Why Big Lots, Inc. Shares Popped Today

The discount retailer surged as first-quarter earnings blew past expectations. Here's what you need to know.

Jeremy Bowman
Jeremy Bowman
May 27, 2016 at 1:43PM
Consumer Goods

What: Shares of Big Lots, Inc. (NYSE:BIG) were flying higher today after the discount retailer delivered a better-than-expected earnings report. As of 11:37 a.m. EDT, the stock was up 9.7%. 

So what: The closeout retailer posted earnings of $0.82 per share, ahead of estimates at $0.70, and better than $0.61 in the quarter a year ago. Comparable sales grew 3%, increasing for the ninth consecutive quarter, as overall revenue increased 2.5% to $1.31 billion, in line with estimates at $1.3 billion.

CEO David Campisi summed up the quarter, saying he was "very pleased" with the performance, and added that the core customer continues to respond positively to improved merchandise selections and better in-store execution.

Now what: Big Lots' performance was particularly impressive considering the challenges across much of the retail industry, pushing sales down at sectors including department stores, apparel, and electronics. Other low-price retailers like Dollar General and Wal-Mart also delivered strong results, indicating consumers may have been doing more bargain hunting in the first quarter.

Looking ahead, Big Lots expects earnings per share of $0.42-$0.47 for the current quarter and $3.35-$3.50 for the year, representing an 11%-16% increase from the year before. Analysts had expected a full-year EPS of $3.30. With comparable sales in the low single digits projected for the year and little growth outside of existing stores, Big Lots' future prospects seem modest, but an aggressive share buyback program and savvy cost management have helped boost profits. With a modest P/E, the company should continue to deliver results for investors.