Big Lots Jumps on Narrower Third-Quarter Loss

Closeout retailer narrows third-quarter loss on the sale of its distribution center and general cost-cutting. Comparable-store sales ease.
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Shares of closeout retailer Big Lots (BIG) - Get Report jumped on Friday after the company posted a narrower-than-expected fiscal-third-quarter loss amid its continued focus on cost-cutting and restructuring, which helped bolster its bottom line.

For the quarter ended Nov. 2 the Columbus, Ohio, company posted an adjusted loss of $7 million, or 18 cents a share, compared with a loss of $6.6 million, or 12 cents a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting a loss of 20 cents a share.

The results included an after-tax gain of $136.6 million, or $3.49 a share, associated with the sale of the company's distribution center in Rancho Cucamonga, Calif., as well as after-tax expense of $2.6 million, or 7 cents a share, associated with the implementation of the company's strategic business transformation. 

Sales totaled $1.17 billion, a 1.6% increase from the year-earlier quarter and in line with the $1.2 billion expected by analysts. Comparable sales decreased 0.1%, compared to the company’s own guidance of approximately flat.

Big Lots finished Q3 with $1.11 billion of inventory, with the 4% increase from a year earlier reflecting planned additions in furniture and soft home goods.

"After a year of restructuring and transition in 2019, and despite the ongoing impact of tariffs, we expect to return to EBIT and EPS growth in 2020, including significant improvement in normalized free cash flow,” CEO Bruce Thorn said in a statement.

Big Lots says it expected fourth-quarter profit of $2.40 to $2.55 a share and a slight increase in comparable-store sales. The FactSet-derived survey is looking for $2.55 a share. In the year-earlier period Big Lots earned $2.68 a share.

Separately Big Lots's board approved a quarterly cash dividend of 30 cents a share, payable on Dec. 30 to shareholders of record as of Dec. 16.

Shares of Big Lots were up 9.6% at $21 in premarket trading on Friday.