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Big Lots (NYSE:BIG) shares fell nearly 10% in premarket trading on Friday after falling short of Q1 expectations and suspending its dividend.
The Ohio-based retailer reported a $3.40 per share loss on an adjusted basis, more than double the expected $1.57 per share loss. The huge loss came as net sales declined 18.3% year over year, which was $70M below Street consensus. On a GAAP basis, the company reported a loss per share of $7.10 in the quarter due to net after-tax charges of $107.4M.
Gross margin decreased nearly 180 basis points in the quarter as the company pursued markdowns to reduce inventory hangs. Inventory fell 18.8% to $1.088B in the first quarter compared to Q1 2022.
“Macroeconomic headwinds have created significant challenges for us, which are reflected in our results and outlook. But we’re confident that these headwinds will abate, and when they do, we’ll see a big boost to our business,” said CEO Bruce Thorne. “In particular, we expect furniture and seasonal will return to be as strong a growth driver as they have been in the past, as consumer confidence improves and as we continue to bring innovation and incredible value to our assortment.”
He added that the company is taking aggressive actions to cut costs and inventory levels. Thorne said he is “encouraged by the green shoots” he is seeing in business as customers look for more bargains.
“Turning to the first quarter results, our low-income consumers were hurt by inflation, low tax refunds and high interest rates, and their confidence has been shaken by banking failures. In addition, we continue to pursue high-ticket purchases during the pandemic,” commented Thorne. “In addition to these macroeconomic factors, the sudden closure of our furniture sales, particularly Brohill Upholstery, our largest seller were adversely affected by product shortages, while seasonal lawns and gardens were affected by adverse weather.”
The company also suspended its dividend following the results.
Big Lots (BIG) shares fell 11.12% in premarket trading after the earnings announcement.
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