Big Lots Inc. BIG -1.19% Chief Executive Steven Fishman is retiring from the closeout retailer as it continues to grapple with a business model that has seen good times and bad.
Mr. Fishman, 61 years old, who said he’s leaving the company to spend time with his family, has been chief executive for nearly eight years and holds the titles of chairman and president. This is the latest executive shift at Big Lots; in August, the company named a new chief financial officer and a new chief operating officer.
Big Lots board members “think very highly” of Lisa Bachmann, who was promoted to chief operating officer in August, one person familiar with the situation said Tuesday. However, she shouldn’t be considered the lead contender to succeed Mr. Fishman as directors want to consider all options, including external candidates, according to this person.
With the departure of Mr. Fishman, Big Lots is losing a linchpin in its efforts to become a consistently profitable company. Before joining Big Lots, Mr. Fishman served as chief executive, president and chief restructuring officer of Rhodes Furniture after being a board member for several years. Before Rhodes, Mr. Fishman was the chairman and chief executive of Frank’s Nursery & Crafts, a lawn and garden-specialty retailer that he also had a role in restructuring.
Big Lots tapped recruiters Korn/Ferry International KFY +1.24% several weeks ago to handle its CEO search, another informed individual said. The big search firm helped it recruit Mr. Fishman.
Mr. Fishman “has been instrumental in stabilizing and turning around the company,” said Charles Grom, retail analyst at Deutsche Bank DBK.XE +0.39% . Still, Mr. Grom said, “it was clear that Mr. Fishman was struggling—and still is—to drive positive traffic and the model itself is currently being tested as it clearly sells too many closeout consumable items. With this in mind, a change in direction could be a positive if the right person is put into the seat.”
Mr. Fishman in the spring drew flak from shareholders for a highly beneficial personal stock trade he made as this year’s first quarter drew to a close. Mr. Fishman exercised stock options and sold a little over $10 million of Big Lots stock on March 20. On April 23, Big Lots surprised investors by disclosing that first-quarter sales had slowed.
The trades were highlighted in a recent Wall Street Journal report on timely share sales by executives.
When asked about the report during the company’s earnings call Tuesday, Chief Administrative Officer Chuck Haubiel said: “We certainly understand the rules, follow the rules and there is probably not a whole lot more to add.”
On the conference call, Mr. Fishman expressed some guardedness about the company’s near future. He cited “some anxiety on the part of consumers” and said cooler weather arriving before the holidays would supply a welcome boost.
Looking at the fourth quarter and the balance of the holiday season, “We’re managing our business very tightly with caution but also with a bit of encouragement,” Mr. Fishman said. “In particular during the peak of traffic in the last week of November, we were encouraged by performance of some of our most important holiday categories.”
Big Lots “will be aggressive from now until Dec. 24, and through the fourth quarter,” he said. “And, I’m confident we will make good decisions on inventory levels and inventory management.”
Big Lots raised its full-year adjusted earnings estimate to between $2.86 and $3.05 a share from its previously lowered August forecast of $2.80 to $2.95 a share. The company also forecast current-quarter adjusted earnings of $1.91 to $2.10 a share, while analysts surveyed by Thomson Reuters expect $2.02 a share.
Big Lots shares were up sharply in Tuesday midday trading to $31.15.
While Mr. Fishman spoke with some confidence, analysts weren’t very upbeat. “While the headline print should make the bulls feel a bit better, the reality is same-store sales remain weak; inventory levels remain bloated; Big Lots continues to lever up—debt now at highest level in 10 years—to support cash flow; and the company’s fourth-quarter earnings-per-share guidance looks aggressive,” said Mr. Grom, the Deutsche Bank analyst
“We believe fiscal 2013 is setting up as a ‘transition year’ with downside potential,” said J.P. Morgan JPM +0.78% analyst Matthew Boss.
At Big Lots, which helps manufacturers clear their warehouses of overstocked and discounted goods, profit has been pressured by softening demand for higher-margin segments like furniture and seasonal goods and competition from online and other low-price retailers. Like Wal-Mart Stores Inc., WMT -1.75% Big Lots targets cost-conscious customers who are being pinched by higher fuel and food prices.
In an attempt to catch up, the company is testing coolers and freezers to add more consumable goods, looking into a new rewards loyalty program in several markets and store remodels as part of a three-year strategic plan that runs through 2015.
For the quarter ended Oct. 27, Big Lots reported a loss of $5.99 million, or 10 cents a share, compared with a profit of $4.19 million, or six cents a share, a year earlier. Its August projection was for a per-share loss between 20 cents and 30 cents.
Sales declined 0.4% to $1.13 billion, just shy of the $1.14 billion expected by analysts polled by Thomson Reuters.
Gross margin shrank to 38.1% from 39%.
Same-store sales, or sales from U.S. stores open for at least 15 months, fell 4.6%.
He has extensive experience working in the tire industry, with excellent operational knowledge and management capability that fit well with our company,” says Mitsuhata. “He is a strong strategic marketer, has a history of launching innovations and growing businesses, and a great passion for working with tire dealers as long-term business partners.”