Strong Demand Drives Big Lots Comps

Big Lots said it has seen a continuation of the strong demand that began in mid-April, with quarter-to-date comparable sales through fiscal June increasing well ahead of expectations.

For the second quarter of fiscal 2020, the company now expects comparable sales to be up by a mid-to-high twenties percentage, which reflects anticipated moderation from quarter-to-date trends. The company expects adjusted diluted earnings per share, which excludes a gain of approximately $11.00 per share on the sale of its four distribution centers as part of its previously announced sale/leaseback transactions, to be in the range of $2.50 to $2.75, compared to $0.53 of adjusted diluted EPS for the second quarter of fiscal 2019. The outlook reflects an expected gross margin rate above last year and continued strong control of expenses, notwithstanding the inclusion of additional costs related to COVID-19.

With these positive business trends, and the recent closure of the sale/leaseback transactions, the company noted that it is in a strong liquidity position, with current cash and short-term investments of approximately $890 million, and no amounts drawn on its $700 million revolving credit facility. The company’s cash position does not yet reflect expected tax payments of approximately $170 million related to the sale/leaseback transactions. In addition, the company’s cash position has been positively impacted by low inventory levels due to strong sales trends.

Bruce Thorn, president and CEO of Big Lots, said, “We are very pleased with our quarter-to-date performance and our outlook for the full quarter. Our assortment continues to resonate across all of our merchandise categories, while we continue to grow our customer base and accelerate sign-ups to our Big Rewards program. I could not be prouder of the incredible job our team continues to do in adapting and responding to the unprecedented challenges from the COVID-19 crisis. Our number one priority remains serving customers and communities in a safe and healthy environment. Looking forward, our strong performance over the past few months gives us growing confidence that we are well positioned to navigate through the upcoming quarters and beyond. In addition, our strong liquidity position will support our ability to return cash to shareholders through share repurchases, while continuing to invest in high-return growth initiatives under Operation North Star.”