Big Lots Reports Q2 Earnings Above Street View; Eyes Inventory & Cost Reduction

Home discount retailer Big Lots Inc BIG reported a second-quarter FY22 sales decline of 7.6% year-on-year to $1.346 billion, marginally beating the consensus of $1.34 billion. Comparable sales decreased 9.2%.
The gross margin for the quarter decreased 700 basis points Y/Y to 32.6%. The operating loss for the quarter was $(109.1) million versus a profit of $53.8 million a year ago.
The company held $49.1 million in cash and equivalents as of July 30, 2022.
Inventory at the end of the quarter was $1.2 billion, a 22.8% Y/Y increase, encompassing higher unit costs and a significant rise in in-transit inventory.
Adjusted EPS loss of $(2.28) beat the analyst consensus of $(2.47).
The company's Board declared a quarterly cash dividend of $0.30 per share, payable on September 23, 2022, to shareholders of record on September 9, 2022.
"Consumers are stretched by inflation and starting to trade down more," said CEO Bruce Thorn.
Outlook: Big Lots sees Q3 comparable sales to be down in the low double-digit range.
The company expects continued promotional activity in Q3, resulting in a quarter gross margin rate into the mid-30s.
BIG said it is taking aggressive actions to improve the gross margin rate in Q4, to a rate that is approximately in line with the prior-year quarter.
In addition, the company also plans to take actions to reduce expenses.
Price Action: BIG shares are trading higher by 2.78% at $22.15 in premarket on the last check Tuesday.
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