Cautious Consumers Crimp Big Lots
By Jennifer Marks -- Home Textiles Today, 12/8/2008 12:00:00 AM
Columbus, Ohio —
Big Lots' third quarter followed a pattern several retailers reported for the past 13 weeks: a steadily eroding comp sales trend followed by a Black Friday uptick that failed to compensate for earlier weakness.
"It's less about the store traffic and the demographics and more about what customers were purchasing and putting into the basket," chairman, president and ceo Steve Fishman said during the Big Lots conference call with analysts last week. "What is consistent [across the chain's demographics] is that shoppers appear to be more cautious about what they're buying and when they're buying it."
Big Lots' profit for the quarter ended Nov. 1 fell 15% to $12.2 million. Sales dipped 0.9% to $1.02 billion, while comps slid 0.2%.
Fishman pointed to furniture and electronics as the store's strong categories, citing seasonal and toys as among the weakest. But consumables led all categories and accounted for 30% of Big Lots' merchandise mix during the quarter.
Still, Fishman was upbeat about the opportunities ahead, saying the weak economy is washing out competitors and simultaneously unleashing a raft of off-price buying opportunities.
"There are approximately 1,000 stores that are in GOB mode right now. A number of those from our perspective are direct competitors that we have faced on a number of deals," he said. "So we kind of think from a market share perspective we continue to get stronger and stronger and stronger."
Looking ahead to next year, Fishman said Big Lots expects to see container rates ease up in the face of lower fuel prices, and anticipates merchandise price reductions as raw material prices come down and China restores some rebates to manufacturers there.
Nonetheless, Big Lots last week lowered its guidance for the fourth quarter and full fiscal year. The 1,366-unit chain now expects 4Q earnings per share on continuing operations of 90 to 99 cents, down from $1.02 to $1.09, anticipating a comp decline of 2% to 4%.
For the year, Big Lots expects EPS of $1.79 to $1.88. Earlier, it expected EPS of $1.90 to $2.
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