What happened

Shares of Big Lots Inc. (NYSE:BIG) dropped 10.1% on Friday after the retail chain delivered mixed fiscal results relative to expectations for the fiscal fourth quarter ended Feb. 3, 2018.

More specifically, Big Lots' quarterly adjusted earnings grew 14% year over year to $109.3 million, or $2.57 per share -- above guidance for a range of $2.35 to $2.40 per share. Meanwhile, net sales climbed just 4% year over year to $1.642 billion, driven entirely by an extra week in the quarter as compared to the same year-ago period. To that end, Big Lots posted a surprise 0.1% decline in same-store sales, below guidance for a range of flat to positive 2%. 

Analysts, on average, were expecting adjusted earnings of only $2.43 per share on higher revenue of $1.66 billion.

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So what

Even so, during the subsequent conference call, Big Lots COO Lisa Bachmann called it a "good" quarter given its strong earnings and progress toward longer-term goals. Regarding the slight sales shortfall, Bachmann added that the quarter played out largely as expected, though adverse weather conditions negatively impacted sales in many major markets in the month of January. 

Now what

It's also worth noting that Big Lots simultaneously increased its quarterly dividend 20% to $0.30 per share, and the company announced a new $100 million share repurchase authorization.

But for what it's worth, Big Lots also has a history of under-promising and over-delivering on the bottom line -- this was the company's 17th straight quarter of meeting or exceeding its EPS guidance, after all -- so perhaps the market simply wasn't impressed by its latest earnings beat regardless of its freshly boosted capital returns efforts. 

Until Big Lots can prove its same-store sales weakness is an isolated event, and with shares trading up around 20% from their 52-week lows leading up to this report, it's hard to blame investors for taking a step back today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.