Why Discount Retail Chain Big Lots' Stock Is Climbing Today

Big Lots Inc BIG reported a third-quarter FY23 sales decline of 14.7% year-on-year to $1.027 billion, missing the analyst consensus estimate of $1.03 billion. The decline to last year was driven by a comparable sales decrease of 13.2%.

Commenting on today's results announcement, Bruce Thorn, President and CEO, stated, "Although the environment remains challenging, we continued to make significant progress in turning around our business."

Gross margin for the quarter expanded 240 basis points Y/Y to 36.4%. The operating income for the quarter was $19.7 million versus a loss of $(130.8) million a year ago.

Adjusted EPS loss of $(4.38) beat the consensus estimate of $(4.66).

The company held $46.6 million in cash and equivalents as of October 28, 2023. Inventory at the end of the quarter was $1.18 billion, a 12.5% decrease Y/Y driven by lower in-transit inventory, on-hand units, and average unit cost.

During Q3, the company completed the sale and leaseback of its Apple Valley, CA distribution center and 23 owned stores, resulting in gross proceeds of $306 million.

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

"Project Springboard is off to a strong start and on track to deliver $200 million of bottom-line benefits, spanning gross margin and SG&A, of which we expect a high proportion to be realized on a run-rate basis by the end of 2024," added Thorn.

Outlook: Big Lots reiterated negative high-single-digit Q4 comp sales outlook with an approximately 38% gross margin rate. Q4 adjusted operating result is expected to be ahead of last year, marking the first quarter of year-over-year improvement since Q1 2021. The company did not provide EPS guidance.

Price Action: BIG shares are trading higher by 7.08% at $5.14 in premarket on the last check Thursday.

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