Big Lots likes its remodeled stores, e-commerce data
Big Lots is having success with its remodeled stores and e-commerce efforts, the company said Friday in announcing second-quarter earnings. However, its financials missed analysts’ expectations, sending shares down 10 percent on the day.
The Columbus-based discount retailer reported earnings of $24.2 million, or 59 cents per share, on sales of $1.22 billion. Wall Street had expected earnings of 67 cents per share and sales of $1.23 billion.
The company said higher transportation costs played a role in missing expectations.
The difference between the expected increase and the actual increase was $3 million, said Tim Johnson, Big Lots chief administrative officer and chief financial officer. The impact for the quarter was 5 cents per share.
Despite that, “it was a solid quarter for our company,” said Lisa Bachmann, chief merchandising and operating officer. “We had a meaningful sales acceleration coming off a challenging first quarter.”
Comparable-store sales, a key indicator of a retailer’s health, increased 1.6 percent, in line with estimates. Vincent Sinisi, an analyst at Morgan Stanley
The retailer reported that furniture and seasonal merchandise were the strongest departments. “Furniture sales in our ‘Stores of the Future’ were very strong,” Bachmann said. In the remodeled stores, Big Lots has put furniture and seasonal items up front so customers see them immediately upon entering the store.
Big Lots also set a record for the quarter on its e-commerce website, with sales there nearly double from the same quarter last year.
“We’re no longer crawling but moving swiftly and strategically to the next phase of growth,” Bachmann said.
Wall Street took note of the company’s challenges and changes.
“We continue to positively view early signs of the transformation, with Store of the Future remodels continuing to outperform (the rest of the stores),” said Vincent Sinisi, an analyst at Morgan Stanley. “”We continue to believe these remodels will be a more notable driver to (sales growth).”
Big Lots officials said that the closing of Toys R Us has given them several opportunities, both in increased sales of toys and in picking up store locations.
Big Lots does typically plan for more toy sales during the holidays, but Bachmann said the company is looking to make “opportunistic” purchases that might have gone to Toys R Us.
In real estate, Big Lots has already plucked out eight former Toys R Us locations. “Most would not be relocations, but new stores in existing markets, so that’s encouraging,” Johnson said. “It allowed us to be appropriately sized in those markets so we can fully display furniture and seasonal (merchandise).”
Earlier this week, Big Lots announced that it had hired a new CEO, Bruce K. Thorn, to fill the vacancy created by David Campisi’s retirement in April. Johnson said Thorn plans on “enhancing our strategies, not changing direction.”