Geoffrey Smith 

Premarket Trading: Investing.com — Big Lots (NYSE 🙂 Stock fell more than 21% Friday, as rising budget pressures forced the retailer to make a big miss in sales and suffer a surprising loss over the past three months. 

This news is the latest in a long line of retailers that have reported disappointing results this quarter because of high inflation, supply chain issues, and a diminishing of fiscal stimulus from the pandemic. This news comes on the heels Gap’s (NYSE:) announcement that it will be reducing its outlook for next year following the Thursday bell. 

Big Lots experienced a $11.1 million loss on an adjusted basis during the, which was 39c per share. The company had previously predicted $1.09, which was below its guidance range of $1.10- $1.20.

Chief Executive Bruce Thorn said that after a solid February and March, “trends materially slowed in April, resulting in a need to increase markdowns.”

Thorn stated that the slowdown in sales was due to the increased gas prices and wider inflation. This is impacting discretionary spending across all retail industries. “As a result, we missed our sales plan by approximately $100 million, the vast majority in April.”

He noted that there were still “significant headwinds” in the supply chain. 

Thorn stated that the current environment is “challenging”, forcing the company to reduce inventories and “temporary,” scale back Capex in connection with store openings or refurbishments. 

With higher input costs, slower delivery times and increased inventory levels, the result was a nearly 50% increase in inventory compared to a year ago. This has led to an ever-increasing amount of working capital.

Big Lots pulled its guidance from the whole year because of the uncertainty. It said that the cost savings it plans between now and the close of its fiscal year will return gross margins back to the levels they were a year ago in the fourth quarter. 

Big Lots stocks had slightly trimmed its losses by 7:40 am ET (1140 GMT), having rebounded from the 2-year low it reached earlier in the week.