Big Lots Guides Higher

It cites strong inventory management.
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Big Lots (BIG) - Get Report swung to a third-quarter profit and guided higher for the year.

The Columbus, Ohio, closeout retailer made $1.8 million, or 2 cents a share, from continuing operations for the quarter ended Oct. 28, reversing the year-ago loss of $16 million, or 14 cents a share. Sales rose to $1.05 billion from $991 million a year earlier. Excluding certain legal costs, latest-quarter earnings were 7 cents a share.

Analysts surveyed by Thomson Financial were looking for a 3-cent loss on sales of $1.02 billion.

Inventory ended the quarter at $995 million, down 9% or $95 million compared to last year. Lower inventory value resulted from a decline in store count along with a 2% decline in comparable store inventory levels year over year. The company said it achieved record inventory turnover results driven by improving inventory management and timely flow of merchandise along with strength in comparable store sales. Inventory turnover performance combined with improving operating results resulted in cash flow improvement for the third quarter compared to last year. Cash outflow (defined as cash provided by operating activities less cash used in investing activities) for the third quarter of fiscal 2006 was $51 million compared to approximately $74 million of cash outflow during the same period last year.

Big Lots said it expects to make 62 to 67 cents a share for the fourth quarter, above the 59-cent Thomson target. Sales should be $1.5 billion to $1.53 billion, beating the $1.44 billion Wall Street estimate.