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Big Lots Plummets on Disappointing Q1 2024 Earnings

This retail earnings season could be described as "the haves and the have nots"

Big Lots (NYSE: BIG) saw its stock fall sharply in pre-market trading following the release of its Q1 2024 earnings report. Big Lots Q1 earnings saw the company report a net loss of $206.1 million, or $7.10 per share, far worse than the $11.1 million loss from the same period last year. Big Lots Q1 revenue also dropped to $1.12 billion from $1.37 billion, missing analysts’ expectations.

Key Factors in Earnings Report

  1. Sales Decline: Comparable store sales dropped by 18.2%, attributed to weakened consumer demand and intense competition.
  2. Inventory Issues: Overstock led to aggressive markdowns, negatively impacting margins.
  3. Operational Costs: Increased labor and supply chain costs exacerbated financial challenges.

In the earnings call, CEO Bruce Thorn stated, “The first quarter was extremely challenging, and our results were below our expectations as we faced significant sales pressure and higher costs.” This underscores the difficulties Big Lots is experiencing.

Company Background

Big Lots operates over 1,400 stores across 47 states, offering merchandise including furniture, food, and household items. The company has historically managed inventory and costs effectively but faces significant challenges in the current environment.

Industry Overview

The retail industry, particularly the discount segment, is grappling with inflationary pressures and shifts in consumer behavior post-pandemic. Companies must navigate increased operational costs and a shift toward e-commerce.

Market Sentiment

Social media platforms like Twitter and Reddit are filled with negative sentiment regarding Big Lots. Users express concerns about the company’s ability to recover, given the significant drop in comparable store sales and operational issues.

Investor Considerations

Big Lots faces significant losses, declining sales, and high operational costs. Addressing inventory and cost management issues will be crucial for the company to regain investor confidence. Further volatility is expected, and investors should remain cautious. Investors should be weary of retailers on the more discretionary end of the spectrum, especially ones that cater to the middle and lower middle class given the weakening economic environment.

Source: Barchart.com

View Chart on Barchart

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Disclaimer: Wealthy VC does not hold a long or short position in any of the stocks, ETFs or cryptocurrencies mentioned in this article. WealthyVC is in the business of profiling growth stocks for compensation which constitutes a conflict of interest.

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