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Big Lots swings to loss amid higher expense; expects ‘challenging’ holiday results

BY Marianne Wilson

Big Lots reported a wider-than-expected third quarter loss and lowered its earnings guidance for the holiday period and full year.

The discounter swung to a net loss for the quarter to Nov. 3 of $6.6 million, or 16 cents a share, for the quarter ended Nov.3, from a profit of $4.4 million, or 10 cents a share, in the same period a year ago. Analysts polled by Refinitiv were expecting the company to break even on a per-share basis.

That compares with the company’s previous per-share guidance range of a loss of 6 cents to a profit of 4 cents, and the FactSet consensus of a 1-cent loss.

Sales rose to $1.15 billion from $1.11 billion, beating estimates of $1.14 billion. Same-store sales rose 3.4%, also more than expected.

“In terms of third quarter, we were pleased to achieve our second consecutive quarter of positive comps, but our bottom line results fell short of our expectations,” said Bruce Thorn, who took the reins as president and CEO of Big Lots in late September. “While we expect near-term results to be challenging this holiday season, we have a strong brand, great people, and we are working swiftly to enhance our current strategy, identify new growth opportunities, and position our business for profitable expansion well into the future.”

Big Lots said it now expects comparable-store sales for the fourth quarter to be between flat to up 2% compared to its previous estimate of an increase in the low single digits. It expects earnings of $2.20 to $2.40 a share, compared to its previous estimate of $2.90 to $3 a share. Analysts were expecting earnings of $2.92 a share.

For fiscal 2018, the company affirmed its same-store sales growth guidance of “approximately 1%,” but cut its adjusted outlook to $3.55 to $3.75 from $4.40 to $4.55.

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Lululemon Q3 earnings, sales beat Street; testing paid membership program

BY Marianne Wilson

Lululemon Athletica Inc. reported earnings and sales that beat expectations amid ongoing growth in its men’s division, but offered a fourth-quarter outlook that was disappointing to investors.

On its quarterly earnings call with investors, the athleisure retailer said it has been testing a loyalty program in Edmonton (Canada) that charges members $128 a year for access to special events and classes, free expedited shipping and other benefits. The program has been so successful that it plans to expand the test to other markets.

“Guests are seeing value beyond just the product,” Lululemon CEO Calvin McDonald said on the call.

The company’s net income rose to $94.4 million, or $0.71 a share, for the quarter ended Oct. 28, compared to $58. 9 million, or $0.43 a share, in year-ago period. Adjusted diluted earnings per share were $0.75, up from $0.56 last year. Analysts had expected adjusted earnings of $0.70 a share.

Net revenue increased 21% to a better-than-expected $748 million amid strong sales of men’s and women’s outerwear. Lululemon’s expansion into men’s clothing is paying off, with the category recording the highest increases overall. Total same-store sales rose 17%.

The company also increased its guidance for full-year profits, and met analysts’ expectations for its fourth-quarter forecast.

“Lululemon has achieved a high level of success over the past year and has established a solid foundation to continue to build our future. It’s been exciting to see guests around the world respond so strongly to our product offerings and improved digital experience.

For the fourth quarter, the retailer estimated revenue of as much as $1.13 billion with earnings of $1.64 cents per share, slightly below what analysts were expecting.

“Lululemon has achieved a high level of success over the past year and has established a solid foundation to continue to build our future,” said McDonald.

The company ended the quarter with 426 stores.

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Neiman Marcus racks up fifth straight quarter of same-store sales gains

BY Marianne Wilson

Neiman Marcus Group LTD reported a wider third quarter loss as its debt continues to take a toll on the company’s earnings.

The luxury retailer reported a net loss of $28.2 million for the quarter ended Oct. 27, compared with a net loss of $26.2 million in the year-ago period. Interest expense to manage the firm’s heavy debt were significant, totaling $80.5 million in the quarter. Adjusted earnings before interest, taxes, depreciation and amortization rose to $135.3 million from $122.3 million.

Total revenues inched down to $1.093 billion from $1.096 billion. Same-store sales rose 2.8%

“Our first quarter results, marking our fifth consecutive quarter of comparable revenue increases, demonstrate the ongoing stabilization of our business,” said Geoffroy van Raemdonck, CEO, Neiman Marcus Group. “We continue to focus on delivering on our plan this year, while also positioning the company for future growth. We will continue to drive innovation that enriches the shopping experience, including investing in personalization and omni-selling.”

Neiman Marcus is burdened with $4.6 billion in debt (related to two leveraged buyouts), almost all of which comes due in 2020 and 2021. The retailer has been in discussions since late fall with groups of creditors about various options, including one that would it give it more time to pay back its loan. In late November, the retailer and its lenders ended their debt negotiations — at least for the time being. Neiman Marcus still has time to try and get the debt extended, MarketWatch reported.

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