Big Lots Inc on Friday reported a better-than-expected quarterly profit on improved cost controls, but the closeout retailer said it now expects same-store sales to fall in the holiday quarter amid weak demand for toys and home goods.
Net income rose to $14.3 million, or 14 cents per share, in the third quarter ended on November 3 from $1.7 million, or 2 cents per share, a year earlier.
Sales fell 1.8 percent to $1.03 billion, hurt by weak sales of toys, home goods and fall seasonal merchandise.
Analysts had expected a profit of 12 cents a share on revenue of $1.03 billion, according to Reuters Estimates.
In October, Big Lots, which specializes in sales of excess inventory, forecast a decline in quarterly sales at stores open at least two years, instead of the increase it had previously expected. Earlier this month it said third-quarter same-store sales fell 0.5 percent.
But at the time, it also forecast third-quarter earnings to be near the high end of its 9 cents to 13 cents per share range, helped by better inventory management and expense controls.
On Friday, Big Lots said operating expenses as a percentage of sales had improved due in part to store and distribution center efficiencies, lower insurance-related costs, and lower depreciation expense.
For the fourth quarter, which includes the crucial holiday season, the company expects same-store sales to be slightly negative, compared with a prior outlook that called for an increase of 1 percent to 3 percent.
But lower sales and a lower gross margin rate should be partially offset by a lower share count because it expects to complete a $600 million share repurchase program.
Big Lots forecast fourth-quarter earnings per share of 81 cents to 86 cents per share. Analysts, on average, had been expecting it to earn 88 cents per share.
(Reporting by Nicole Maestri and Franklin Paul; Editing by Derek Caney)