Big Lots Inc.'s (BIG) is upping the number of stores it will open this year and will begin offering greater discounts through a new loyalty card on the heels of posting better-than-expected second-quarter results.

The off-price retailer raised its new store count for this year by five, for a total of 50 openings, taking advantage of real estate opportunities provided by the pullbacks and bankruptcies of other retailers.

Big Lots in the third quarter is rolling out its first loyalty card program, offering a discount when customers make 10 purchases over $20. The retailer sees the effort as a way of drawing more customers while gathering purchasing information from them. Big Lots will follow up with tailored offerings, Chief Executive Steven Fishman said during a conference call. "This opens up some marketing opportunities to us that we have never had before."

The company will also be advertising more aggressively as it heads toward the end of the year. Big Lots, already known for very low prices, will take a page from other retailers' books and focus on value and savings.

Big Lots sees consumer electronics, toys and pet supplies as areas of opportunity amid overall efforts to continue burnishing its bargain bin image.

"We're long way from being done but we do look a whole lot better than this time a year ago," Fishman said.

Steps to enhance its image may be making some headway, but Big Lots' fiscal second-quarter earnings beat was largely on better cost controls, as sales fell.

Second-quarter earnings rose 9.2%, with margins improving on lower payroll costs and advertising expenses. Big Lots also improved the way it receives goods and delivers them to stores.

Shares were recently up 9.7% to $26.35.

For the quarter ended Aug. 1, the company reported a profit of $28.4 million, or 34 cents a share, up from $26 million, or 32 cents a share, a year earlier. Earnings from continuing operations were 35 cents a share when Wall Street was expecting 30 cents a share.

Net sales fell 1.7% to $1.09 billion, while comparable-store sales, or sales at stores open at least two years, declined 2.4%.

Gross margin rose to 40% from 39.3% amid higher prices and lower freight costs.

The better-than-expected results prompted Big Lots to raise its fiscal-year earnings estimate again, this time by 7 cents, to a range of $1.92 to $2.02 a share.

Big Lots - which helps manufacturers clear their warehouses of discontinued, overproduced and otherwise unwanted goods - has been adding brands from manufacturers that previously shunned it because of its lower-end image.

Big Lots has been testing a move upscale, taking over a former Linens N' Things site in Ohio, where it is implementing edgier presentations, better lighting, wider aisles and other tweaks.

The company said earlier this month that consumable, hardline and seasonal goods were the strongest categories with at least flat sales. Home and furniture categories posted declines. Sales at Big Lots' western stores were strongest, while the Southeast, especially Florida, remained the most challenging. The west coast pickup was a matter of better "execution" in the region by Big Lots, not necessarily a big indicator the economy is improving in the area, Fishman said.

For the fiscal third quarter, the company expects earnings of 14 cents to 19 cents, while analysts were looking for 16 cents. Big Lots said same-store sales may fall as much as 2%. Fourth-quarter earnings are slated to come in between 99 cents and $1.04, bracketing Street estimates. Same-store sales may rise slightly.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

(Tess Stynes contributed to this article.)