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Big Lots (BIG) to Report Q3 Earnings: Is a Beat in Store?

Big Lots, Inc. BIG is likely to report a decline in its top and bottom lines in its third-quarter fiscal 2023 results on Nov 30 before market open compared with its last fiscal year’s figures.
 
The Zacks Consensus Estimate for BIG’s fiscal third quarter’s bottom line is pegged at a loss of $4.71 per share, wider than the loss of $2.99 per share reported in the year-earlier quarter. The consensus estimate has declined by 0.6% in the past 30 days.

The consensus mark for quarterly revenues is pinned at $1,030 million, indicating a 14.4% drop from the prior-year quarter's reported number.

This Columbus, OH-based player delivered an earnings surprise of 1.2%, on average, in the trailing four quarters.

Key Factors to Note

Big Lots’ quarterly performance is anticipated to reflect the adverse impacts of a challenging macroeconomic backdrop, including a high inflationary environment. On its last reported quarter's earnings call, management expected its sales backdrop to remain challenging in the fiscal third quarter. Big Lots is likely to have witnessed persistent pressure in the demand environment, primarily for higher tickets and other discretionary items.

The closure of a key vendor led to product shortages that have been affecting the company’s furniture sales. Lower tax refunds and higher interest rates might have dented the demand for its products, in turn affecting its performance. Consequently, management forecasts comparable sales to decline in the low teens range for the fiscal third quarter.

High costs and operating expenses might have been a concern for the company. For instance, in the second quarter of fiscal 2023, selling, general & administrative expenses as a percentage of net sales increased 370 basis points year over year to 39.8%. Higher occupancy, depreciation and advertising costs are likely to have marred its margin performance in the to-be-reported quarter. Our model estimates adjusted SG&A expenses as a percentage of net sales to increase 430 basis points in the fiscal third quarter.

The company’s focus on cost management and operational efficiency, along with lower inbound freight rates, are likely to have offered some respite. Our estimate for the gross margin is pegged at 36% in the quarter, reflecting a year-over-year improvement of 200 basis points.

Big Lots’ Operation North Star initiative and e-commerce business appear encouraging as well. Strength in BIG’s Broyhill and Real Living brands are likely to have been tailwinds. Also, BIG’s focus on strategic actions, including inventory management, boosting customer experience and embracing innovative sourcing strategies, is expected to have driven its third-quarter performance.

Big Lots, Inc. Price and EPS Surprise

Big Lots, Inc. Price and EPS Surprise
Big Lots, Inc. Price and EPS Surprise

Big Lots, Inc. price-eps-surprise | Big Lots, Inc. Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Big Lots this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the case here.

Big Lots has an Earnings ESP of +8.65%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company carries a Zacks Rank #3 at present.

Other Stocks Poised to Beat Earnings Estimates

Here are a few more companies that, according to our model, have the right combination of elements to come up with an earnings beat this reporting cycle:

The Gap, Inc. GPS has an Earnings ESP of +7.94% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

GPS’ earnings for the to-be-reported quarter are expected to increase by 124%. The consensus mark for its quarterly earnings has moved up by 12.5% to 18 cents per share in the past 30 days.

The Zacks Consensus Estimate for Gap’s quarterly revenues is pegged at $4.2 billion, which suggests a fall of 0.2% from the figure reported in the prior-year quarter.

American Eagle AEO has an Earnings ESP of +4.55% and currently carries a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up by 4.8% to 44 cents per share in the past 30 days. The consensus estimate suggests 18.9% growth from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pinned at $1.56 billion, suggesting growth of 4.5% from the figure reported in the prior-year quarter.

Abercrombie & Fitch Co. ANF has an Earnings ESP of +8.63% and carries a Zacks Rank #2. ANF’s earnings for the to-be-reported quarter are expected to increase by 161.7% on a year-over-year basis. The consensus mark for its quarterly earnings has moved up by 17.1% to $2.12 per share in the past 30 days.

The Zacks Consensus Estimate for Abercrombie & Fitch’s quarterly revenues is pegged at $1.34 billion, which suggests growth of 12% from the figure reported in the prior-year quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

The Gap, Inc. (GPS) : Free Stock Analysis Report

Big Lots, Inc. (BIG) : Free Stock Analysis Report

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