Big Lots(US:BIG)2019-03-08 17:51Financial Data and Key Metrics Changes - Net sales for Q4 2018 were $1.599 billion, a decrease from $1.641 billion in the previous year, attributed to a lower store count and an extra week of operations in last year's results [22][24] - Comparable store sales increased by 3.1%, exceeding guidance of flat to plus 2% [22][24] - Income for Q4 was $108 million or $2.68 per diluted share, surpassing the previously communicated EPS guidance of $2.20 to $2.40 [23][24] - Gross margin rate for Q4 was 41.2%, a decline of 40 basis points from the previous year [24][25] Business Line Data and Key Metrics Changes - Six out of seven merchandising categories posted positive comps in Q4, with Soft Home leading at high single-digit growth [14][15] - Furniture also saw high single-digit growth across all departments, driven by new assortments and lease-to-purchase business [15] - Consumables achieved low single-digit growth, marking the best quarterly comp in four years, driven by health and beauty and holiday gifting [16] - Food experienced its first positive comp in three years, aided by event-driven assortments [18] Market Data and Key Metrics Changes - Sales trends accelerated in December and January, with both months up comfortably in the mid-single digits [23] - The first year after store remodels showed sales growth in the high single to low double-digit range in major markets [11] Company Strategy and Development Direction - The company is focusing on enhancing its current strategy and launching new initiatives to accelerate sales and reduce costs [32][38] - Key platforms for growth include strengthening the home category, increasing traffic drivers, and focusing on life's occasions [37][40] - The acquisition of Broyhill is expected to enhance the company's furniture offerings and quality perception [38][77] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the sales momentum and the impact of tax refund delays on purchasing behavior [67][68] - The company anticipates a low single-digit sales increase for fiscal 2019, with adjusted income expected to decrease by 7% to 12% [47][48] - Management is committed to a $100 million cost reduction over the next three years to fund growth initiatives [51][53] Other Important Information - The company ended fiscal 2018 with $970 million in inventory, a 12% increase per store compared to the previous year [27] - Capital expenditures for fiscal 2018 were approximately $232 million, with plans for $260 million to $270 million in 2019 [28][57] - A quarterly cash dividend of $0.30 per common share was declared, payable on April 5, 2019 [30][59] Q&A Session Summary Question: Can you provide insight on the treasure hunt concept? - Management noted that customers enjoy the treasure aspect more than the hunt, indicating a positive reception to the Store of the Future format [62] Question: How has the delayed tax refund impacted trends? - The delay affected big-ticket purchases, but management remains optimistic about March and April trends [66][68] Question: What contribution did the Store of the Future make to Q4 comps? - The Store of the Future contributed slightly less than a full point to Q4 comps, with expectations for at least a full point in 2019 [70] Question: What are the expectations for SG&A dollars? - SG&A is expected to grow mid to high singles in Q1 and mid-singles for the year, with various factors influencing this growth [72] Question: What categories show the most potential for growth? - Management sees significant opportunities in the home destination and furniture categories, along with traffic drivers in food and consumables [74]