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Big Lots Down 18% in Premarket Trading Friday on Surprise Missed Earnings

The company posted a loss of 39 cents when the street was looking for a profit of 95 cents.

 

Shares of Big Lots (BIG) are down 18% in Friday's pre-market session after the company posted much worse-than-expected revenue and earnings for the first quarter of 2022 this morning.

The retailer posted a net loss for the quarter ended April 30, 2022, of $11.1 million, or $0.39 per share. The street was looking for profit of $0.95 per share.

Revenues came in at $1.37 billion for the quarter, down 15.4% from the prior year and below the street's expectations of $1.46 billion.

Same-stores fell 17.0%, significantly below the 11.4% decline predicted by analysts.

For fiscal Q2, Big Lots is guiding the street to a mid-to-high single digit percentage decline in same store sales, much worse than the expected 1.5% decrease.

Big Lots did not issue EPS guidance.

CEO Bruce Thorn said, "We expect the environment to remain challenging and we remain highly focused on managing the business prudently, which includes aggressively right-sizing our inventories over the course of Q2."

Investment thesis

Big Lots shares have tumbled 66% since peaking in June 2021.

We see no reason for investors to try to be brave at these levels. Today's earnings release exacerbates an already negative situation for Big Lots investors, and we think that caution is warranted until at least the company's fiscal Q2 report in three months' time.

Take the CEO at face value when he says that he expects "the environment to remain challenging." 

The stock will be volatile in the main market today, and we think the sidelines are the place to be.

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Source: Equities News