Why Big Lots Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of discount retailer Big Lots (NYSE: BIG  ) sank 10% today after its current-quarter and full-year guidance disappointed Wall Street.

So what: Big Lots' first-quarter results -- adjusted EPS of $0.61 on revenue of $1.31 billion -- managed to meet estimates, but downbeat guidance for the rest of 2013 is forcing analysts to recalibrate their growth expectations. While same-store sales in its Canadian business jumped 13.2%, a 2.9% decline in the U.S., where Big Lots generates most of its business, suggests that its domestic growth opportunities remain limited.

Now what: Management now sees full-year adjusted EPS of $2.87 to $3.12 on revenue growth of 1% to 2%, below its previous outlook of $3.05-$3.25 and 2%-3%.

"I am delighted to join Big Lots and welcome the opportunity to build on the strong franchise," said newly hired CEO David Campisi in a conference call with analysts. "I can assure you that we are moving quickly and I look forward to updating you on our progress."

With the stock now off about 20% from its 52-week highs and trading at a forward P/E of around 10, buying into that optimism might be worth looking into.

Interested in more info on Big Lots? Add it to your watchlist.


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