Why Big Lots Shares Are Sliding Today

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  • Big Lots Inc BIG reported a first-quarter FY23 sales decline of 18.3% year-on-year to $1.124 billion, missing the consensus of $1.19 billion.
  • The decline to last year was driven by a comparable sales decrease of 18.2%.
  • Gross margin for the quarter decreased 180 basis points Y/Y to 34.9%. The operating loss for the quarter was $(261.2) million versus a loss of $(13.5) million a year ago.
  • CEO Bruce Thorn stated, "Macro-economic headwinds have created significant challenges for us, which are reflected in our results and outlook."
  • "While we navigate through this difficult environment, we are being very aggressive in how we are managing our business. We are significantly raising our SG&A savings target to over $100 million in 2023, and have identified over $200 million of bottom-line opportunities across gross margin and SG&A we will be pursuing over the next 18 months."
  • The company held $51.3 million in cash and equivalents as of Apr 29, 2023.
  • Inventory at the end of the quarter was $1.08 billion, an 18.8% decrease Y/Y.
  • Adjusted EPS loss of $(3.40) missed the analyst consensus of $(1.77).
  • On May 24, 2023, the company entered a letter of intent for a sale and leaseback of the Apple Valley, California, distribution center; corporate headquarters building in Columbus, Ohio, and most of the remaining owned stores for $340 million.
  • On May 23, 2023, the Board of Directors declared a suspension of the dividend.
  • Outlook: Big Lots sees Q2 comparable sales to be down in the high-teens range.
  • The company expects Q2 gross margin rate to slightly improve, but remain in the low-30s range, driven by significant markdowns on slow-moving seasonal merchandise.
  • The company did not provide EPS guidance.
  • Price Action: BIG shares are trading lower by 16.6% at $6.01 on the last check Friday.
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Posted In: EarningsEquitiesNewsGuidanceMarketsMoversGeneralBriefswhy it's moving
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