Big Lots Inc. (BIG) recently reported better-than-expected second quarter results surpassing the bottom-line expectation. Effective cost management drove the growth in bottom-line with increased efficiencies in distribution and transportation costs, reduced advertising expenses, and decline in payroll costs.

Earnings per share (excluding one-time items) of 35 cents was well above the company’s guidance range of 26 cents to 32 cents, and surpassed the Zacks Consensus Estimate of 31 cents. Earnings per share increased 9.4% year over year, compared to 32 cents in the prior-year quarter.

On a reported basis, Big Lots delivered EPS of 34 cents, up 6.3%.

Management now expects EPS for the third and fourth quarter to be in the range of 14 cents to 19 cents, and 99 cents to $1.04, respectively. Management also raised its full year earnings guidance on account of better-than-expected results. It now expects EPS to be in the range of $1.92 to $2.02 up from prior forecast of $1.85 to $1.95.

Big Lots now expects to generate cash flow of $155 million for the full year 2009 up from $145 million predicted earlier.

However, the company recorded low single-digit decline in the top-line due to slump in demand for home décor and furniture categories because of lower discretionary spending by the consumers. Revenue for the quarter under review slipped 1.7% to $1,086.6 million.

Big Lots operates as a broad line closeout retailer in the United States offering food, health, beauty, plastics, paper, chemical, and pet products as well as home decorative products, and other product lines.

Comparable sales for the quarter declined 2.4% compared to an increase of 2.8% posted in the year-ago quarter. Comps for the first quarter fell 0.5%. Management now expects comps in the range of flat to (2%) in the third quarter, and flat to slightly up in the fourth quarter.

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