Big Lots Q1 Earnings: Revenue And Profit Miss, Ditches EPS Outlook, Stock Crashes

Big Lots, Inc. BIG shares are trading lower on Thursday.

The company reported a first-quarter adjusted loss per share of $4.51, missing the street view for a loss of $3.92.

Net sales for the first quarter of fiscal 2024 totaled $1.009 billion, a 10.2% decrease compared to $1.124 billion for the same period last year. Sales missed the analyst consensus estimate of $1.04 billion. The decline to last year was driven by a comparable sales decrease of 9.9%.

“Our operational initiatives to offer a larger assortment of new and exciting extreme bargains, cut costs, and increase productivity exceeded our targets in Q1,” Bruce Thorn, President and CEO of Big Lots, stated.

“This enabled us to improve consumer perceptions about our brand and the value we offer, and to deliver a year-over-year improvement in gross margin and operating expenses, despite significant sales pressure,” Thorn added.

Big Lots’ first quarter comparable sales declined due to a challenging consumer environment. The company witnessed continued reductions in adjusted operating expenses. Gross margin expanded to 36.8% from 34.9% a year ago.

“We need to continue to elevate our brand relevance and drive more traffic, so we are moving quickly to achieve 75% bargain penetration and, within that, substantially grow our extreme bargain penetration to 50% by year-end,” the CEO said. 

What’s Next:

For the second quarter of fiscal 2024, the company expects comp sales to improve sequentially relative to the first quarter and to be down in the mid to high-single-digit range as key actions to improve the business continue to gain traction.

The company expects the gross margin rate to improve significantly versus the prior year and be up by at least 300 basis points, driven by reduced markdown activity and benefits from Project Springboard efforts. 

Big Lots said it expects significant quarterly year-over-year gross margin rate improvements through 2024, with a path to positive comparable sales later in the year.

The company is on track to achieve 75% bargains penetration and, within that, 50% extreme bargains penetration by year-end.

The company did not provide EPS guidance at this point, but expects its second-quarter adjusted operating loss to be better than last year. The company expects a share count of approximately 29.3 million for the second quarter.

Price Action: BIG shares are trading lower by 21.3% to $2.77 at last check Thursday.

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