Friday, December 3, 2010

Big Lots Inc. (NYSE: BIG): Q3 Earnings Preview

. Friday, December 3, 2010

By Stock Wizard

Big Lots Inc. (NYSE: BIG) is scheduled to release its third-quarter earnings before the opening bell on Friday, December 3, 2010. Analysts, on average, expect the company to report earnings of 24 cents per share on revenue of $1.06 billion. In the year ago period, the company reported earnings of 27 cents cents per share on revenue of $1.04 billion.

Big Lots, Inc., through its subsidiaries, operates as a broad line closeout retailer in the United States. The Company’s merchandising categories include Consumables, Home, Furniture, Hardlines, Seasonal, and Other. The company’s closeout format provides it an edge over traditional discount retailers as it offers merchandise assortments to customers at very low prices.

In the preceding second quarter, the Columbus, Ohio-based company's net income was $38.9 million, or 48 cents a share, compared $28.4 million, or 34 cents a share, in the year-ago quarter. Revenue increased 5.1% to $1.14 billion from $1.09 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 47 cents per share on revenue of $1.15 billion.

Early in November, Big Lots said that third quarter comparable store sales for stores open at least two years increased 0.7%, helped primarily by sales growth in furniture and home categories. Third quarter retail sales rose 2.4% to $1.039 million from $1.015 million a year ago.

For the fourth quarter, the company expects comp sales increase in the range of 2% to 4%. The company expects that its fourth quarter gross margin rate will be down to last year, driven by higher domestic and import freight costs and lower IMU in certain deals and nine weeks of Christmas strategies designed to drive traffic to its stores. Big Lots anticipates fourth quarter earnings per share from continuing operations to be in the range of $1.41 to $1.45 per share compared to $1.31 per share last year.

At its last earnings call in August, the company raised its full-year guidance for income from continuing operations to a range of $2.82 to $2.90 per share from the prior guidance of $2.75 to $2.85 per share.

Big Lots is actively managing its capital. With a strengthening business model, it expects to generate significant cash flows in fiscal 2010.

In terms of stock performance, Big Lot shares have gained nearly 5% since the beginning of the year.

Full Disclosure: None.

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