Big moves continue at Big Lots

David Campisi joined Big Lots a little more than a year ago as president and CEO and with sales and profits gathering momentum the nation’s leading off-price retailer has decided to begin paying a hefty dividend.

The operator of roughly 1,500 stores nationwide said it would begin paying a quarterly dividend of 17 cents a share as part of a more balanced approach to returning cash to shareholders and as a reflection of confidence in the company’s strategy and favorable long-term prospects.

“We've made significant improvements to our merchandise product offerings, marketing activities, and we are implementing several key strategic initiatives intended to improve comparable store sales and the overall shopping experience for Jennifer,” Campisi said in reference to the hypothetical woman the company uses to describe its core customer. He added that the decision to pay a dividend, “demonstrates the confidence we have as a board of directors in our management team, our strategy, and our long term opportunities to drive meaningful profit growth and cash flow to return to our shareholders.”

Prior to the dividend, the company was focused exclusively on buying back stock as a means to return cash to shareholders and in recent years it had spent close to $2 billion to buy back 74 million shares. However, some shareholders prefer the more direct method of an actual cash payout.

“After careful deliberation and considering feedback obtained from investors as part of our shareholder outreach program, we will begin to institute a more balanced approach of returning cash to shareholders by introducing a regular quarterly dividend to supplement this year's and anticipated future share repurchase activity,” Campisi said. “We are confident the dividend program we announced today along with our recently completed $125 million share repurchase program fit comfortably within our expected cash flow for 2014."

Announcement of the dividend preceded a meeting the company held for investors on June 26 and follows the May 30 release of first quarter results which show Campisi and his new senior leadership team have room for improvement. Same store sales increased 0.9% and total sales increased 1.1% to nearly $1.3 billion during the first quarter. Net income from continuing operations, which doesn’t include a $25.2 million loss related to the company’s exit from Canada, fell to $28.6 million, or 50 cents a share, from $37 million, or 70 cents a share. The earnings per share performance was better than an initial forecast of 40 cents to 45 cents, but the earnings beat was driven by aggressive share repurchase activity. Big Lots said it spent $82.5 million during the first quarter to acquire 2.2 million of its own shares which equates to approximately 3.8% of the outstanding shares.

Campisi, the fomer CEO of Sports Authority, arrived at Big Lots in April of 2013 and since then created a new senior leadership team. Richard Chene was named chief merchandising officer last November, filling a position that had been vacated by John Martin who left the company in July 2013. The month before Chene was hired, Andrew Stein was named SVP and chief customer officer to oversee marketing. Then in December of last year Big Lots named Trey Johnson, Martha Withers and Lucy Cindric to new roles as SVP/GMMs to oversee food and consumables, furniture and home décor and seasonal, toys and electronics, respectively.

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