According to the news report by CNBC, Big Lots Inc.’s stocks plunged during trading on Friday, August 31, after the company’s quarter two earnings report proved to be a disappointment. Big Lots Inc. is a community retailer that is offers its customers products in categories such as food, décor, furniture, etc.
The retail company’s shares dropped by more than 9% to close at $43.05 per share. So far, for the year, the company’s stocks have dropped by more than 14.7%.
Big Lots, headquartered in Columbus, Ohio has more than 1,400 retail stores across the United States. The company reported its second quarter net income at $24.2 million, which is $0.59 per share. This is well below the analysts’ expectations of earnings of $29.1 million or $0.67 per share. According to Financial Times, these results missed the company’s projections for earnings to be between $0.60 and $0.70 per share.
Big Lots also stated that comparable sales went up by 1.6%, which was almost at the top end of the company’s own projections. This figure was also well above the market expectation of 1.1%. Comparable sales is a measure of sales in stores that have been open for more than 12 months.
Net sales also went up by 0.2% from the same time last year. The retailer posted its revenues at $1.22 billion, which also fell short of market expectations of $1.23 billion. The percentage of gross profits to total sales also fell down to 40.2%. This number was at 40.4% at the same time last year.
For the third quarter – the current quarter – Big Lots stated that it is expecting comparable sales to go up to between 2% and 4%. The company is also expecting adjusted earnings per share to be at 6 cents per share. For the full fiscal year, Big Lots said that it still expected its comparable sales to go up by 1%.
The retailer’s guidance on adjusted earnings per share, however, is expected to be below market consensus expectations. Big Lots said its adjusted EPS is expected to be between $4.40 and $4.55 per share. However, the market expectation is that the company should achieve at least $4.47 adjusted EPS.
During the earnings call, Lisa Bachmann, Big Lots’ Executive Vice President and Chief Merchandising and Operating Officer, stated that the second quarter of the year was actually a solid quarter from the perspective of sales. She said that after a really challenging first quarter, the company was able to show a meaningful acceleration in sales in Q2.
Bachmann attributed their first quarter’s challenges to the weather, due to which businesses in most of their markets faced challenges in terms of sales. However, by the second quarter, especially from May onwards, the weather improved, which helped boost sales, especially of the company’s lawn and gardens and summer collections.
She also stated their seasonal inventories were well-positioned for the third quarter of 2018 and that the company was getting early positive feedback on their harvest and Halloween collections.
According to Bachmann, the company’s e-commerce arm had a record quarter in almost every measurable metric – sales, growth, conversions, site visits, average order values etc.
Bit Lots also declared its quarterly cash dividend payout, scheduled to be disbursed on September 28 this year. This dividend will be paid out at $0.30 per common share and will be given to shareholders who are on the company’s records at close of business on September 14, 2018.
Like many brick-and-mortar retailers, Big Lots is also struggling with changing consumer preferences as more and more people prefer to shop online from giants such as Amazon.com.