Big Lots home biz sees uptick despite faulty Q4
Cecile Corral -- Home Textiles Today, March 7, 2014
Columbus, Ohio – Thanks in part to the recent restructuring of the home division’s buying and merchandising operation,
Big Lots’ soft home and furniture areas made strides during the fourth quarter.
During the discount chain’s earnings call this morning, ceo David Campisi – who is marking his 10th month with the company in the post – offered a snapshot of the performances of these segments.
“Looking at our home business, we restructured our buying teams and how we go to market, and this change will ultimately help us better merchandise the store,” he said. “In the fourth quarter we started to see an improvement in the soft home area, the fashion side, and that has continued into February.”
Furniture, too, was encouraging, he continued.
“Even though our comps were up slightly in our traditional furniture business, I was pleased with our overall merchandise content, specifically in regions of the country with normal weather patterns,” Campisi said. “Our furniture business was positive. Strategically, this category is very important to our success, and I am confident we have strong content and inventory [and we are] well positioned…to maximize on it in the first quarter.”
This year, Big Lots will be focused on rolling out its furniture financing program to about 85% of its U.S. stores.
“We’ve tested this concept for over six months and we’ve consistently experienced high-single and low-double-digit increases…it’s very, very encouraging,” he said.
Also this year, the company is getting started on rebooting its e-commerce efforts. Currently in “week 3” of its design phase, Big Lots expects e-commerce to be “an initiative for 2015,” Campisi said.
The company has a “desire to move swiftly toward an appropriate multi-channel strategy. We know we are behind [other retailers]…and we know [the customer] wants to buy online…So this is not an if, but a when for us. So stay tuned. We think this is a big break-through for our customer and our brand.”
Not surprisingly, consumables and food were the company’s strongest categories for during the recent quarter, with comps up mid single digits for each.
Net income for the quarter, ended Feb. 1, dove 30% to $84.4 million from $120.3 million, and diluted earnings per share came in at $1.45 versus $2.10 in the year-ago period.
Net sales decreased 7.3% to $1.57 billion compared to $1.69 billion last year, and comparable store sales for U.S. stores open at least 15 months decreased 3.0% for the quarter, consistent with guidance. The company noted that excluding the deferred tax benefit associated with the loss on its shuttered Canadian operation, adjusted income from continuing U.S. operations totaled $84.1 million, or $1.45 per diluted share (non-GAAP) compared to guidance of $1.40 to $1.55 per diluted share, and income from continuing U.S. operations of $119.9 million, or $2.08 per diluted share (non-GAAP), last year.
Big Lots’ Canadian operations suffered a net loss of $27.0 million, or $0.47 per diluted share (non-GAAP), for the fourth quarter, compared to guidance of a net loss of $0.65 to $0.75 per diluted share – a “favorable result,” the company said, “from the higher sell-through of merchandise at better margins, lower operating expenses, and the timing of recognition of lease liability charges and certain asset write downs.”
For fiscal 2013, net income fell 30% to $125.3 million from $177.1 million, and diluted earnings per share came in at $2.16 versus $2.93 in the prior year.
Net sales for the year declined 6% to $1.63 billion from $1.74 billion.
Big Lots’ guidance for the first quarter of fiscal 2014 includes income from continuing U.S. operations in the range of $0.40 to $0.45 per diluted share (non-GAAP), compared to last year's $0.70 per diluted share (non-GAAP). This guidance assumes U.S. comparable store sales will be in a range of slightly positive to slightly negative.
The company added that with the closure of all Canadian stores by the end of February 2014, Big Lots estimates a first quarter loss from its discontinued Canadian operations in the range of $37 million to $41 million, or 64 to 71 cents per diluted share.
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