Big Lots Takes Big Tumble on 2Q Miss, Dreary '12 View

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Published August 23, 2012

| FOXBusiness

Big Lots (BIG) spooked Wall Street on Thursday by slashing its full-year guidance and disclosing a deeper-than-expected 38% decline in second-quarter earnings amid shrinking same-store sales.

The close-out retailer, which also announced the hiring of a new chief financial officer and chief operating officer, saw its shares tumble 17% in the aftermath of the gloomy news.

Big Lots said it earned $22.1 million, or 36 cents a share, last quarter, compared with a profit of $35.7 million, or 50 cents a share, a year earlier. Last quarter’s EPS trailed the Street’s view of 41 cents as well as the low end of management’s own call for 37 cents to 42 cents.

Revenue rose 4.4% to $1.22 billion, narrowly missing consensus calls for $1.24 billion.

Same-store sales dipped 1.9% and gross margins contracted to 39.2% from 39.5%.

At the same time, Big Lots slashed its full-year non-GAAP EPS view to $2.80 to $2.95, well below its earlier call for $3.25 to $3.40 and significantly missing the Street’s view of $3.29.

Big Lots also downgraded its 2012 cash flow target to $125 million from $190 million as same-store sales are expected to decline in the low single digit rate.

Shareholders dumped their shares in response to the gloomier view and earnings miss, sending them diving 16.56% to $32.41 ahead of the opening bell. Big Lots shares had been up just 3% on the year as of Wednesday’s close.

Meanwhile, Big Lots unveiled a slew of management changes, tapping 10-year veteran Lisa Bachmann to take over as chief operating officer. Bachmann will stay on as chief information officer.

Management also promoted Timothy Johnson, who joined the company in 2000, to the post of chief financial officer.

“I've always believed our people are our greatest asset and that we continue to develop some of the most talented leaders in the retail industry,” CEO Steve Fishman said in a statement.

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