Closeout retailer Big Lots said its mid-summer inventory levels swelled as it scheduled import shipments early to avoid possible problems with container shortages during the traditional August-October peak season for holiday merchandise.
“We made an intentional decision to move up delivery dates and bring in goods early to avoid potential disruption or risk of sales that could have resulted from the container shortages coming out of Asia,” CEO Steve Fishman told analysts.
His comments came as Columbus, Ohio-based Big Lots reported second quarter net profit rose 36.7 percent to $38.9 million. Operating profit increased 33 percent to $63.2 million while revenue was up 5.1 percent to $1.142 billion.
By The Numbers: U.S. Retail Inventory to Sales Ratio.
Fishman said the early imports contributed to a 9.9 percent increase in Big Lots’ inventory to $734 million at the end of the second quarter from $668 million a year earlier. He said all but about $11 million of that $66 million increase was due to early shipments and opportunistic deals on merchandise. The rest of the increase came from the addition of 24 stores since last year.
He said the early shipments and purchases have left the company well positioned for the rest of the year. “Right now, we have control over our inventories. And we are where we want to be right now,” Fishman said.
Big Lots officials said they expect shipping costs to rise. “In terms of imports, the increases in container rates have been well documented, and we along with most every other retailer will be fighting this battle for the next several quarters. Domestic freight costs are also up… with fuel and rising carrier rates driving the increase,” said Joe Cooper, executive vice president and chief financial officer.
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