Big Lots, Inc. reported net income of $29.9 million, or $0.76 per diluted share, for the third quarter of fiscal 2020 ended October 31, 2020, which compares to the company’s guidance, as provided on September 29, 2020, of $0.50 to $0.70 per diluted share. Net income for the third quarter of fiscal 2019 was $127.0 million, or $3.25 per diluted share, which included a one-time, after-tax benefit of $136.6 million, or $3.49 per diluted share, associated with the sale of the company’s distribution center in Rancho Cucamonga, California, as well as after-tax expense of $2.6 million, or $0.07 per diluted share, associated with the implementation of the Company’s strategic business transformation. Excluding these items, the adjusted net loss for the third quarter of fiscal 2019 was $7.0 million, or $0.18 per diluted share (see non-GAAP table included later in this release).
Net sales for the third quarter of fiscal 2020 totaled $1,378 million, an 18.0% increase compared to $1,168 million for the same period last year, with the growth resulting from a 17.8% increase in comparable sales, and sales growth from new and relocated non-comp stores, offset by a slightly lower store count year-over-year.
Commenting on the December 4th announcement, Bruce Thorn, President and CEO of Big Lots stated, “I am delighted to report another record-breaking quarter of results. We registered our strongest ever third quarter sales comp and, by way of continued strategic management of our business and tight control of expenses, we delivered our highest ever adjusted EPS in a third quarter. The incredible efforts of our associates in our distribution centers, our stores, and our corporate headquarters continue to impress me week in and week out. Their commitment to serving our customers and keeping our stores and workplaces safe during this uncertain time has been on display daily and remains a key driver to our superior performance.”
Mr. Thorn further commented, “During the quarter, we continued the rollout of our Operation North Star strategies, including the re-configuration of our Food and Consumables categories and expanding our online merchandise assortment offering through the implementation of ship-from-store. These initiatives built on the success of other North Star-driven strategies, including the rollout of the Broyhill brand, the launch of our Lot and Queue Line programs across 750 stores, and the rapid scaling of our ecommerce capabilities. With our steadfast focus on customer service, our strongly aligned assortment of everyday essentials and stay-at-home products, and our growing customer file, we believe we are well positioned to navigate through and beyond the current environment. Finally, this year’s holiday season is certainly unique, and our strategic decision to plan for early holiday shopping has paid off. Although we expect business to moderate given the elongated season, we are pleased with the strong start we have made to the fourth quarter.”
Inventory and Cash Management
Inventory ended the third quarter of fiscal 2020 at $1,089 million compared to $1,117 million for the same period last year. The 3% decrease was driven by strong sales in all merchandise categories. The decrease occurred in our on-hand merchandise, while our in-transit inventory was substantially higher year over year as we accelerated receipts ahead of the holiday season.
The company ended the third quarter of fiscal 2020 with $548 million of Cash and Cash Equivalents and $39 million of long-term debt, compared to $62 million of Cash and Cash Equivalents and $501 million of long-term debt as of the end of the third quarter of fiscal 2019.
Share Repurchase Authorization
As previously announced, on August 27, 2020 the company’s Board of Directors authorized the repurchase of up to $500 million of the company’s outstanding common shares. The authorization may be utilized to repurchase shares in the open market and/or in privately negotiated transactions at the company’s discretion, subject to market conditions and other factors. In the third quarter, we invested $100 million to repurchase 2.2 million shares at an average price of $45.81.
Dividend
As announced in a separate press release, on December 2, 2020, the Board of Directors declared a quarterly cash dividend of $0.30 per common share. This dividend payment of approximately $11 million will be payable on December 30, 2020, to shareholders of record as of the close of business on December 16, 2020.
Company Outlook
As of March 30, 2020, the company withdrew its full year guidance for fiscal 2020. Given the magnitude of sales historically generated through the late holiday season and changing consumer shopping patterns in the current environment, the company continues to believe it does not have sufficient visibility to provide fourth quarter guidance or reinstate full year guidance. The company expects to provide a business update in early January when it has greater visibility on expected results for the current quarter.
