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Big Lots unveils preliminary FQ4 results; Loop Capital cuts PT to Street low


Big Lots (BIG) unveils preliminary FQ4 results; analyst cuts PT to Street low

 

BIG
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Shares of Big Lots (NYSE:BIG) plummeted more than 20% on Monday after the discount retail chain operator shared preliminary results for the fiscal Q4 2023.

According to the company’s CEO and President Bruce Thorn, Big Lots’s Q4 performance was largely in line with its guidance.

“I am pleased to share that we delivered fourth quarter performance in line with our guidance on comparable sales, gross margin rate, operating expenses, and inventory,” Thorn commented.

“In addition, we generated substantial cash flow in the quarter, which was used to pay down debt on our $900 million asset-based lending facility.”

Big Lots is set to reveal its full Q4 financial report during the earnings call on March 7.

In the meantime, Loop Capital analysts downgraded the BIG stock to Sell from Hold and lowered the target price to $1 from $6. The new price objective implies an 81% downside from the current levels.

“We believe Big Lots has lost substantial consumer relevance and mindshare, which in our long experience is very difficult —if not impossible—to regain,” analysts at Loop Capital wrote.

“We are also extremely skeptical of Big Lots’ merchandising shift back to bargain/treasure products given changes in the competitive landscape over the past 10+ years,” they added.

Analysts also expressed concern over Big Lots’ financial stability, highlighting troubling signs from recent reports that the company has hired a turnaround consulting firm and is exploring financing solutions.

The investment bank believes its new price target represents the value of a “call option” on the company achieving what they consider to be an extremely unlikely recovery.

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