Big Lots Reports Lighter-Than-Expected Q3 Loss (BIG)

Closeout retailer Big Lots Inc (NYSE: BIG) swung into losses in the fiscal third-quarter as decline in margins along with flagging sales hurt company’s top line and bottom line; however, shares  climbed nearly 7.5% in premarket trading as losses were lighter-than-expected.

The Company also raised its outlook on full-year earnings to $2.86 to $3.05 a share, from its earlier guidance of $2.80 to $2.95 a share.

For the fourth quarter, Big Lots’ expect earnings between $1.91 and $2.10 a share. Analysts polled by Thomson Reuters, on average, were expecting earnings of $2.02 a share.

Big Lots, which assist manufacturers by reducing their overstocked and discounted goods, has been witnessing squeeze on its bottom line due to falling demand for higher-margin products such as furniture, seasonal goods even as competition from on-line sellers and other closeout retailers increased.

Just like its larger rival Wal-Mart Stores Inc (NYSE: WMT), Big Lots’ focus is on cost conscious consumers who looks for a best deal.

Now in order to catch up with its rivals and add more variety into its consumer goods segment the company is trying several new products such as coolers, freezers. In addition, the company is considering promotional activities like rewards loyalty program to retain customers  while  it also in the midst of store remodeling as a part of three year strategic plan, running until 2015.

For the quarter ended October 27, the Company reported a loss of $5.99 million, or 10 cents a share, against a profit of $4.19 million, or six cents a share, in the year earlier quarter.

Earlier in August, Big Lots had projected a loss of 20 cents to 30 cents a share.

Sales during the period contracted 0.4% to $1.13 billion, a tad short of analysts’ consensus estimate of $1.14.

Gross margin stood at 38.1%, down from 39%, in the year earlier period.

Same-store sales–, a key gauge on retailer’s performance –fell 4.6%.

Big Lots’ Canadian operations trimmed down its loss to $4.31 million on sales of $39 million. The sales grew by 81% over the last year.

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