Broadline closeout retailer Big Lots Inc. (BIG) on Wednesday reported that lower U.S. comparable store sales as well as a loss from its newly acquired Canadian operations dragged its first-quarter profit down, below analysts' estimates. Top line also fell below Wall Street view, despite a growth. Projecting that the anticipated loss in its Canadian operations would hurt second-quarter profit, the company trimmed its fiscal 2012 forecast.
Further, the company announced that its Board of Directors on Tuesday approved a new share repurchase program of up to $200 million of its shares.
For the first quarter, net income was $40.75 million or $0.63 per share, lower than prior year's $52.47 million or $0.70 per share.
Excluding a charge of $3.4 million or $0.05 per share related to an inventory accounting change, adjusted income from continuing operations was $44.2 million or $0.68 per share. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude one-time items.
The company generated increased adjusted profit from its U.S. operations, partly offset by a loss from the Canada operations, which were acquired on July 18, 2011.
Consolidated net sales increased to $1.29 billion from $1.23 billion a year before, but missed Wall Street analysts' estimate of $1.30 billion for the quarter.
During the period, net sales for U.S. operations increased 2.8 percent, despite a 0.8 percent drop in comparable store sales for U.S. stores open at least fifteen months.
On a consolidated basis, first-quarter end inventory grew 8 percent reflecting growth in the number of U.S. stores along with Canadian acquisition.
Looking ahead to the second quarter, Big Lots projects income from continuing operations between $0.37 and $0.42 per share, lower than last year's $0.50 per share, whereas analysts anticipate earnings of $0.54 per share.
The company expects U.S. comparable store sales in a range between slightly positive to slightly negative and total U.S. sales increase in the range of 3 percent to 4 percent. However, the growth should be offset by an anticipated loss in the Canadian segment.
Citing the first-quarter operating results and expectations for the second quarter, Big Lots now expects fiscal 2012 adjusted income from continuing operations in the range of $3.25 to $3.40 per share, versus its prior range of $3.40 to $3.50 per share. Analysts project earnings of $3.33 per share for the full year. Last year profit was $2.99 per share.
Adjusted income from U.S. operations is projected in the range of $3.50 to $3.60 per share, lower than prior guidance of $3.63 to $3.73 per share. This is based on expectations for U.S. comparable store sales in the range of flat to a 1 percent increase and a total U.S. sales increase in the range of 5.5 percent to 6.5 percent.
In pre-market activity, Big Lots shares are currently trading at $32.67, down $2.12 or 6.09 percent.
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