Furniture helps Big Lots beat 1Q income forecast
By Clint Engel -- Furniture Today, May 25, 2003
Columbus, Ohio — Discount retailer Big Lots posted first-quarter net income of $10.2 million or 9 cents per share, down from a year ago but a penny above analysts' forecasts, thanks in part to strong sales of furniture and other high-margin categories.
Earnings were down 16.5% from the same period last year, while sales for the quarter ended May 3 were up 4.9% to $948.4 million. Same-store sales grew 1% — on top of an 11.7% same-store sales increase in the same period a year earlier.
"We are encouraged by sales trends in the later half of the first quarter, particularly the rebound in customer transactions," which drove same-store sales up in April after a weak start to the quarter, said Michael Potter, chairman and chief executive officer of the close-out specialist, whose 1,392 U.S. stores include 48 furniture stores.
Gross margins for the quarter rose slightly to 42%, driven by strong sales of higher-margin categories, including home furnishings and lawn and garden. That strength, however, was offset by disappointing sales for the period in some other categories, including spring decorative merchandise.
Asked how a possible increase in the retail furniture operations of competitor Wal-Mart could affect Big Lot's furniture business, Potter said it's difficult to anticipate. Still, the company remains pleased with the category, which is targeted for growth.
"Competitively, we're in a great position," Potter said, noting that there isn't much national competition in the promotional furniture arena and that the company's varied assortment, which includes bedding and upholstery, is a strength.
"For us, the furniture business continues to be one of our stellar performers," he said in the call. "I think we're properly positioned, and we're taking advantage of regular traffic that's coming through our stores and people that are looking to save money on a large purchase."
Big Lots has said it will add a net 145 furniture departments to new and existing stores this year.
The company's furniture stores appear in Furniture/Today's Top 100 for the first time this year, ranked No. 82 with estimated 2002 furniture, bedding and accessory sales of $68 million. Combined with furniture departments in its other stores, Big Lots did about $440 million in furniture and bedding sales last year and expects to do about $525 million this year, accounting for about 13% of total projected sales.
| 13 weeks ended 5/3 | 2003 | 2002 | Change |
|---|---|---|---|
| Sales | $948,382,000 | $904,141,000 | 4.9% |
| Operating income | 21,194,000 | 25,009,000 | (15.3%) |
| Net income | 10,193,000 | 12,207,000 | (16.5%) |
| Earnings per share | 0.09 | 0.11 | (18.2%) |
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