Please ensure Javascript is enabled for purposes of website accessibility

Big Lots Inc. Posts Highest Quarterly Growth Pace Since 2011

By Demitri Kalogeropoulos - May 27, 2016 at 2:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Profits soared in the first quarter as the discount retailer's merchandising initiatives met an enthusiastic shopper base.

Image source: Big Lots.

Discount retailer Big Lots (BIG -8.43%) posted first-quarter results on Friday, May 27, that included its strongest sales growth pace in years. In addition, earnings soared as the company held the line on price cuts and kept operating expenses in check.

Here's how the big-picture results stacked up against the prior year: 


Q1 2016 Actuals

Q1 2015 Actuals

YOY Growth


$1.31 billion

$1.3 billion


Net income

$39 million

$32 million


Earnings per share




YOY = year over year. Data source: Big Lots' financial filings.

What happened this quarter?

Big Lots' comparable-store sales rose 3% to hit the high end of management's guidance, marking a solid rebound from the prior quarter's less than 1% uptick. That produced the retailer's ninth consecutive quarter of comps growth (following two straight years of declines in 2012 and 2013).

Here are the other key highlights of the quarter.

  • The 3% comps gain was Big Lots' best quarterly growth pace since the fourth quarter of 2011.
  • Big Lots' store count decreased slightly, which pulled sales growth to just below the 3% comps gain.
  • Gross margin held steady at 39% of sales.
  • Expenses grew at a slower pace than revenue, leading to a jump in bottom line profitability. Net income margin improved to 2.9% of sales from 2.5% a year ago.
  • Inventories ticked lower due to the declining store base and flat inventory numbers at the remaining locations.

What management had to say

"I'm very pleased with our first quarter results," CEO David Campisi said in a press release. Executives highlighted the success they had at improving the customer experience by focusing on segments like furniture, while at the same time producing higher profitability. "[Our core customer] continues to respond positively to our strategic focus on ownable and winnable merchandise categories, improved merchandise presentations and more consistent in-store execution."

Looking forward

Big Lots didn't raise its 2016 sales growth guidance even though the first quarter results show solid momentum in the business. The company still projects "low single digit" comps for the year (comps of around 2% in the current quarter).

However, the retailer is on pace to produce significantly higher earnings than management had initially forecast. Adjusted profit should now come in as high as $3.50 per share, representing 16% growth over 2015 results. Back in March, Campisi and his team capped their earnings target at $3.35 per share, or just 11% growth.

Investors can look for Big Lots to try to extend the merchandising initiatives that worked so well this quarter to keep customer traffic levels rising. A new private-label credit card is also in the works that might boost results beginning this summer.

Over the longer term, executives are pouring resources into building out the company's e-commerce infrastructure. To date, online sales aren't contributing anything to Big Lots' growth, and they aren't expected to help much for the full year. Yet the recently launched website is just now scaling up its product offerings -- at a conservative pace. "We know what [our core customer] wants to buy from us online and we've got one chance to get it right," Campisi told investors in March. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Big Lots, Inc. Stock Quote
Big Lots, Inc.
$26.84 (-8.43%) $-2.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.