Big Lots Shares Spike as Demand Seen Ahead of Expectations

Discount retailer Big Lots expects second-quarter comparable sales to climb in the mid-to-high 20s percent.
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Shares of Big Lots  (BIG) - Get Report spiked on Friday after the discount retailer said second-quarter same-store results were increasing "well ahead of expectations."

The company expects adjusted earnings for the quarter to range $2.50 to $2.75 a share, compared with 53 cents a share in the year-earlier quarter.  

The latest figures exclude an about $11-a-share gain on the sale of its four distribution centers as part of previously reported sale-leaseback transactions.

And Big Lots now expects comparable sales to rise in the mid-to-high twenties percent, moderating from quarter-to-date trends. 

That number is ahead of the 13.3% growth that analysts at FactSet are modeling for the quarter. 

"The company 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," the company said in a statement.

The outlook reflects an expected gross-margin rate above last year's level and "continued strong control of expenses" despite the pandemic.

The company has a current cash position of $890 million with nothing drawn on its $700 million credit facility. That cash position does not reflect expected tax payments of about $170 million stemming from the sale-leaseback deals.

And the cash position has been helped "by low inventory levels due to strong sales trends," Big Lots said.

"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," President and Chief Executive Bruce Thorn said in a statement. 

Shares of Big Lots, Columbus, Ohio, at last check were 17% higher at $39.65. In 2020 through the close of Thursday trading, Big Lots stock was up 18%.