It seems that the retail sales have been pretty strong this month. As merchants reported their monthly sales figures on March 1, a diverse group, including Target (TGT) and Macy's (M), reported sales gains that exceeded Wall Street estimates. Even Gap Inc. (GPS), long mired in a sales slump, posted an unexpected increase.
The numbers, based on revenue at stores opened at least a year, are considered an indicator of a retailer's health. Although the number of companies submitting their results is quite small, it accounts for over 70% of all economic activity. It seems that the American people have become optimistic over the past few months.
Let's see how Big Lots Inc (BIG) is performing at this moment. Today, Big Lots reported the fourth quarter results and the full year results, and it is doing well.
From the press release, here's a snapshot of the fiscal year 2011 results.
- Record income from continuing operations of $2.99 per diluted share; fifth consecutive record year
- Record total sales of $5.2 billion, an increase of 5% compared to fiscal 2010
- Record operating profit of $358 million for U.S. operations
- Opened 92 new stores in the U.S.
- Expanded into Canada with the acquisition of Liquidation World
- Invested $359 million to repurchase 11 million shares - approximately 15% of our outstanding shares as of the beginning of fiscal 2011
Here's a snapshot of the fourth quarter 2011 results.
- Record net income of $1.75 per diluted share, a 20% increase over last year
- Comparable store sales increase of 3.4% for U.S. stores
- Record operating profit of $191 million
- Opened 23 new stores in the U.S.
- Invested $46 million to repurchase 1.3 million shares
If you check the balance sheet, goodwill asset has rose to $12.3 million last year, compared to nil in 2010. Wow. What did the company do? Perhaps it is because of the acquisition of Liquidation World Inc. in July 2011. Cash is being utilized efficiently in common share repurchase programs, as evident from the decreasing cash assets.
Compared to 16.87% of Dollar General Corp (DG), 11.59% of 99 Cents Only Stores and 12.81% of Costco Wholesale Corp (COST), Big Lots' return on average equity (ROAE), standing at 22.85%, seems pretty decent to me. And investors seem to be favoring this stock, which increased around 34% in the last 6 months. Good going, Big Lots!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.