When the Bureau of Economic Research declared that the recession had officially begun in December 2007, the entire retail sector shrugged its shoulders and said, "No kidding."

Shares of companies that deal directly with the consumer, except for the deep discount retailers, have known for some time that the economy was struggling. Sales have been declining steadily and, with the deteriorating operating environment, shares of the retail stocks have been absolutely crushed.

The entire retail group is one of the biggest losers in the market this year, with some stocks down 80% to 90%.

That said, those retailers that offer big discounts, including Wal-Mart (NYSE: WMT) and Big Lots (NYSE: BIG), are doing much better on a relative basis.

Continue reading Stock up on Overstock.com (OSTK)

Stock up on Overstock.com (OSTK) originally appeared on BloggingStocks on Thu, 04 Dec 2008 14:01:00 EST. Please see our terms for use of feeds.

3Q 2007 operating income grew 10X operating income from 3Q 2006, to $22.7 million from $2.3 million. CEO Steve Fishman credits the vast improvement in operating profit to a much more efficient product distribution system and higher gross margin dollars per square foot.

Continue reading Big Lots (BIG) reports big third quarter

Big Lots (BIG) reports big third quarter originally appeared on BloggingStocks on Tue, 04 Dec 2007 16:10:00 EST. Please see our terms for use of feeds.

Discount retailer Big Lots Inc. (NYSE: BIG) reported good 2Q 2007 earnings, driven in large measure by dramatic improvements in inventory control and distribution. Big Lots has gotten better at getting merchandise into stores on time and then moving it out the door faster. Big Lots reduced cost of inventory 13% to $714 million, still a hefty amount. But Big Lots has also increased its inventory turnover rate, which resulted in a 5% increase in same-store sales. Lots of retailers would like to post such an increase for just one quarter. Big Lots has posted 5% or better increases in same-store sales for the last two quarters.

Big Lots' strategy to concentrate on its supply chain management is beginning to pay off handsomely. Net sales increased 2.7% to $1,084.9 million or diluted EPS of $0.21, 5 times the amount of 2Q 2006. Operating profit also increased 3% to $33.4 million even though Big Lots is selling lower-margin merchandise. In addition to distribution system enhancements, Big Lots also kept the lid of insurance-related costs and cut back on advertising spending.

There are many discount retailers for investors to choose from. Big Lots is more attractive than most because the company carries NO long-term debt obligations, and presently has cash and cash equivalents of $109 million on hand. The company spent $215 million of the $600 million authorized on stock repurchases in 2Q, and will continue its buyback in the following quarters.

Given the good numbers from the previous two quarters, and 3Q and 4Q predicted comparable-store sales increases of 1%-3% per quarter, Big Lots management increased FY 2007 guidance EPS to $1.43-$1.48. Cash flow is expected to increase to $240 million, and inventory turnover rate will continue to climb. Big Lots wants to sell more merchandise more quickly. Lucky investors in the stock were up 9% on Wednesday as a result of the earnings release. The stock closed on August 29 at $28.91, up $2.61.

Big Lots (BIG) posts big earnings originally appeared on BloggingStocks on Thu, 30 Aug 2007 08:15:00 EST. Please see our terms for use of feeds.