Big Lots, Inc. BIG reported an adjusted loss of $3.40 per share for first-quarter fiscal 2023, wider than the Zacks Consensus Estimate of a loss of $1.95. The metric was also wider than the year-ago quarter’s loss of 39 cents per share.
Net sales of this Columbus, OH-based player declined 18.3% to $1,124 million year over year and missed the Zacks Consensus Estimate of $1,186 million. The year-over-year downside was due to soft comparable sales. Comparable sales fell 18.2% and were hurt by roughly 300 basis points (bps) owing to product shortages in furniture stemming from the closure of the company’s largest vendor in November. Also, net decrease in store count, partially offset by new stores and relocations, contributed approximately 10 bps of sales decline from the first quarter of 2022. Quarterly results were hurt by the volatility caused by the macroeconomic environment.
Over the past three months, shares of this Zacks Rank #4 (Sell) company have plunged 54.5% compared with the industry’s 1.4% fall. Nonetheless, management has been making efforts to strengthen and transform the business model. It has also been taking actions to control costs.
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More on Results
Gross profit declined 22.2% year over year to $392.5 million. Big Lots’ gross margin contracted 180 bps to 34.9% from the year-ago quarter’s figure of 36.7%. Impacts from higher levels of late quarter promotions that targeted the seasonal and furniture categories hurt the metric.
In the reported quarter, adjusted selling general and administrative (SG&A) expenses were $474.9 million, down 8.3% year over year. As a percentage of net sales, the metric increased 460 bps to 45.3%. The company recorded an adjusted operating loss of $118 million in the reported quarter. BIG expects total SG&A expense savings of $100 million in 2023.
Other Financial Details
Big Lots ended the quarter with cash and cash equivalents of $51.3 million and long-term debt of $501.6 million. Total shareholders’ equity was $551.4 million. Inventories decreased to $1,088 million from $1,339 million recorded in the prior-year period.
For the 52 weeks that ended Apr 29, 2023, BIG used net cash worth $168.9 million from operating activities.
Big Lots’ board announced a suspension of dividend. At the end of the reported quarter, BIG had $159 million remaining under its $250 million share buyback authorization.
BIG concluded the quarter with more than 1,420 stores across 48 states.
On May 24, 2023, the company has entered into a letter of intent for sale and leaseback of the Apple Valley, CA, distribution center and corporate headquarters building in Columbus, OH. The value of the transaction is expected to be $240 million excluding $100 million remaining on synthetic lease. The closing date of this transaction is expected to be in the late second quarter or early third quarter of fiscal 2023.
Big Lots, Inc. Price, Consensus and EPS Surprise
Big Lots, Inc. price-consensus-eps-surprise-chart | Big Lots, Inc. Quote
For the second quarter of fiscal 2023, management expects comps to decline in the high-teens range. Net new stores will contribute nearly 30 bps of growth from 2022. Big Lots anticipates the gross margin rate to slightly improve in the low-30s range.
With respect to fiscal 2023, BIG expects an improvement in financial results year over year. Management highlighted that earnings momentum is likely to be weighted toward the second half of the fiscal year, on better actions and reductions in freight costs. Given the highly volatile macroeconomic backdrop, management did not give guidance for the fiscal year.
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