Big Lots Encounters Sales Slump In Q4, Despite Margin Expansion And Reduced Inventory

Big Lots Inc BIG reported a fourth-quarter FY23 sales decline of 7.2% year-on-year to $1.432 billion, beating the analyst consensus estimate of $1.426 billion.

The decline to last year was driven by a comparable sales decrease of 8.6%.

Commenting on today’s results announcement, Bruce Thorn, President and CEO, stated, “For the third quarter in a row, we did what we said we would do, and despite a challenging macroeconomic environment and well documented weather challenges in January, we finished the year in a much better place than where we started.”

“That said, there’s a lot of work to do in 2024, and we are moving aggressively to accelerate our transformation, return to positive comparable sales, and continue to improve our gross margin rate over the course of the year.”

Gross margin for the quarter expanded 170 basis points Y/Y to 36.4%. The operating loss for the quarter was $(23.7) million versus a loss of $(8.1) million a year ago.

Adjusted EPS loss of $(0.28) missed the consensus estimate of $(0.23).

The company held $46.4 million in cash and equivalents as of February 3, 2024. Inventory at the end of the quarter was $953.3 million, a 17% decrease Y/Y driven by lower on-hand units and in-transit inventory.

Big Lots did not execute any share repurchases during the quarter, with $159 million remaining under its December 2021 $250 million authorization.

Outlook: Big Lots expects first-quarter comp sales to improve relative to the fourth quarter and be in the mid-single-digit negative range with a 200-250 basis points expansion in gross margin rate. The company expects its first-quarter adjusted operating loss to be lower than last year. The company did not provide EPS guidance.

Price Action: BIG shares are trading lower by 2.19% at $4.92 in premarket on the last check Thursday.

Photo via Wikimedia Commons