Big Lots stock soars on Q4 earnings beat

COLUMBUS, Ohio — Big Lots stock was trading up more than 15% in late morning trading as the value-oriented retailer beat fiscal fourth-quarter earnings guidance, posting strong gains in net income and same-store sales.

The 1,401-store retailer also acknowledged its acquisition of the Broyhill name and design rights, noting plans to launch the brand in its stores in the first quarter of 2020.

Net income for the period ended Feb. 2, increased 3.1% to $108 million from $104.8 million for the same period a year ago. On a per-share basis earnings grew to $2.68 from $2.46.

Net sales declined 2.6% to $1.6 billion from $1.64 billion for the fourth quarter last year, while same-store sales increase 3.1%, with the retailer noting a lower store count this past quarter and an additional week of operations included in the previous year’s fourth quarter.

“After a slow start to the quarter, we experienced meaningful sales acceleration in December and January driving Q4 sales and earnings above the high end of our guidance,” said Big Lots President and CEO Bruce Thorn.

“Our holiday plans were well-executed and led to broad-based growth across the majority of our merchandise categories,” he said, noting the comp-store sales growth. “Our merchandise category results were supplemented by continued strong performance in our store of the future remodel efforts and our marketing and stores’ focus on growth of our rewards loyalty program.”

Furniture, which receives front-and-center billing in Big Lots’ new store format, continued to be a top performer, with same-store sales up s in all four subcategories: upholstery, case goods, mattresses and ready-to-assemble furniture.

The retailer has been undertaking a strategic review of its competitive positioning and “our opportunities for long-term, profitable sales growth,” Thorn said, adding later that it has developed a three-year playbook that will have it doubling down on the things consumers recognize the retailer for — price, value, and treasure hunt — while building on others. That includes an accelerated rollout of the store-of-the-future model, expansion of its buy-online-pick-up-in-store program — including furniture — and continued expansion of its e-commerce business, something Thorn conceded Big Lots was late in developing.

For the full year, Big Lots’ net income decreased 17.4% to $156.9 million, while sales decreased 0.5% to $5.24 billion, the result of a lower store count year-over year and an extra week of operations in the previous fiscal year. Same-store sales increased 1.2%.

For the current fiscal year, Big Lots projected adjusted earnings per share in the $3.55 to $3.75 range (compare with $4.04 this past year) and a comparable store sales increase in the low single-digit range.

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