Big Lots sees opportunity in growing textiles sales
May 25, 2006-- Home Textiles Today,
Columbus, Ohio – "We have a huge upside in linens and domestics," said Big Lots chairman and ceo Steve Fishman at the company’s first-quarter conference call this morning. Fishman pointed to mid-single-digit comp store gains in home overall, and high-single-digit comps for domestics.
"You will see more bedding and bath promotion and inventory investment," by Big Lots, Fishman told analysts. Basic tabletop and cookware remain a challenge, he noted, while other home décor categories are improving, but the textiles business is "very, very good." Another major driver is furniture, where "comps were up approximately 10%," the third quarter in a row with a double-digit comp gain for furniture.
Big Lots reported first-quarter sales of $1.09 billion, up 4.7% from a year ago, and first-quarter income from continuing operations of $14.5 million, far exceeding its consensus earnings estimate of 5 cents per share, and twice its earnings from the period a year ago. The 1,400-store discounter cut expenses as a percent of sales by 140 basis points to 38.2%, down from 39.6% in the year-ago period. One key was closing 130 stores in January, said Tim Johnson, vp strategic planning and investor relations.
There was record inventory turn in first quarter, and record cash flow, the company said. Big Lots will continue an aggressive program of closing underperforming stores, and now plans a net reduction of 40 locations this year, up from the 25 originally planned.
Big Lots has been suffering from a loss of momentum in sales of seasonal goods, and still needs to reduce costs, even as high fuel costs are taking their toll. But the company emphasized that gross margin dollars are up, and plans continue to cut costs on everything from real estate and distribution to insurance and advertising. Fishman pointed to success in reducing inventory and getting more "store-ready" merchandise from vendors.
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