Early this morning, discount retailer Big Lots (NYSE: BIG) reported first-quarter earnings of 44 cents per share. These results are up from 42 cents a year ago, and are four cents better than the consensus estimate. BIG tallied quarterly sales of $1.14 billion, down from $1.15 billion a year ago. Comparable-store sales slipped 0.5% during the quarter.
BIG forecast second-quarter earnings of 26 to 32 cents per share. On average, analysts expected 30 cents per share. This outlook assumes that BIG's same-store sales will fall 1% to 3% during the quarter.
As for the full year, BIG believes it will earn between $1.85 and $1.95 per share, up from an earlier forecast of $1.75 and $1.90 per share. This guidance assumes that the firm's same-store sales will be flat to 1% lower. Analysts projected BIG's full year income at $1.88 per share.
I am not surprised by BIG's fortunes during the last quarter. This retailer is the type that should do well during recessions and economic downturns. BIG offers name brand items at a fraction of the cost, allowing families on a budget to purchase food, toys, baby goods, electronics, baby goods and cleaning supplies. In times when budgets and purse strings tighten, BIG offers families what they want and need. In addition to the stronger-than-expected earnings, the forward-looking forecast indicates that BIG expects continued strength.
A glance at the stock shows that it is pulling back to the support of its 10-week moving average, a role the moving average has filled since the middle of February. This trendline could help push the stock through potential resistance at the $25 level. Further support could come from BIG's 10- and 20-month moving averages, which have helped prop the shares during the past two months.
The technical support is there, the stock is one that should flourish during an economic crisis, I think the equation adds up to BIG being a solid bullish play.
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