Viewing weekly ad for: This Big Lots Circular Ad was published on March 3, 2017. This Circular Ad is valid March 4, 2017 through March 11, 2017. This Ad may contain time-sensitive information and offers. Please check with Big Lots to confirm availability. Coupons & Sales on Page 1 Crystal Geyser 24 Pk. Spring Water Victor Allen's Coffee Single Serve Brew Cups Coconut Water, Oil, Sugar, Flour & Chips Sun® Liquid Laundry Detergent 250 Oz. Big Lots® 24 Double Roll Bathroom Tissue Simmons Manhattan Living Room Furniture Collection Simmons Top Gun Living Room Sectional Stylish Sofas or Matching Loveseats ALL SERTA® FULL, QUEEN OR KING MATTRESS SETS Simmons Bellamy Taupe Sofa Simmons Mason Charcoal Sofa Serta DAVIS PERFECT SLEEPER® PLUSH EUROTOP MATTRESS SETS Serta EMORY PERFECT SLEEPER® CUSHION FIRM MATTRESS SETS Serta HARMON PERFECT SLEEPER® SUPER PILLOW TOP MATTRESS SETS Serta PERFECT SLEEPER® BENSON FIRM QUEEN MATTRESS SETS
Add this to your Wishlist - Get local deals in your inbox Sign up with Email Share a link to with a friend via Email. Your Email Has Been SentSorry, the server was unable to process your request. Please check back shortly.SummaryBig Lots reported second quarter results on August 26th and updated full-year guidance for a second time in 2016.Its focus on furniture is proving fruitful. But, the furniture industry is projected to face price battles heading into 2017.Third quarter results in early December and the kick-off to the 2016 holiday buying season should offer a window of insight about whether to invest in Big Lots.The first quarter of the calendar year is a peak selling season for furniture. This worked out well for close-out retailer, Big Lots (NYSE:BIG). Comparable store sales improved 3% year-over-year. Non-GAAP earnings per share for continuing operations improved over 30% from $0.61 in the 2015 first quarter to $0.82. After its first quarter, the company updated its EPS guidance for the full year.
Non-GAAP adjusted EPS was increased to the range of $3.35 to $3.50 as compared to prior guidance of $3.20 to $3.35 2016 Second QuarterBig Lots' results for the second quarter, reported August 26th, were not as shattering. First, the company had closed 19 stores since the 2015 second quarter. As a result, revenue at $1.203 billion declined $6.5 million, or 0.54%, year-over-year. Revenue also missed analysts' average estimate by $20 million. Comparable store sales did manage to increase 0.3%. But, diluted earnings per share of $0.52 beat analysts' average estimate by $0.06. It also beat the high end of the company's guidance by $0.05. Compared to 2015, earnings increased 49% from $0.35. For a second time, Big Lots' increased its full-year estimate for adjusted income from continuing operations to a range of $3.45 to $3.55 per diluted share. Borrowing to Buy Unlike earnings, Big Lots' net income increased only 28% from $17.6 million to $22.7 million. Because Big Lots has been actively repurchasing shares, there were 6.5 million fewer shares outstanding year-over-year.
The company exhausted its authorization in the 2016 second quarter. The difference in share count can be credited for $0.06 per share of diluted earnings, or 35% of the EPS increase. Big Lots' second quarter ended with $58 million in cash and cash equivalents. Debt totaled $258 million. In the 2015 second quarter, cash tallied $57 million but debt was just $223 million. "Our increase in debt year-over-year is directly attributed to higher levels of share repurchase activity this year." The Remainder of The ImpactOf late, Big Lots has placed a specific focus on its best-selling department - furniture. The company expanded the square footage dedicated to the department. In 2014, it also introduced a lease-to-purchase program through Progressive (PRG). Big Lots conducted training for associates on both selling furniture and its Easy Leasing program. In late 2015, the company initiated e-mail and direct mail marketing to existing customers. In May, 2016, the company relaunched its private-label credit card.
In the 2016 second quarter, the furniture department was, again, the top performer. Compared to the 2015 second quarter, sales for upholstery, mattresses, and casegoods increased by a high single-digit percentage. The total increase in the furniture department from 2013 is approximately 25%. Source: Author-created from company data Although the furniture department is performing, total sales for Big Lots are not increasing at the same pace. At year-end 2013, the furniture department represented less than 19% of total sales. Through the first half of 2016, it increased to 24%. Source: Author-created from company data In 2015, Big Lots expanded the leasing program to include purchases from its Soft Home department. It may be too soon to declare the move significant. But, when viewing sales from both the Furniture and Soft Home departments as a percentage of total sales, the growth is evident. "An average Furniture basket is in the $200 range. Easy Leasing is probably in the mid-$600's at this point, if not slightly higher.
The average credit card basket is going to be in that $500 to $600 range as well." Source: Author-created from company data With the Big Lots transformation seemingly dependent on its financing programs, it is natural to question where the apex will be. Management does not believe Easy Leasing has peaked. "The answer is we are absolutely growing the Easy Leasing program with Progressive. They've been a great partner. They continue to invest in our business. We're continuing to test new ways of trying to increase the number of places, or points as they call them, that Jennifer (Big Lots' reference to its customer) can apply to make it easier at the point of checkout. So really, all cylinders are working, at this point, in trying to grow this ownable category. Clearly, it's a differentiator for us." Its private-label credit card is in the early stages. Its roll-out was a purposeful, limited test with specific measurements. "And, in the early results, we are actually exceeding our expectations from an application standpoint and from a dollar penetration standpoint."
Industry PotentialAccording to Furniture Today, the spend on furniture and bedding is expected to hit $106 billion in 2016. The spend broke through the $1B mark for the first time in 2015. Historically, the growth has been primarily fueled by the top players in the industry. Furniture Today tracks the top 100 U.S. furniture stores - those that specialize in home furnishings where sales from furniture, bedding and accessories account for at least 25% of total sales and at least 25% of those sales come from brick-and-mortar stores. The top 100 are responsible for 80% of the industry's sales. In 2015, sales from the top 100 furniture stores grew 11% over the previous year. It was the first time since 2000 the list delivered a double-digit increase but it was the sixth year of consecutive gain. The year-over-year improvement for 2016 is projected at just over 4%. Between the election and uncertainty in the economy, 2016 has experienced inconsistent and choppy performance. Consumers have cycled through periods of hesitancy on discretionary purchases.
Low interest rates have spurred some purchasing. On the other hand, the looming threat of interest rate increase helps drive leasing decisions. Rent-A-Center (NASDAQ:RCII) is seeing growth in furniture leasing. "And, finally, the furniture category continues to perform well and has been up mid-single-digits for the past several quarters." In its second quarter investor presentation, Rent-A-Center illustrated a leasing market potential of $25 billion by estimating 20 million customers executing an average transaction of $1,250. With its leasing program, Big Lots has a built-in safety net on lease transactions. When a customer leases through Big Lots, Progressive purchases the product. The lease transaction actually occurs between Progressive and the consumer. Furniture Today is projecting major price battles are facing the industry. "Black Friday this year will prove instructive as a guide to the price battle to come in 2017. Everyone sharpens their pencil a little bit this time each year, but this year expect prices to be a little sharper, a little more aggressive and the competition a little more intense."
The furniture industry overseer proposes 2017 will see fallout. "It means that innovation, creative merchandising and outstanding customer service are more critical today than ever. It also means that anyone who is not using any and every means to connect with consumers, including great content, great websites and excellent e-Commerce is putting their business at risk." Big Lots benefits from both buy decisions and lease decisions. As a discount retailer, Big Lots should hold an advantage in price battles. As a close-out retailer, Big Lots should benefit from fallout. Around the CornerThe third quarter typically produces the lowest revenue in a year at Big Lots. Seasonally, the fourth quarter typically produces the highest level. There is a small window coming up that should prove advantageous for potential investors in Big Lots. Furniture Today has already advised the kick-off of the holiday buying season should provide insight to 2017. Pay attention to both Big Lots' advertising and competitors' advertising.
Listen closely to the sales summaries after the Thanksgiving weekend. Shortly after, Big Lots will report third quarter results in early December. The combination of the two may provide an attractive buying opportunity. Big Lots estimated non-GAAP adjusted earnings in a range of a loss of $0.04 per share to income of $0.01 per share. Comparable store sales are expected to be in a range of flat to up 2%. Q3 Results Holiday Season Promotional Activity Invest? beat - Approach with caution beat + Advisable meet - Beware meet + Consider miss - No miss + Approach with caution If third quarter results fall short and Big Lots' promotional activity is not aggressive, it could indicate Big Lots is missing the big picture. If results meet expectations and the holiday season's promotional activity fares comparably to competitors, an investment is likely safe. If the company exceeds its projections and its promotional activity is strong, consider Big Lots on the attack and looking to take market share.