by our 3.4%
comparable store sales increase along with improvement in the gross
margin rate. Operating expenses as a percent of sales improved by
100 basis points primarily due to store and distribution center
efficiencies and the leveraging impact of a 3.4% comp over certain
fixed expenses. Our gross margin rate for the quarter increased 70
basis points compared to last year due to improved initial markup,
favorable costs resulting from our inbound freight initiatives, and
shrink results related to physical inventories taken and recorded
in fiscal 2008. For the first quarter of fiscal 2008, net interest
expense was $1.4 million compared to net interest income of $2.9
million last year. The incremental $4.3 million of net interest
expense was directly attributable to the investment of $750 million
to repurchase over 32 million shares of our common stock during the
period of March 2007 through February 2008. The effective income
tax rate for the first quarter of fiscal 2008 was 39.2% compared to
35.7% last year. Inventory and Cash Management Inventory ended the
first quarter of fiscal 2008 at $725 million compared to $798
million last year. The 9% decline in overall inventory resulted
from a combination of an 8% 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 and timely flow of merchandise along with
strength in comparable store sales. We ended the first quarter of
fiscal 2008 with debt of $165 million which was directly
attributable to $750 million of share repurchase activity during
the March 2007 through February 2008 timeframe. Share Repurchase
Update As previously communicated on March 5, 2008, during the
first four weeks of fiscal 2008, we completed a $150 million share
repurchase program that was authorized by our Board of Directors in
November 2007 ("November 2007 Repurchase Program") by investing the
remaining $37 million to purchase 2.2 million shares at a weighted
average price of $17.28. In total, 9.2 million shares were
purchased at a weighted average price of $16.38 under the November
2007 Repurchase Program. 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 first quarter of fiscal 2008 totaled less than
$0.1 million compared to a net loss from discontinued operations of
$0.3 million for the first quarter of fiscal 2007. 2008 OUTLOOK --
Provides initial Q2 guidance for income from continuing operations
of $0.21 to $0.25 per diluted share versus income from continuing
operations (on a non-GAAP basis) of $0.20 per diluted share for the
same period last year -- Increases fiscal 2008 annual guidance for
income from continuing operations to $1.80 to $1.90 per diluted
share versus income from continuing operations (on a non-GAAP
basis) of $1.41 per diluted share last year -- Increases fiscal
2008 annual guidance for Cash Flow (defined as operating activities
less investing activities) to $185 million For the second quarter
of fiscal 2008, we anticipate a 1% to 2% comparable store sales
increase compared to a 5.2% comparable store sales increase
recorded last year. Based on this level of sales performance, our
earnings are estimated to be in the range of $0.21 to $0.25 per
diluted share, compared to income from continuing operations (on a
non-GAAP basis) for the second quarter of fiscal 2007 of $0.20 per
diluted share. Given the strength of the first quarter operating
results and trends in the business, we raised our fiscal 2008
guidance for earnings from continuing operations and cash flow. We
now anticipate fiscal 2008 income from continuing operations of
$1.80 to $1.90 per diluted share, an increase of 28% to 35%,
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 5.3% to 5.5%. We also now expect Cash Flow of
approximately $185 million. Conference Call/Webcast We will host a
conference call today at 8:00 a.m. Eastern Time to discuss our
financial results for the first 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 ( http://www.biglots.com/ ). If you are unable to join
the live webcast, an archive of the call will be available through
the Investor Relations section of our website (
http://www.biglots.com/ ) beginning two hours after the call ends
and will remain available through midnight on Thursday, June 12. A
replay of the call will be available beginning May 29 at 12:00 noon
(Eastern Time) through June 12 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 6298. Big Lots
is the nation's largest broadline closeout retailer. As of the end
of the first quarter of fiscal 2008 (May 3, 2008), we operated
1,354 BIG LOTS stores in 47 states. Wholesale operations are
conducted through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL,
and WISCONSIN TOY. Our 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," "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) MAY 3, MAY 5, 2008 2007 (Unaudited)
(Unaudited) ASSETS Current assets: Cash and cash equivalents
$43,186 $210,122 Inventories 724,629 797,500 Deferred income taxes
54,259 63,648 Other current assets 51,798 54,771 Total current
assets 873,872 1,126,041 Property and equipment - net 478,947
494,536 Deferred income taxes 50,510 51,260 Other assets 19,542
22,044 $1,422,871 $1,693,881 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $257,531 $222,306 Property,
payroll and other taxes 71,453 71,579 Accrued operating expenses
61,533 72,500 Insurance reserves 36,244 43,856 KB bankruptcy lease
obligation 0 11,730 Accrued salaries and wages 27,961 26,612 Income
taxes payable 21,550 7,867 Total current liabilities 476,272
456,450 Long-term obligations 165,400 0 Deferred rent 34,120 36,625
Insurance reserves 44,342 43,988 Unrecognized tax benefits 26,827
30,039 Other liabilities 35,646 35,060 Shareholders' equity 640,264
1,091,719 $1,422,871 $1,693,881 BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) 13 WEEKS ENDED 13 WEEKS ENDED May 3, 2008
May 5, 2007 % % (Unaudited) (Unaudited) Net sales $1,151,589 100.0
$1,128,399 100.0 Gross margin 463,791 40.3 446,913 39.6 Selling and
administrative expenses 386,856 33.6 382,686 33.9 Depreciation
expense 18,778 1.6 21,764 1.9 Operating profit 58,157 5.1 42,463
3.8 Interest expense (1,412) (0.1) (92) 0.0 Interest and investment
income 12 0.0 3,010 0.3 Income from continuing operations before
income taxes 56,757 4.9 45,381 4.0 Income tax expense 22,271 1.9
16,357 1.4 Income from continuing operations 34,486 3.0 29,024 2.6
Income (loss) from discontinued operations, net of tax expense
(benefit) of $14 and ($166), respectively 23 0.0 (260) (0.0) Net
income $34,509 3.0 $28,764 2.5 Earnings per common share - basic
Continuing operations $0.43 $0.26 Discontinued operations 0.00 0.00
Net income $0.43 $0.26 Earnings per common share - diluted
Continuing operations $0.42 $0.26 Discontinued operations 0.00 0.00
Net income $0.42 $0.26 Weighted average common shares outstanding
Basic 80,918 109,919 Dilutive effect of share-based awards 798
1,765 Diluted 81,716 111,684 UNAUDITED ADJUSTED RESULTS Schedule
Provided for Informational Purposes Only BIG LOTS, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 INSURANCE PROCEEDS (In thousands, except per
share data) 13 WEEKS ENDED 13 WEEKS ENDED MAY 3, 2008 MAY 5, 2007 %
% (Unaudited) (Unaudited) Adjusted Results Excluding Insurance
Proceeds As Reported (non-GAAP) Net sales $1,151,589 100.0
$1,128,399 100.0 Gross margin 463,791 40.3 446,913 39.6 Selling and
administrative expenses 386,856 33.6 386,589 34.3 Depreciation
expense 18,778 1.6 21,764 1.9 Operating profit 58,157 5.1 38,560
3.4 Interest expense (1,412) (0.1) (92) 0.0 Interest and investment
income 12 0.0 3,010 0.3 Income from continuing operations before
income taxes 56,757 4.9 41,478 3.7 Income tax expense 22,271 1.9
14,814 1.3 Income from continuing operations 34,486 3.0 26,664 2.4
Income from discontinued operations, net of tax expense (benefit)
of $14 and ($166), respectively 23 0.0 (260) 0.0 Net income $34,509
3.0 $26,404 2.3 Earnings per common share - basic Continuing
operations $0.43 $0.24 Discontinued operations 0.00 0.00 Net income
$0.43 $0.24 Earnings per common share - diluted Continuing
operations $0.42 $0.24 Discontinued operations 0.00 0.00 Net income
$0.42 $0.24 Weighted average common shares outstanding Basic 80,918
109,919 Dilutive effect of share-based awards 798 1,765 Diluted
81,716 111,684 UNAUDITED ADJUSTED RESULTS AND RECONCILIATION
Schedule Provided for Informational Purposes Only BIG LOTS, INC.
AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING FISCAL 2007 INSURANCE PROCEEDS (In thousands, except per
share data) 13 WEEKS ENDED 13 WEEKS ENDED MAY 3, 2008 MAY 5, 2007
(Unaudited) (Unaudited)(Unaudited)(Unaudited) Adjusted Results
Insurance Excluding Proceeds Insurance As As (a) Proceeds Reported
Reported (non-GAAP) Net sales $1,151,589 $1,128,399 $1,128,399
Gross margin 463,791 446,913 446,913 Selling and administrative
expenses 386,856 382,686 $3,903 386,589 Depreciation expense 18,778
21,764 21,764 Operating profit 58,157 42,463 (3,903) 38,560
Interest expense (1,412) (92) (92) Interest and investment income
12 3,010 3,010 Income from continuing operations before income
taxes 56,757 45,381 (3,903) 41,478 Income tax expense 22,271 16,357
(1,543) 14,814 Income from continuing operations 34,486 29,024
(2,360) 26,664 Income from discontinued operations, net of tax
expense (benefit) of $14 and ($166), respectively 23 (260) (260)
Net income $34,509 $28,764 ($2,360) $26,404 Earnings per common
share - basic Continuing operations $0.43 $0.26 ($0.02) $0.24
Discontinued operations 0.00 0.00 0.00 0.00 Net income $0.43 $0.26
($0.02) $0.24 Earnings per common share - diluted Continuing
operations $0.42 $0.26 ($0.02) $0.24 Discontinued operations 0.00
0.00 0.00 0.00 Net income $0.42 $0.26 ($0.02) $0.24 Weighted
average common shares outstanding Basic 80,918 109,919 109,919
109,919 Dilutive effect of share- based awards 798 1,765 1,765
1,765 Diluted 81,716 111,684 111,684 111,684 (a) During the first
quarter of fiscal 2007, we received $3,903 of insurance proceeds as
recovery for damages related to hurricanes occurring in 2005. BIG
LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) 13 WEEKS ENDED 13 WEEKS ENDED May 3, 2008
May 5, 2007 (Unaudited) (Unaudited) Net cash provided (used) by
operating activities $58,637 $(673) Net cash used in investing
activities (18,096) (7,892) Net cash used in financing activities
(34,486) (62,970) Increase (decrease) in cash and cash equivalents
6,055 (71,535) Cash and cash equivalents: Beginning of period
37,131 281,657 End of period $43,186 $210,122
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/
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