Big Lots Raises Outlook After Smaller Q3 Loss

Big Lots Inc. (NYSE: BIG) reported third quarter 2012 results before markets opened this morning. The close-out retailer reported a diluted earnings per share (EPS) loss of $0.10 on revenues of $1.1 billion. In the same period a year ago, Big Lots reported EPS of $0.06 on revenue of $1.12 billion. Today’s results also compare to the Thomson Reuters consensus estimates for a net loss of $0.24 per share and $1.14 billion in revenue.

The company provided updated guidance for the fourth quarter and the full 2012 fiscal year. For the current quarter, Big Lots forecasts EPS of $1.91 to $2.10, above EPS of $1.75 in the fourth quarter of 2011. The forecast assumes a decline in same-store sales of low to mid single digits and an increase of 3% to 7% in total U.S. sales. The consensus EPS estimate calls for a total of $2.02.

For the full fiscal year, Big Lots expects to post adjusted EPS of $2.86 to $3.05. The total excludes a cash charge of $3.4 million that the company took in the first fiscal quarter. The company projects a U.S. same-store sales decline of in the low single digits and an increase in U.S. sales of 1% to 3%. The consensus estimate calls for EPS of $2.80.

The fourth quarter and the fiscal year each have an extra week this year, which will certainly help the company meet its forecasts.

In the third quarter, U.S. same-store sales fell 4.6% and the company’s loss from continuing U.S. operations totaled $1.7 million. In its Canadian division, the company posted a net loss of $11.4 million.

Unlike discount retailers Family Dollar Stores Inc. (NYSE: FDO) or Dollar Tree Inc. (NASDAQ: DLTR), customers at Big Lots are far more likely to be on a kind of bargain treasure hunt, rather than buying from a prepared list. If times get tight, store traffic — and sales — slide.

That said, the store completed a $299 million share buyback in the third quarter, reclaiming 13% of the stores outstanding shares. The company did not announce a new stock repurchase plan.

Shares are up 7% in premarket trading this morning, at $30.00, in a 52-week range of $26.69 to $47.22. Thomson Reuters had a consensus analyst price target of around $34.00 before today’s results were announced.

Paul Ausick