Big Lots Looking Like A Small Parcel

 

Big Lots stock plunged 23% after announcing 3Q earnings this past week. Big Lots posted comparable-store sales growth of 3.4%, toward the high end of the company's guidance of 2% to 4%, which drove total revenue up 3.6% to $1.15 billion, edging out estimates at $1.14 billion. So, why the stock price plunge? Big Lots suffered a surprisingly large loss. Big Lots posted a loss of $0.16 per share in the quarter, but analysts were looking for a break-even per share.

The news come just days after Big Lots announced that Bruce Thorn will become chief executive officer. Bruce most recently was president and chief operating officer at Tailored Brands, a specialty retailer of men’s clothing. Bruce said near-term results to be challenging this holiday season.

NOTE: I see Big Lots gave Bruce a warm welcome this past week.

 

 

For some retailers, the holiday season can represent as much as 30 percent of annual sales with hobby, toy and game stores reporting the highest percentage, accounting for approximately 30.1 percent of their sales during the 2017 holiday season. Overall, last year holiday sales represented nearly 20 percent of total retail industry sales.

Source

Big Lots also cut its full-year earnings guidance, calling for adjusted earnings per share of $3.55 to $3.75, down from a previous range of $4.40 to $4.55 and worse than earnings per share of $4.45 a year ago. However, Management did maintain comparable sales guidance at 1%. It appears the challenge for Big Lots is maintaining their gross profits as revenues grow. If not, their expenses will grow, which will put pressure on their margins.

So is there more pain in story for Big Lots, lets go to the charts to find out?

On the monthly chart, price broke out of the ascending channel.

 

 

On the monthly chart, there is a monthly demand level at $21.

 

 

Thus, the monthly chart suggest there is still room to the downside. The chart suggests, price will pull back a bit, but head lower to the demand level at $21.

 

 

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.  

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Published by Rolland Thomas

on

with SteemPresshttps://mentormarket.io/rolland/big-lots-looking-like-a-small-parcel/

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