Shares of Big Lots (BIG) - Get Free Report dropped Friday after the discount retailer missed Wall Street estimates on fiscal second quarter earnings and revenue due to continued supply chain and freight headwinds
Shares of the Columbus, Ohio., retailer slipped 4.29% to $51.92.
For the quarter ended July 31, the big-box retailer posted earnings of $37.7 million, or $1.09 a share, down from $452 million, or $11.29 a share in the same three-month period a year earlier.
Sales declined to $1.46 billion from $1.64 billion a year earlier.
Comparable sales declined 13%, partially reversing the 31% year-over-year comparable-sales gain that Big Lots posted in the second quarter of 2020 amid a surge in shopping during the earlier phases of the COVID-19 pandemic.
"We know that the supply chain headwinds will continue into fall and holiday, and the situation remains fluid," said President and CEO Bruce Thorn in a statement.
A Telsey analyst downgraded Big Lots to market perform from outperform citing concern about higher supply chain and shipping costs.
“Our visibility on Big Lots’ near-term performance is incrementally more clouded, given significantly higher supply chain and freight expenses,” Telsey analyst Joseph Feldman wrote in a note published on Friday.
Feldman also added that next year’s earnings “could come down significantly” amid lingering cost pressures.
Big Lots should be able to execute its transformation strategy over the next few years, but Feldman doesn’t expect any near-term gains from the plan to fully offset these headwinds.
Telsey's estimates and price target for Big Lots are under review.
Big Lots has three buys, five holds two sells and an average price target of $64 a share according to Bloomberg data.
Feldman also warned that the consumer shopping environment could “prove more challenging” as the U.S. laps government stimulus in the first half of next year.