Big Lots (BIG), a merchandise retailer, has posted a 10.00 percent increase in profit for the quarter ended Aug. 02, 2014. The company earned $19.94 million or $0.36 a share in the second-quarter compared with $18.13 million or $0.31 a share a year ago. Analysts on average had predicted net income of $0.30 a share.

Revenue during the second-quarter went up marginally 1.22 percent to $1,195.36 million from $1,180.90 million in the last year period.

Gross margin contracted by 2 basis points over the previous year period to 39.28 percent. Total expenses as a percentage of revenues increased to 97.66 percent from 96.91 percent in the same period last year. That has resulted in contraction of 75 basis points in operating margins to 2.34 percent.

The company disclosed operating income of $27.94 million, compared with operating income of $36.49 million in the last year period.

David Campisi, chief executive officer and president of Big Lots, said, "I'm very pleased with the results we reported today. Our comps were positive and comfortably within the guidance range we provided, and our earnings were above the high end of our range. We believe this is an indication that our core customer, Jennifer, is responding to our improved merchandising strategies and marketing execution."

For fiscal 2014, the company expects income from continuing operations to be in the range of $2.40 to $2.50 per diluted share.

The company affirms comparable store sales range of 1% to 2% for fiscal 2014.

Cash Flow

Big Lots has generated cash of $157.17 million from operating activities during the first half, up 91.63 percent or $75.15 million when compared with the last year period. The company has generated 6.35 cents of operating cash flow in every sales dollar for the first half, up from 3.35 cents in the same period last year.

The company has spent $37.61 million cash to meet investing activities during the first half, as against cash outgo of $50.10 million in the last year period.

The company has spent $131.30 million cash to meet financing activities during the first half, as against cash outgo of $28.36 million in the last year period.

As on Aug. 02, 2014, the company's cash balance stood at $62.03 million, down 2.78 percent or $1.78 million from Aug. 03, 2013.

Working Capital

Big Lots has witnessed a decline in the working capital over the last one year. The company's working capital stood at $446.09 million as at Aug. 02, 2014, down $41.80 million or 8.57 percent from $487.89 million on Aug. 03, 2013. It registered a decrease in current ratio to 1.76 as at Aug. 02, 2014 from 1.76 on Aug. 03, 2013.

Debt Position

The company has witnessed a decline in long-term debt over the last one year. As on Aug. 02, 2014, long-term debt stood at $56.50 million, down 60.13 percent or $85.20 million, from Aug. 03, 2013.

The company's total debt was 3.44 percent of total assets as on Aug. 02, 2014, compared with 7.87 percent on Aug. 03, 2013.

Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 54.79 from 49.99 in the same period last year.

Shares of the company declined $0.85 or 1.80 percent to settle at $46.35 on Friday.