Company Raises Annual Earnings Guidance 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 (http://www.biglots.com/). 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 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
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) 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
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, +1-614-278-6622 Web site: http://www.biglots.com/
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