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Big Lots Calls Off View & Defers Store Plans Amid Coronavirus
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Unlike apparel and non-essential goods retailers which have shuttered majority of stores or curbed job hours, general merchandise retailer Big Lots, Inc. (BIG - Free Report) has been seeing demand for its essential products. However, this hasn’t helped the company completely counter the ill effects of the coronavirus pandemic. Although higher sales of essential items, including consumables and food, drove low-single digit comparable sales (comps) growth quarter-to-date, management withdrew outlook for first quarter and fiscal 2020. Moreover, it cancelled the "Friends and Family" event for April, which is expected to hurt the company’s top line for the fiscal first quarter.
During the fourth-quarter conference call, management had projected that the fiscal first quarter will be a tough one owing to supply-chain disruptions from the pandemic and upfront investments in higher-return growth initiatives. The company had projected comps decline in the range of low to mid-single digit range and earnings per share in the band of 30-45 cents for the quarter. Big Lots had delivered earnings of 92 cents in the same quarter a year ago.
In addition, management made unplanned expenditure on temporary store and distribution center wage increases as well as store cleaning costs and other items. These additional expenses are likely to continue in the remainder of the fiscal first quarter, thanks to heightened uncertainty surrounding the coronavirus outbreak.
Nevertheless, Big Lots is taking several measures to strengthen its financial flexibility, including assessment of additional external financing and bringing down capital expenditures. Also, it has been cutting down on operating expenses and adjusting inventory receipts to cope up with the circumstance. The company now expects ‘Store of the Future’ conversions to nearly 20 stores, calling off store openings at the moment. Management had earlier planned to convert 80 stores in fiscal 2020. Currently, the company’s net revolver utilization is roughly $150 million below the prior-year’s equivalent point.
Being a provider of essential goods, Big Lots is well on track to serve the community in such unprecedented times. Impressively, the company has been making operational enhancements and had added curbside pickup service for online orders. Also, it has been encouraging early-hour shopping for senior and other vulnerable citizens as well as adhering to all safety protocols.
Apart from Big Lots, Target (TGT - Free Report) has prioritized its actions to resonate well with the prevailing crisis and chosen to cater to Americans’ burgeoning demand for essential commodities now. Other big-box retailers like Walmart (WMT - Free Report) and Dollar General (DG - Free Report) have announced plans to hire associates to efficiently deal with consumers’ panic-buying demand, and in turn serving the jobless community. While Dollar General announced plans to hire roughly 50,000 workers by April-end, Walmart is looking to temporarily hire 150,000 workers across its stores, clubs and distribution centers.
Price Performance
Coming to Big Lots, shares of this Zacks Rank #5 (Strong Sell) have lost 51.7%, wider than the industry’s 14.5% fall in the past three months.
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Big Lots Calls Off View & Defers Store Plans Amid Coronavirus
Unlike apparel and non-essential goods retailers which have shuttered majority of stores or curbed job hours, general merchandise retailer Big Lots, Inc. (BIG - Free Report) has been seeing demand for its essential products. However, this hasn’t helped the company completely counter the ill effects of the coronavirus pandemic. Although higher sales of essential items, including consumables and food, drove low-single digit comparable sales (comps) growth quarter-to-date, management withdrew outlook for first quarter and fiscal 2020. Moreover, it cancelled the "Friends and Family" event for April, which is expected to hurt the company’s top line for the fiscal first quarter.
During the fourth-quarter conference call, management had projected that the fiscal first quarter will be a tough one owing to supply-chain disruptions from the pandemic and upfront investments in higher-return growth initiatives. The company had projected comps decline in the range of low to mid-single digit range and earnings per share in the band of 30-45 cents for the quarter. Big Lots had delivered earnings of 92 cents in the same quarter a year ago.
In addition, management made unplanned expenditure on temporary store and distribution center wage increases as well as store cleaning costs and other items. These additional expenses are likely to continue in the remainder of the fiscal first quarter, thanks to heightened uncertainty surrounding the coronavirus outbreak.
Nevertheless, Big Lots is taking several measures to strengthen its financial flexibility, including assessment of additional external financing and bringing down capital expenditures. Also, it has been cutting down on operating expenses and adjusting inventory receipts to cope up with the circumstance. The company now expects ‘Store of the Future’ conversions to nearly 20 stores, calling off store openings at the moment. Management had earlier planned to convert 80 stores in fiscal 2020. Currently, the company’s net revolver utilization is roughly $150 million below the prior-year’s equivalent point.
Being a provider of essential goods, Big Lots is well on track to serve the community in such unprecedented times. Impressively, the company has been making operational enhancements and had added curbside pickup service for online orders. Also, it has been encouraging early-hour shopping for senior and other vulnerable citizens as well as adhering to all safety protocols.
Apart from Big Lots, Target (TGT - Free Report) has prioritized its actions to resonate well with the prevailing crisis and chosen to cater to Americans’ burgeoning demand for essential commodities now. Other big-box retailers like Walmart (WMT - Free Report) and Dollar General (DG - Free Report) have announced plans to hire associates to efficiently deal with consumers’ panic-buying demand, and in turn serving the jobless community. While Dollar General announced plans to hire roughly 50,000 workers by April-end, Walmart is looking to temporarily hire 150,000 workers across its stores, clubs and distribution centers.
Price Performance
Coming to Big Lots, shares of this Zacks Rank #5 (Strong Sell) have lost 51.7%, wider than the industry’s 14.5% fall in the past three months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>