Company Provides Guidance for 2006 COLUMBUS, Ohio, Feb. 22
/PRNewswire-FirstCall/ -- Big Lots, Inc. (NYSE:BLI) today reported
fourth quarter fiscal 2005 net income of $14.7 million, or $0.13
per diluted share, compared to net income of $57.2 million, or
$0.51 per diluted share for the same period of fiscal 2004. For
fiscal year ended January 28, 2006, the Company reported a net loss
of $10.1 million, or $0.09 per share, compared to net income of
$23.8 million, or $0.21 per diluted share for fiscal year 2004. The
results for the fourth quarter and fiscal 2005 include charges
related to the incremental store closing of underperforming
locations previously announced by the Company on October 6, 2005.
The charges to close these incremental stores along with their
operating results have been classified as discontinued operations
for all periods being presented and are discussed in more detail
later in this release. (Logo:
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO )
Excluding the results classified as discontinued operations, fourth
quarter fiscal 2005 income from continuing operations was $37.7
million, or $0.33 per diluted share, compared to income from
continuing operations of $56.7 million, or $0.50 per diluted share
for the fourth quarter of fiscal 2004. For fiscal 2005, the Company
reported income from continuing operations of $15.7 million, or
$0.14 per diluted share, compared to income from continuing
operations of $31.4 million, or $0.27 per diluted share, for the
fiscal year ended January 29, 2005. Net sales for the fourth
quarter ended January 28, 2006 were $1,394.9 million, a 6.1%
increase compared to net sales of $1,314.1 million for the same
period of fiscal 2004. Comparable store sales for stores open at
least two years as of the beginning of the fiscal year increased
2.5% for the quarter consisting of a 5.1% increase in the value of
the average basket and a 2.6% decrease in customer transactions.
Net sales for the fiscal year 2005 increased 6.8% to $4,429.9
million compared to $4,149.3 million in fiscal 2004. Comparable
store sales increased 1.8% for the year with the value of the
average basket increasing 4.6% and the number of customer
transactions decreasing 2.8%. The 2.5% increase in comparable store
sales for the fourth quarter of fiscal 2005 was driven by strength
in the average basket, which increased 5.1% and experienced growth
in both units sold per transaction and average item retail. From a
merchandising perspective, home and furniture were the best
performing categories. The Company's home business benefited from
an increased level of closeout merchandise during the fourth
quarter, while the furniture category was driven by an improving
overall assortment and strong performance of advertised items.
After a slow start to the fourth quarter in November, seasonal
sales trends improved as the Company became more promotional than
originally planned. Additionally, clearance markdowns related to
the Company's previously announced merchandising initiatives
positively impacted comparable store sales results by approximately
1% for the quarter. Partially offsetting the basket strength was
softness in customer traffic, which remains challenging. For the
fourth quarter of fiscal 2005, the Company's operating profit from
continuing operations declined compared to the fourth quarter of
fiscal 2004, as softness in gross margin was partially offset by
100 basis points of expense leverage. From a gross margin
perspective, the Company experienced a higher markdown rate during
the fourth quarter of fiscal 2005 compared to fiscal 2004 due to
significant merchandise clearance activity, coupled with continued
fuel cost pressures impacting transportation expense and the price
of materials in certain merchandise categories. Expenses as a
percent of sales for the fourth quarter of fiscal 2005 improved by
100 basis points compared to last year as the Company benefited
from increased productivity in its stores and distribution centers
while also recognizing certain cost savings as a result of the
Company's previously announced WIN initiatives. The Company ended
the fourth quarter of fiscal 2005 with inventory at $836 million,
down 4% on a comparable store basis to the fourth quarter of fiscal
2004, as an increased level of markdowns and higher inventory
turnover were partially offset by the planned, early delivery of
lawn and garden and summer merchandise to the Company's warmer
weather regions. Bank debt at the end of the fourth quarter of
fiscal 2005 was $6 million, down $154 million compared to last
year, principally due to reduced inventories consistent with a
lower store count and lower levels of capital spending.
Discontinued Operations On October 6, 2005, as a result of a
store-by-store level analytical review of its real estate
portfolio, the Company announced its plans to close an incremental
126 stores that were underperforming locations, producing operating
losses, and not returning value to shareholders. These 126 stores
were incremental to the 40 stores the Company had already
anticipated closing in fiscal 2005 as part of the ordinary course
of its business. Historically, the Company has closed or relocated
approximately 30 to 40 stores per year. Given the significance of
the decision to close approximately 8% of its store base, the
Company began analyzing certain quantitative and qualitative
measures of each store to determine the appropriate financial
reporting for this group of stores. Based on this review, the
Company concluded that the results specifically identifiable to the
incremental store closings, now 130 stores, should be reported as
discontinued operations. For fiscal 2005, the loss from
discontinued operations of $25.8 million, or $0.23 per diluted
share, was principally related to the full-year operating results
of the incremental stores closed coupled with the costs to exit
those locations including: (a) the write-down of property,
inventory, and deferred rent, (b) severance and benefits, and (c)
lease termination costs. For fiscal 2004, the loss from
discontinued operations totaled $7.7 million, or $0.06 per diluted
share, which included the full-year operating results of the closed
stores mentioned above along with certain charges recorded in the
third quarter of fiscal 2004 related to KB Toys, a former division
of the Company. 2006 Outlook The Company anticipates fiscal 2006
earnings of $0.38 to $0.43 per diluted share compared to income
from continuing operations of $0.14 per diluted share for fiscal
2005. The Company's earnings guidance is based on a comparable
store sales increase in the 2% to 3% range with net sales from
continuing operations increasing in the 3% to 4% range compared to
fiscal 2005. The Company estimates expansion in the gross margin
rate and leverage of the expense structure will lead to improvement
in the operating results of the business. For fiscal 2006, the
gross margin rate increase is anticipated to be the result of
improvement in the initial mark-up related to the execution of the
merchandising aspects of the Company's previously disclosed WIN
strategy combined with a slight decline in the markdown rate
compared to fiscal 2005. Additionally, the Company expects that a
comparable store sales increase of approximately 2% is necessary to
leverage its expense structure. The Company believes that
efficiencies in stores and distribution centers along with its
previously announced WIN-related cost reductions will be partially
offset by external cost pressures such as transportation expense,
cost of fuel and utilities and other inflationary increases. This
guidance includes an anticipated positive impact from the Company's
53-week retail calendar in fiscal 2006, partially offset by the
effect of SFAS No. 123(R), "Share-Based Payment" related to the
recognition of share-based compensation expense. The Company
expects interest expense for fiscal 2006 to be approximately $6 to
$7 million and the income tax rate is estimated to be in the range
of 36.0% to 40.0%. Capital expenditures are expected to be in the
$50 to $55 million range with depreciation expense estimated at
$105 to $110 million. The Company estimates this financial
performance combined with an inventory turnover of 3.1 times should
result in free cash flow of approximately $120 million, prior to
the Company's $150 million share repurchase program detailed later
in this release. For the first quarter of fiscal 2006, the
Company's plan calls for a 1% to 3% comparable store sales
increase. Net sales are estimated in the range of $1,075 million to
$1,095 million, an increase of 3% to 5% compared to net sales from
continuing operations in the first quarter of fiscal 2005. Based on
this level of sales performance, the Company's earnings are
estimated to be in the range of $0.04 to $0.07 per diluted share,
compared to income from continuing operations for the first quarter
of fiscal 2005 of $0.06 per diluted share. Effective with the
beginning of fiscal 2006, the Company announced that it will begin
to report sales on a quarterly basis, rather than on a monthly
basis, and expects to report sales for the first quarter of fiscal
2006 on Thursday, May 4, 2006. $150 Million Share Repurchase
Program The Company also announced today its Board of Directors
authorized the repurchase of up to $150 million of the Company's
common shares as it believes that the repurchase plan builds value
for shareholders and that the size of the repurchase program
approximates the Company's fiscal 2005 free cash flow and fits well
within the Company's capital structure. The Company said it expects
the purchases to be made from time to time in the open market or in
privately negotiated transactions with such purchases to be
completed within the next twelve months. Common shares acquired
through the repurchase program will be available for general
corporate purposes. Conference Call/Webcast Big Lots, Inc. will
host a conference call today at 8:30 a.m. Eastern Time to discuss
the Company's fourth quarter and fiscal 2005 financial results, its
outlook for fiscal 2006, and provide an update on its WIN strategy.
The Company invites you to listen to the live webcast of the
conference call. The Company is hosting the live webcast at
http://www.biglots.com/. If you are unable to join the live
webcast, an archive of the call will be available at
http://www.biglots.com/ in the Investor Relations section of our
website two hours after the call ends and will remain available
through midnight on Wednesday, March 8. A replay of the call will
be available beginning February 22 at 12:00 noon (Eastern Time)
through March 8 at midnight by dialing: 1.800.207.7077 (United
States and Canada) or 1.913.383.5767 (International or
metro-Seattle). The PIN number is 4596. Big Lots, Inc. is the
nation's largest broadline closeout retailer. As of the end of
fiscal 2005, the Company operated a total of 1,401 BIG LOTS stores
in 47 states. Wholesale operations are conducted through BIG LOTS
WHOLESALE, CONSOLIDATED INTERNATIONAL, WISCONSIN TOY and with
online sales at http://www.biglotswholesale.com/. The Company's
website is located at http://www.biglots.com/. Cautionary Statement
Concerning Forward-Looking Statements for Purposes of "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information, so long as
those statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those discussed in the statements. The Company
wishes to take advantage of the "safe harbor" provisions of the
Act. This release, as well as other verbal or written statements or
reports made by or on the behalf of the Company, may contain or may
incorporate material by reference which includes forward-looking
statements within the meaning of the Act. By their nature, all
forward-looking statements involve risks and uncertainties.
Statements, other than those based on historical facts, which
address activities, events, or developments that the Company
expects or anticipates will or may occur in the future, including
such things as future capital expenditures (including the amount
and nature thereof), business strategy, expansion and growth of the
Company's business and operations, future earnings, store openings
and new market entries, anticipated inventory turn, and other
similar matters, as well as statements expressing optimism or
pessimism about future operating results or events, are
forward-looking statements, which are based upon a number of
assumptions concerning future conditions that may ultimately prove
to be inaccurate. The words "believe," "anticipate," "project,"
"plan," "expect," "estimate," "objective," "forecast," "goal,"
"intend," and similar expressions generally identify
forward-looking statements. The forward-looking statements are and
will be based upon management's then-current views and assumptions
regarding future events and operating performance, and are
applicable only as of the dates of such statements. Although the
Company believes the expectations expressed in forward-looking
statements are based on reasonable assumptions within the bounds of
its knowledge of its business, actual events and results may
materially differ from anticipated results described in such
statements. The Company's ability to achieve the results
contemplated by forward- looking statements is subject to a number
of factors, any one, or a combination, of which could materially
affect the Company's business, financial condition, results of
operations, or liquidity. These factors may include, but are not
limited to: - the Company's ability to source and purchase
merchandise on favorable terms; - interruptions and delays in
merchandise supply from the Company's and its vendors' foreign and
domestic sources; - risks associated with purchasing, directly or
indirectly, merchandise from foreign sources, including increased
import duties and taxes, imposition of more restrictive quotas,
loss of "most favored nation" trading status, currency
fluctuations, work stoppages, transportation delays, foreign
government regulations, political unrest, natural disasters, war,
terrorism, and trade restrictions including retaliation by the
United States against foreign practices; - the ability to attract
new customers and retain existing customers; - the Company's
ability to establish effective advertising, marketing, and
promotional programs; - economic and weather conditions which
affect buying patterns of the Company's customers; - changes in
consumer spending and consumer debt levels; - the Company's ability
to anticipate buying patterns and implement appropriate inventory
strategies; - continued availability of capital and financing on
favorable terms; - competitive pressures and pricing pressures,
including competition from other retailers; - the Company's ability
to comply with the terms of its credit facilities (or obtain
waivers for noncompliance); - significant interest rate
fluctuations and changes in the Company's credit rating; - the
creditworthiness of the Company's former KB Toys business; - the
Company's indemnification and guarantee obligations with respect to
approximately 390 KB Toys store leases and other real property
leases, some or all of which may have been rejected or materially
modified in connection with the KB Toys bankruptcy proceedings, as
well as other potential costs arising out of the KB Toys
bankruptcy; - litigation risks and changes in laws and regulations,
including changes in accounting standards, the interpretation and
application of accounting standards, and tax laws; - transportation
and distribution delays or interruptions that adversely impact the
Company's ability to receive and/or distribute inventory; - the
impact on transportation costs from the driver hours of service
regulations adopted by the Federal Motor Carriers Safety
Administration that became effective in January 2004; - the effect
of fuel price fluctuations on the Company's transportation costs
and customer purchases; - interruptions in suppliers' businesses; -
the Company's ability to achieve cost efficiencies and other
benefits from various operational initiatives and technological
enhancements; - the costs, interruptions, and problems associated
with the implementation of, or failure to implement, new or
upgraded systems and technology; - the effect of international
freight rates and domestic transportation costs on the Company's
profitability; - the Company's ability to secure suitable new store
locations under favorable lease terms; - the Company's ability to
successfully enter new markets; - delays associated with
constructing, opening, and operating new stores; - the Company's
ability to attract and retain suitable employees; and - other risks
described from time to time in the Company's filings with the SEC,
in its press releases, and in other communications. The foregoing
list is not exhaustive. There can be no assurances that the Company
has correctly and completely identified, assessed, and accounted
for all factors that do or may affect its business, financial
condition, results of operations, and liquidity. Additional risks
not presently known to the Company or that it believes to be
immaterial also may adversely impact the Company. Should any risks
or uncertainties develop into actual events, these developments
could have material adverse effects on the Company's business,
financial condition, results of operations, and liquidity.
Consequently, all of the forward-looking statements are qualified
by these cautionary statements, and there can be no assurance that
the results or developments anticipated by the Company will be
realized or that they will have the expected effects on the Company
or its business or operations. Readers are cautioned not to place
undue reliance on forward-looking statements, which speak only as
of the date thereof. The Company undertakes no obligation to
publicly release any revisions to the forward-looking statements
contained in this release, or to update them to reflect events or
circumstances occurring after the date of this release, or to
reflect the occurrence of unanticipated events. Readers are
advised, however, to consult any further disclosures the Company
may make on related subjects in its public announcements and SEC
filings. BIG LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands) JANUARY 28 JANUARY 29 2006 2005
(Unaudited) (Audited) ASSETS Current Assets: Cash and cash
equivalents $1,710 $2,521 Inventories 836,092 895,016 Deferred
income taxes 78,539 73,845 Other current assets 77,413 63,400 Total
Current Assets 993,754 1,034,782 Property and equipment - net
584,083 648,741 Deferred income taxes 18,609 12,820 Other assets
29,051 37,241 $1,625,497 $1,733,584 LIABILITIES AND SHAREHOLDERS'
EQUITY Current Liabilities: Accounts payable $161,470 $149,777
Property, payroll and other taxes 106,858 102,118 Accrued operating
expenses 68,752 58,792 Insurance reserves 46,474 45,255 KB lease
obligation 27,205 32,498 Accrued salaries and wages 25,171 20,860
Other current liabilities 593 3,213 Total Current Liabilities
436,523 412,513 Long-term obligations 5,500 159,200 Deferred rent
42,288 39,533 Insurance reserves 42,037 35,955 Other liabilities
20,425 10,893 Shareholders' equity 1,078,724 1,075,490 $1,625,497
$1,733,584 BIG LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except per share data) 13
WEEKS ENDED 13 WEEKS ENDED JANUARY 28 JANUARY 29 2006 % 2005 %
(Unaudited) (Unaudited) Net sales $1,394,902 100.0 $1,314,088 100.0
Gross margin 517,023 37.1 529,345 40.3 Selling and administrative
expenses 426,831 30.6 415,324 31.6 Depreciation expense 27,394 2.0
25,628 2.0 Operating income 62,798 4.5 88,393 6.7 Interest expense
1,424 0.1 1,644 0.1 Interest income (282) (0.0) (123) (0.0) Income
from continuing operations before income taxes 61,656 4.4 86,872
6.6 Income tax expense 24,003 1.7 30,170 2.3 Income from continuing
operations 37,653 2.7 56,702 4.3 (Loss)income from discontinued
operations, net of tax benefit(expense) of $14,142 and ($315),
respectively (23,001) (1.6) 504 0.0 Net income(loss) $14,652 1.1
$57,206 4.4 Income(loss) per common share - basic Income from
continuing operations $0.33 $0.50 Discontinued operations (0.20)
0.01 Net income(loss) $0.13 $0.51 Weighted average common shares
outstanding 113,428 112,76 Income(loss) per common share - diluted
Income from continuing operations $0.33 $0.50 Discontinued
operations (0.20) 0.01 Net income(loss) $0.13 $0.51 Weighted
average common and common equivalent shares outstanding 114,024
112,903 Note 1: For all periods presented, discontinued operations
includes the results specifically identifiable to 130 stores closed
during fiscal 2005 which meet the criteria of discontinued
operations reporting of Statement of Financial Accounting Standards
No. 144. In connection with closing the 130 stores, the Company
recorded pretax charges, primarily in the fourth quarter of 2005,
of $20 million for the non-cash write down of property and
equipment, inventory and deferred rent; $3 million for severance
and benefits; and $21 million for contract termination costs. BIG
LOTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share data) 2 WEEKS ENDED 52
WEEKS ENDED JANUARY 28 JANUARY 29 2006 % 2005 % (Unaudited) Net
sales $4,429,905 100.0 $4,149,252 100.0 Gross margin 1,731,666 39.1
1,687,138 40.7 Selling and administrative expenses 1,596,136 36.0
1,518,589 36.6 Depreciation expense 108,657 2.5 99,362 2.4
Operating income 26,873 0.6 69,187 1.7 Interest expense 6,272 0.1
24,845 0.6 Interest income (313) (0.0) (618) (0.0) Income from
continuing operations before income taxes 20,914 0.5 44,960 1.1
Income tax expense 5,189 0.1 13,528 0.3 Income from continuing
operations 15,725 0.4 31,432 0.8 (Loss)income from discontinued
operations, net of tax benefit(expense) of $15,886 and $5,313,
respectively (25,813) (0.6) (7,669) (0.2) Net income(loss)
($10,088) (0.2) $23,763 0.6 Income(loss) per common share - basic
Income from continuing operations $0.14 $0.28 Discontinued
operations (0.23) (0.07) Net income(loss) ($0.09) $0.21 Weighted
average common shares outstanding 113,240 114,281 Income(loss) per
common share - diluted Income from continuing operations $0.14
$0.27 Discontinued operations (0.23) (0.06) Net income(loss)
($0.09) $0.21 Weighted average common and common equivalent shares
outstanding 113,677 114,801 Note 1: For all periods presented,
discontinued operations includes the results specifically
identifiable to 130 stores closed during fiscal 2005 which meet the
criteria of discontinued operations reporting of Statement of
Financial Accounting Standards No. 144. In connection with closing
the 130 stores, the Company recorded pretax charges, primarily in
the fourth quarter of 2005, of $20 million for the non-cash write
down of property and equipment, inventory and deferred rent; $3
million for severance and benefits; and $21 million for contract
termination costs.
http://www.newscom.com/cgi-bin/prnh/20011026/BIGLOTSLOGO
http://photoarchive.ap.org/ DATASOURCE: Big Lots, Inc. CONTACT:
Timothy A. Johnson Vice President, Strategic Planning and Investor
Relations, +1-614-278-6622 Web site: http://www.biglots.com/
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Big Lots (NYSE:BLI)
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Big Lots (NYSE:BLI)
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