The warehouse stores have been saying it for years, and it seems the mantra is finally sinking in with consumers: Buy in bulk and save. As food and fuel costs spiral up, buying the gigunda-size laundry detergent at your club store stretches your dollar.
It's also working for closeout retailer Big Lots
Like many retailers, Big Lots has been careful about its inventory, which at $725 million was 9% lower than a year ago. It has been able to leverage the increase in same-store sales with lower store counts and inventory management practices that improve turnover.
Still, if results for Wal-Mart
The signs were there last quarter, when the company also posted significant growth, though it wasn't as much as it might have seemed initially. It was still an improvement over that of many competitors, and Big Lots was able to build on it. This time around, it could be said that results are better than what GAAP would suggest, because last year's first quarter included insurance proceeds related to hurricanes that hit in 2005. Of course, Big Lots did have 30 million fewer shares outstanding in the first quarter than it did last year, which contributed about $0.12 a share to the quarter's total per-share profit of $0.42.
Also, the company's stock has been hammered over the past 12 months. At one point, shares traded for less than $13 a stub, and they still trade 8% below where they did a year ago. So the shares the retailer bought back over the past year were discounted as much as the big bottles of shampoo it sells, making that a smart return of value to shareholders. However, as Big Lots continues to shine in the weak economy, the stock is recovering from its cheap values and continued to rebound today, up nearly 10% on the earnings news.
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