On July 26, Big Lots (BIG) announced its second-quarter earnings, which disappointed investors and sent shares plunging 10% in premarket trading on Thursday.
The company reported quarterly revenue of $1.21 billion, which fell short of the $1.22 billion that Wall Street analysts were expecting. Big Lots also posted adjusted earnings per share of $0.68, below the $0.71 that analysts were looking for.
Big Lots’ weak results were driven by a decline in store traffic and lower average transaction values.
Comparable store sales fell 1% during the quarter, while total transactions declined 3%.
The company’s gross margin also contracted during the quarter as Big Lots’ promotional activity weighed on margins. Big Lots’ gross margin fell to 34.2% from 35% a year ago.
“We continue to face challenges in our business as consumers remain cautious in their spending,” said Big Lots CEO Steven Fishman.
“We are taking aggressive actions to improve our performance, including initiatives to drive traffic and transaction growth, control expenses and optimize inventory. “
Why did Big Lots stock drop?
Big Lots stock dropped because the company’s quarterly revenue and earnings fell short of analyst expectations. Additionally, comparable store sales declined during the quarter, while total transactions and gross margins also contracted.
