Company Updates 2008 Guidance COLUMBUS, Ohio, Dec. 5
/PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE: BIG) today reported
third quarter fiscal 2008 income from continuing operations of
$12.4 million, or $0.15 per diluted share, compared to income from
continuing operations of $14.4 million, or $0.14 per diluted share,
in the third quarter of fiscal 2007. Including the impact of
discontinued operations, third quarter fiscal 2008 net income
totaled $12.2 million, or $0.15 per diluted share, compared to
$14.3 million, or $0.14 per diluted share, in the prior year.
(Logo: http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO)
For the year to date period ended November 1, 2008, income from
continuing operations totaled $73.0 million, or $0.89 per diluted
share, compared to income from continuing operations of $65.5
million, or $0.61 per diluted share, for the same period in fiscal
2007. Including the impact of discontinued operations, year to date
fiscal 2008 net income totaled $72.8 million, or $0.89 per diluted
share, compared to $66.4 million, or $0.62 per diluted share, in
the prior year. THIRD QUARTER HIGHLIGHTS -- Record income from
continuing operations of $0.15 per diluted share versus income from
continuing operations of $0.14 per diluted share last year --
Comparable store inventories approximately 3% below last year at
the end of the quarter -- Record third quarter inventory turnover
-- Opened 15 new stores Third Quarter Results Net sales for the
third quarter of fiscal 2008 decreased 0.9% to $1,021.6 million,
compared to $1,030.6 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 decreased 0.2% for the quarter.
Operating profit for the third quarter of fiscal 2008 was $20.1
million, or 2.0% of sales, compared to last year's operating profit
of $22.7 million, or 2.2% of sales. Despite a slightly negative
comp store sales result, expenses as a percent of sales were flat
to last year due to the continued disciplined approach to our cost
structure. As anticipated, our gross margin rate was challenged by
slightly higher markdowns and continued strength in our lower
margin merchandising categories (Consumables and Hardlines) which
were partially offset by better buying margins in a vibrant
closeout deal environment. For the third quarter of fiscal 2008,
net interest expense was $1.6 million compared to net interest
income of $0.3 million last year. The incremental $1.9 million of
net interest expense was directly attributable to investments made
to repurchase our stock during the second half of fiscal 2007
through February 2008. The effective income tax rate for the third
quarter of fiscal 2008 was 33.2% compared to 37.7% last year.
Inventory and Cash Management Our company remains in a strong
financial position. Inventory ended the third quarter of fiscal
2008 at $958 million compared to $990 million last year. The
decline in overall inventory was the direct result of a 3% decrease
in average store inventory as our store count was relatively flat
year over year. We continue to achieve record inventory turnover
results driven by improving inventory management and record
productivity in our distribution centers. We ended the third
quarter of fiscal 2008 with debt of $269 million which was directly
attributable to our seasonal borrowing needs and $750 million of
share repurchase activity during the March 2007 through February
2008 timeframe. Our cash flow (defined as operating activities less
investing activities) peaks during the fourth quarter of each
fiscal year. As such, we expect to end the fourth quarter of fiscal
2008 with approximately $40 million of borrowings. This leaves us
adequate liquidity and flexibility to pursue opportunities in
merchandise and real estate openings while investing in and
positioning our business for long-term success. 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 third quarter of fiscal
2008 totaled a net loss of $0.1 million, or flat to the net loss
from discontinued operations of $0.1 million posted for the third
quarter of fiscal 2007. For the year to date period ended November
3, 2008, income from discontinued operations totaled a net loss of
$0.2 million compared to net income from discontinued operations of
$0.9 million for the same period in fiscal 2007. 2008 OUTLOOK --
Providing updated Q4 guidance of income from continuing operations
of $0.90 to $0.99 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 -- Providing updated fiscal 2008 annual
guidance for income from continuing operations of $1.79 to $1.88
per diluted share versus income from continuing operations (on a
non-GAAP basis) of $1.41 per diluted share last year -- Providing
updated cash flow estimate of $145 million For the fourth quarter
of fiscal 2008, we anticipate a comparable store sales decrease of
approximately 2% to 4%. Our gross margin rate is forecasted above
last year while expense de-leverage is anticipated due to the
softness in sales. Given these assumptions, our income from
continuing operations is estimated to be in the range of $0.90 to
$0.99 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 operating results of
the first nine months of the year and our updated view of EPS for
the fourth quarter of fiscal 2008, we revised our fiscal 2008
guidance for income from continuing operations. We now anticipate
fiscal 2008 income from continuing operations will be $1.79 to
$1.88 per diluted share, an increase of 27% to 33%, respectively,
compared to income from continuing operations (on a non-GAAP basis)
of $1.41 per diluted share for fiscal 2007. This updated EPS
guidance is based on an expected fiscal 2008 comparable store sales
increase of approximately 1% and an operating profit rate in the
range of 5.3% to 5.5%. Refer to our March 5, 2008 press release
(furnished with our Form 8-K filed with the SEC on March 11, 2008)
to view a presentation of the financial measures calculated and
presented in accordance with GAAP that most directly compare to
these fiscal 2007 non-GAAP financial measures and a reconciliation
of the differences between the non-GAAP financial measures and the
comparable financial measures calculated and presented in
accordance with GAAP. Conference Call/Webcast We will host a
conference call today at 8:00 a.m. Eastern Time to discuss our
financial results for the third quarter and provide commentary on
our outlook for the fourth quarter of 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 Friday, December 19. A replay of the call will
be available beginning December 5 at 12:00 noon (Eastern Time)
through December 19 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 6697. Big Lots is the nation's
largest broadline closeout retailer. As of the end of the third
quarter of fiscal 2008 (November 1, 2008), we operated 1,366 BIG
LOTS stores in 47 states. We also sell merchandise via the internet
at http://www.biglots.com/. Wholesale operations are conducted
through BIG LOTS WHOLESALE, CONSOLIDATED INTERNATIONAL, and
WISCONSIN TOY and with online sales at
http://www.biglotswholesale.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 current economic and credit
crisis, 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)
NOVEMBER 1, NOVEMBER 3, 2008 2007 (Unaudited) (Unaudited) ASSETS
Current assets: Cash and cash equivalents $39,236 $41,776
Inventories 957,979 989,742 Deferred income taxes 57,899 65,006
Other current assets 68,202 65,989 Total current assets 1,123,316
1,162,513 Property and equipment - net 494,369 491,780 Deferred
income taxes 45,964 50,443 Other assets 19,374 22,308 $1,683,023
$1,727,044 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Current maturities of long-term obligations $269,100
$0 Accounts payable 385,761 386,981 Property, payroll and other
taxes 72,143 69,186 Accrued operating expenses 48,790 117,879
Insurance reserves 36,204 38,257 KB bankruptcy lease obligation 0
8,768 Accrued salaries and wages 37,450 34,884 Income taxes payable
724 13,914 Total current liabilities 850,172 669,869 Long-term
obligations 0 138,900 Deferred rent 28,545 32,604 Insurance
reserves 44,899 43,961 Unrecognized tax benefits 25,510 31,052
Other liabilities 32,490 35,386 Shareholders' equity 701,407
775,272 $1,683,023 $1,727,044 BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) 13 WEEKS ENDED 13 WEEKS ENDED NOVEMBER 1,
2008 NOVEMBER 3, 2007 % % (Unaudited) (Unaudited) Net sales
$1,021,580 100.0 $1,030,638 100.0 Gross margin 406,262 39.8 411,806
40.0 Selling and administrative expenses 366,505 35.9 367,806 35.7
Depreciation expense 19,632 1.9 21,268 2.1 Operating profit 20,125
2.0 22,732 2.2 Interest expense (1,635) (0.2) (235) (0.0) Interest
and investment income 10 0.0 578 0.1 Income from continuing
operations before income taxes 18,500 1.8 23,075 2.2 Income tax
expense 6,142 0.6 8,702 0.8 Income from continuing operations
12,358 1.2 14,373 1.4 Loss from discontinued operations, net of tax
benefit of $64 and $48, respectively (110) (0.0) (75) (0.0) Net
income $12,248 1.2 $14,298 1.4 Earnings per common share - basic
Continuing operations $0.15 $0.14 Discontinued operations 0.00 0.00
Net income $0.15 $0.14 Earnings per common share - diluted
Continuing operations $0.15 $0.14 Discontinued operations 0.00 0.00
Net income $0.15 $0.14 Weighted average common shares outstanding
Basic 81,255 101,188 Dilutive effect of share-based awards 1,129
1,055 Diluted 82,384 102,243 BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) 39 WEEKS ENDED 39 WEEKS ENDED NOVEMBER 1,
2008 NOVEMBER 3, 2007 % % (Unaudited) (Unaudited) Net sales
$3,278,358 100.0 $3,243,928 100.0 Gross margin 1,304,857 39.8
1,279,793 39.5 Selling and administrative expenses 1,124,246 34.3
1,116,315 34.4 Depreciation expense 58,868 1.8 64,860 2.0 Operating
profit 121,743 3.7 98,618 3.0 Interest expense (4,153) (0.1) (432)
(0.0) Interest and investment income 36 0.0 5,180 0.2 Income from
continuing operations before income taxes 117,626 3.6 103,366 3.2
Income tax expense 44,635 1.4 37,834 1.2 Income from continuing
operations 72,991 2.2 65,532 2.0 Income (loss) from discontinued
operations, net of tax (benefit) expense of ($123) and $581,
respectively (209) (0.0) 914 0.0 Net income $72,782 2.2 $66,446 2.0
Earnings per common share - basic Continuing operations $0.90 $0.62
Discontinued operations 0.00 0.01 Net income $0.90 $0.63 Earnings
per common share - diluted Continuing operations $0.89 $0.61
Discontinued operations 0.00 0.01 Net income $0.89 $0.62 Weighted
average common shares outstanding Basic 81,043 105,866 Dilutive
effect of share-based awards 1,064 1,329 Diluted 82,107 107,195 BIG
LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In thousands) 13 WEEKS ENDED 13 WEEKS ENDED Nov. 1,
2008 Nov. 3, 2007 (Unaudited) (Unaudited) Net cash used in
operating activities ($106,120) ($52,640) Net cash used in
investing activities (22,579) (18,707) Net cash provided by
financing activities 124,414 4,484 Decrease in cash and cash
equivalents (4,285) (66,863) Cash and cash equivalents: Beginning
of period 43,521 108,639 End of period $39,236 $41,776 BIG LOTS,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands) 39 WEEKS ENDED 39 WEEKS ENDED Nov. 1, 2008
Nov. 3, 2007 (Unaudited) (Unaudited) Net cash provided by (used in)
operating activities ($5,521) $45,040 Net cash used in investing
activities (75,101) (38,118) Net cash provided by (used in)
financing activities 82,727 (246,803) Increase (decrease) in cash
and cash equivalents 2,105 (239,881) Cash and cash equivalents:
Beginning of period 37,131 281,657 End of period $39,236 $41,776
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, for Big Lots, Inc. Web site:
http://www.biglots.com/
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