Big Lots lapped a big one-time benefit in a slightly disappointing second quarter, but the retailer still demonstrated that it’s a growing concern, particularly in home-related merchandise.
The company posted net income of $37.7 million, or $1.09 per diluted share, for the second quarter versus $452 million, or $11.29 per diluted share. This result included a one-time, after-tax benefit of $341.9 million, or $8.54 per diluted share in the year-previous period, which included the sale and leaseback transactions that closed. With that benefit excluded, adjusted net income for the second quarter of 2020 was $110.1 million, or $2.75 per diluted share, Big Lots noted.
Big Lots second quarter diluted earnings per share fell short of a Yahoo Finance analyst average estimate of $1.13. Revenues also fell slightly short of a Yahoo Finance estimate.
Net sales were $1.46 billion, down 11.4% from the coronavirus-impacted quarter the year before, but up 16.4% compared to the 2019 period. Comparable sales decreased 13.2% from the 2020 quarter but gained 14% from the period a year prior to that.
E-commerce gained 10% in the quarter year over year and 400% versus the year-before period.
Operating profit was $53.9 million versus $608.6 million in the 2020 quarter or $149.5 million adjusted for the special benefits in the year-past period.
Bruce Thorn, Big Lots president and CEO, said, “We have completed another solid quarter that demonstrated the strength of our Operation North Star strategic initiatives, with continued focus on our growth drivers: customer growth, merchandise productivity, e-commerce, and store count growth. We saw two-year comp sales growth across all merchandise categories other than food, with strong double-digit two-year growth in furniture, soft home, hard home, and apparel, electronics and other. Furniture sales remain strong and were up over 30% to 2019, led by continued acceleration in Broyhill. Also within furniture, we are very enthusiastic about the expanding offering in our entry-level price-point Real Living brand, which provides great value for our existing and new customers. Speaking of new customers, we added nearly 1.7 million new Rewards customers to the Big Lots family during the quarter. Meanwhile, The LOT! and Queue Line strategies are now rolled out to 1,225 stores, and continue to drive a combined 3% sales lift.”
On the digital side, Thorn added that “Demand generated in the e-commerce channel was driven by strong sell-through in our lawn and garden assortment.”
Thorn pointed out that ongoing supply chain and freight headwinds inflationary pressures have tempered returns somewhat.
Big Lots launched Project Refresh, a multi-year program to upgrade approximately 800 stores not included in its prior Store of the Future program. The company continued the rollout of its “Be A BIGionaire” brand campaign, and it reported 60% of the transaction lifts coming from first-time visitors.
“Against this backdrop, we continue to invest in our future growth,” he said. “Our first forward distribution center became operational at the end of the quarter, and the second will begin operations next week. We know that the supply chain headwinds will continue into fall and holiday, and the situation remains fluid.”