Here's How Big Lots (BIG) is Placed Ahead of Q2 Earnings
Big Lots, Inc. BIG is likely to report a decline in the top and bottom lines from the last fiscal year’s quarterly reading in its second-quarter fiscal 2023 results on Aug 29, before market open. The Zacks Consensus Estimate for the fiscal second-quarter bottom line is pegged at a loss of $4.15 per share, wider than the loss of $2.28 per share reported in the year-earlier quarter. The consensus estimate has declined by 2.2% in the past 30 days.
The consensus mark for quarterly revenues is pegged at $1,100 million, indicating an 18.3% drop from the prior year quarter's reported number.
This Columbus, OH-based player delivered a negative earnings surprise of 3.2%, on average, in the trailing four quarters.
Big Lots, Inc. Price and EPS Surprise
Big Lots, Inc. price-eps-surprise | Big Lots, Inc. Quote
Key Factors to Note
Big Lots’ quarterly performance is expected to have been hurt by a challenging macroeconomic landscape, including headwinds like inflationary pressures across wages and other line items. For the fiscal second quarter, we expect adjusted SG&A expenses of about $480.7 million, suggesting a decline of 1.2% year-over-year. However, as a percentage of net sales, the metric is estimated to be 43.6%, suggesting an increase of 750 basis points year-over-year.
On its last reported quarter's earnings call, management anticipated the sales backdrop to remain challenging, mainly in the fiscal second quarter. Big Lots is expected to have witnessed persistent pressure in the market environment for the quarter under review, primarily in higher ticket and other discretionary items.
The closure of a key vendor led to product shortages that has been affecting the company’s furniture sales. Big Lots highlighted that product shortages in furniture are likely to have hurt comparable sales by roughly 100 basis points in the to-be-reported quarter. Lower tax refunds and higher interest rates might have affected the demand for its products, in turn affecting its performance. Consequently, management forecasts comparable sales to decline in the high teens range for the fiscal second quarter.
Higher occupancy and advertising costs, depreciation expenses and costs related to the operation of incremental forward distribution centers are likely to have marred its margin performance. For the fiscal second quarter, Big Lots expects to have incurred depreciation of around $36 million, in line with our estimate.
However, the company’s focus on cost reduction and operational efficiency, along with lower inbound freight rates, are likely to have offered some respite. Our estimate for the gross margin is pegged at 33% in the quarter, reflecting a year-over-year improvement of 40 basis points.
Big Lots’ Operation North Star initiative and e-commerce business appear encouraging. Strength in BIG’s Broyhill and Real Living brands are likely to have been tailwinds. It had earlier stated that net new stores will contribute nearly 30 basis points of year-over-year growth in the second quarter of fiscal 2023.
The company’s strategic actions, including addressing inventory challenges, boosting customer experience and embracing innovative sourcing strategies, are expected to boost its performance.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Big Lots this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here, as you can see below.
Big Lots currently has an Earnings ESP of -2.76%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
BIG has a Zacks Rank #4 (Sell).
Stocks Poised to Beat Earnings Estimates
Here are a few companies that, according to our model, have the right combination of elements to come up with an earnings beat this reporting cycle:
American Eagle Outfitters AEO currently has an Earnings ESP of +8.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is expected to report bottom-line growth when it releases second-quarter fiscal 2023 results. The Zacks Consensus Estimate for earnings is pegged at 15 cents per share, indicating an increase of 275% from the year-ago quarter’s reported level.
The company’s revenues are anticipated to have declined year over year. The consensus mark for the same is pegged at $1.19 billion, implying a 0.9% decrease from that reported in the prior-year period.
Casey's General Stores CASY currently has an Earnings ESP of +1.03% and a Zacks Rank #3. The company is expected to register bottom-line decline when it reports first-quarter fiscal 2024 results. The Zacks Consensus Estimate for earnings is pinned at $3.39 per share, indicating a fall of 17.1% from the year-ago quarter’s reported number.
The company’s revenues are anticipated to decrease year over year. The consensus mark for the same is pinned at $3.85 billion, indicating a deterioration of 13.5% from that reported in the year-ago quarter. CASY has a trailing four-quarter average earnings surprise of 7.5%.
lululemon athletica LULU currently has an Earnings ESP of +1.05% and a Zacks Rank of 2. LULU is likely to record top-line growth when it reports second-quarter fiscal 2023 results.
The Zacks Consensus Estimate for revenues is pegged at $2.2 billion, indicating a 16.1% improvement from the prior-year quarter’s actual. The consensus mark for earnings is pinned at $2.53 per share, implying a 15% increase from that reported in the comparable period of 2022. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Big Lots, Inc. (BIG) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
