Big Lots has continued to benefit as cash strapped consumers seek out bargains amid uncertain economic conditions.

Based in Columbus Ohio, Big Lots is the nation’s largest broadline closeout retailer, operating 1,355 stores in 47 states. The company basically operates in six segments viz. consumables, home, furniture, hardlines, seasonal, and other.            

Early this month, Big Lots reported fourth quarter results that beat consensus estimates. For the quarter ended Jan. 31, net income declined to $78.8 million, or 97 cents a share, compared to $92 million, or $1.05 a share, in the year ago quarter. From continuing operations, the company earned $1 a share. Revenue dropped 3% to $1.37 billion. Analysts on average were looking for earnings of 94 cents a share. The company also said that earnings for 2008 were $1.89 per diluted share from continuing operations, as against $1.47 per share the year before. This was a big achievement considering the fact that most of the retail space was hit hard during the year. The company managed its inventory quite wisely during the year and generated record turnover of 3.6. Moreover, the fourth quarter gross margin rate of 40.4% was 70 basis points above last year's rate of 39.7%.

Looking ahead to the fiscal first quarter, the company expects to report earnings in the range of 34 cents to 40 cents. Analysts on average expect a profit of 37 cents. For full fiscal year 2009, the company said that it expects to report earnings in the range of $1.75 to $1.90 a share on comparable sales flat to down 2%. However, most of the Wall Street analysts consider the guidance as quite “achievable” and are expecting an upward revision in financial guidance. Analysts polled by expected earnings of $1.79 a share.

The company will embark upon an aggressive expansion plan this year despite challenges offered by recession. Big Lots will open 45 new stores this year which is more than it has opened in the last three years combined. The company is quite determined to cut costs by renegotiating lease and reducing occupancy costs. All this is expected to put company in a better position when compared to its competitors.

The company is expected to perform well as consumer spending is expected to remain tight in coming days. The general trend toward thriftiness is expected to further gain in popularity as unemployment is likely to hit double digit.

Big Lots has a fairly strong balance sheet. The company currently has 34.77 million in total cash and cash equivalents. The stock of the company is currently trading at a forward P/E of 10.76 and PEG ratio of 0.77. The stock has outperformed S&P 500 by wide margins over the past one year.

The stock still has a great appeal and investors may add it to their portfolio.

Shares of Big Lots were down 86 cents or 3.98% to $20.76 in morning session on Monday.  

Disclosure: Author does not own any of the stocks discussed here.