Big Lots Shares Plunge 27.6% After Analyst Downgrade
Shares of discount retail company Big Lots plunged by 27.6% in morning trading today following a downgrade from Loop Capital analyst Anthony Chukumba. Chukumba downgraded the stock’s rating from Hold to Sell and significantly lowered the price target from $6 to $1. This new price target implies a potential 70% downside from where the shares were trading when the downgrade was announced.
Chukumba expressed concerns about Big Lots’ financial situation, stating that it is becoming increasingly precarious. He also highlighted recent media reports indicating that the company has hired a turnaround consulting firm, which further adds to the concerns.
Big Lots Provides Preliminary Fourth-Quarter Results
In response to this situation, Big Lots provided some comments regarding its preliminary fourth-quarter results. Bruce Thorn, the President and CEO, stated that the company’s fourth-quarter performance was in line with their guidance on various metrics including comparable sales, gross margin rate, operating expenses, and inventory. Thorn also mentioned that the company generated substantial cash flow in the quarter, which was used to pay down debt on their $900 million lending facility.
Big Lots also announced that they will be reporting their fourth-quarter and full-year 2023 results on March 7, 2024, providing investors with more clarity on the company’s financial performance.
Big Lots in Talks to Secure Loan Amid Liquidity Concerns
According to a Bloomberg report on February 9, 2024, Big Lots has been in talks with bankers and investors to secure a loan amid concerns about its liquidity. A company representative mentioned that they have taken significant actions to enhance their liquidity and are actively considering potential options.
Big Lots’ shares have been experiencing significant volatility, with 79 moves greater than 5% over the past year, indicating that the market is highly reactive to news related to the company.
Strong Results Six Months Ago, But Significant Downturn Since
Despite the recent downturn, Big Lots reported strong results six months ago, with same-store sales, revenue, and EPS surpassing Wall Street analysts’ expectations. The management expressed optimism about the future, highlighting their solid position to play offense and the support they receive from associates and vendor partners. The company anticipated a gradual improvement in its performance throughout the year driven by strategic actions.
In addition, Big Lots recently completed sale leaseback transactions, generating $300 million in proceeds, which has helped strengthen its liquidity position.
As of now, Big Lots’ shares are down 54.1% since the start of the year, trading at $3.67, which is 78.6% below its 52-week high of $17.09 from February 2023.
It is worth noting that an investment of $1,000 in Big Lots’ shares five years ago would now be valued at $116.22, highlighting the significant decline in value.
Investors will be closely monitoring Big Lots’ upcoming financial results and any potential updates on their liquidity situation.
Analyst comment
Negative news: Big Lots’ shares plunge 27.6% after a downgrade and concerns about financial situation. Downgraded to Sell with a price target significantly lowered. Market expects continued decline in stock price. Closely monitoring upcoming financial results and liquidity situation.
