After-tax charges hit Big Lots profit in Q1; sales and earnings beat Street

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After-tax charges hit Big Lots profit in Q1; sales and earnings beat Street

By Dan Berthiaume - 05/31/2019
Big Lots Inc. net income declined during the first quarter of fiscal 2019, but sales and EPS eclipsed Wall Street estimates.

The closeout retailer reported net income of $15.54 million, down 50% from $31.24 million the prior year period. However, after-tax charges related to business transformation and legal settlements cost Big Lots $21.4 million in potential profits. Adjusted earnings per share (EPS) fared better, totaling $0.92, well ahead of Wall Street expectations for EPS of $0.70.

Net sales totaled $1.3 billion, up 2% from $1.27 billion the first quarter of the previous fiscal year and above analyst predictions of $1.29 billion. Same-store sales rose 1.5%, which missed Wall Street expectations for 2.2% growth.

“Our first quarter sales result represents the fourth consecutive quarter of positive comps, which is encouraging in light of the delayed income tax refunds and macro weather challenges in many of our markets,” said Bruce Thorn, president and CEO, Big Lots. “I continue to be very pleased with the progression of certain longer-term strategic elements of our business and their contribution to our near-term results, including the strong performance in our store of the future format, the accelerating sales we're seeing in our new stores, the continued growth of our rewards loyalty program, and our e-commerce business, which had its best quarter life-to-date."

Big Lots is providing initial second quarter guidance for adjusted EPS of $0.35 to $0.45 per diluted share and same-store sales growth in the low single digits. For the full fiscal year, the retailer expects adjusted EPS in the range of $3.70 to $3.85 per diluted share, compared to prior guidance of $3.55 to $3.75 per diluted share, based on single-digit same-store sales growth.