By Sam Boughedda
Big Lots (NYSE:BIG) shares tumbled over 11% on Thursday after the company reported its third-quarter earnings.
The company reported a smaller-than-expected loss of $2.99 per share, $0.05 better than the analyst estimate of a loss of $3.04 per share, while revenue for the quarter came in at $1.2 billion versus the consensus estimate of $1.21B.
Net sales for the third quarter decreased by 9.8% compared to $1.336B for the same period last year, driven by a comparable sales decline of 11.7%.
"The third quarter marks another quarter in which we met the challenges of a tough environment head on and did what we said we would do. Our sales and gross margin were in line with guidance and, importantly, year-over-year inventories continued to come down materially. We saw favorability in SG&A, as we tightly managed costs, and have strengthened our balance sheet and liquidity position," commented Bruce Thorn, President and CEO of Big Lots.
The company acknowledged the challenging macroeconomic environment but said it remains enthusiastic about the "opportunity to provide even more value for our customers."
Looking ahead, in the fourth quarter, Big Lots expects comps to be down in the low-double-digit range, while the gross margin rate is seen improving sequentially versus Q3 but remaining in the mid-30s range.
Reacting to the release, Telsey Advisory Group said: "Big Lots reported soft 3Q22 results, both on absolute and relative basis to the Street. The company reported 3Q22 adjusted EPS of ($2.99) vs. the FactSet consensus (FS) of ($2.94) and our estimate of ($3.05). Total same-store sales was (11.7%) vs. our target of (11.0%) and FS at (10.8%). The adjusted operating margin contracted 875 bps to (9.1%) vs. our estimate of (9.2%) and FS at (9.1%), with the gross margin compression of 487 bps to 34.0% vs. our projection of 35.0% and FS at 34.8%."
"In 3Q22, we believe Big Lots business was impacted by a slowdown in consumer spending on big-ticket discretionary items, given pressure from elevated gas prices and inflation, as well as higher supply chain and operating costs, and step up in promotions to clear inventory."