Big Lots, Inc. (BIG) recently posted better-than-expected first-quarter 2010 results on the heels of strong sales and effective inventory management. The quarterly earnings of 68 cents a share outdid the Zacks Consensus Estimate by a penny, and soared 54.5% from 44 cents in the prior-year quarter.
The better-than-expected results prompted management to raise its earnings outlook. Big Lots now expects fiscal 2010 earnings in the range of $2.75 to $2.85 per share, up from its previous guidance range of $2.65 to $2.75. The retailer now expects second-quarter 2010 earnings between 44 cents and 49 cents.
Total revenue for the quarter rose 8.2% to $1,235.2 million from the prior-year quarter.
Big Lots operates as a broad line closeout retailer in the United States. The company offers food, health, beauty, plastic, paper, chemical and pet products as well as home decorative products, besides other product lines.
The company’s comparable-store sales sustained its growth momentum in fiscal 2010. After increasing 5.1% in fourth-quarter 2009, comps grew by 6% in the quarter under review. Management now expects comps to rise between 4% and 5% in the second quarter, and between 3.5% and 4.5% in fiscal year 2010. Previously, management predicted fiscal 2010 comps in the range of 3% to 4%.
The operator of 1,367 stores said that operating profit for the quarter rose 49.4% to $90.1 million, whereas operating margin expanded 200 basis points to 7.3%. Management now expects fiscal 2010 operating margin in the range of 7.3% to 7.5%.
Big Lots is actively managing its capital. With a strengthening business model, it now expects to generate cash flow of approximately $220 million in fiscal 2010, up from the previous guidance of $200 million. The company generated cash flow of $96 million during first-quarter 2010.
Big Lots is also returning much of its free cash to shareholders via share repurchases. After authorizing a share repurchase of $150 million in December 2009, the company in March 2010 authorized an additional $250 million, bringing the currently available total to $400 million. The company utilized its $150 million authorization, which lowered the number of shares outstanding by 3.6 million.
The Columbus, Ohio based company ended the quarter with cash and cash equivalents of $260.9 million and shareholders’ equity of $946.9 million. The company did not have any borrowings under its credit facility.
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