Shares of Big Lots Inc. BIG, +5.34% dropped 6.0% in premarket trading Friday, as the discount retailer swung to a narrower-than-expected fiscal third-quarter loss and sales that fell less than forecast, and provided a downbeat earnings outlook for the current quarter as supply chain issues weight on gross margin. The net loss for the quarter to Oct. 30 was $4.3 million, or 14 cents a share, after net income of $29.9 million, or 76 cents a share, in the year-ago period. The FactSet consensus for per-share losses was 16 cents. Sales fell 3.1% to $1.34 billion but was above the FactSet consensus of $1.32 billion, while gross margin declined to 38.9% to 40.5%. Same-store sales fell 4.7% but that beat expectations for a 5.2% decline. The company said that the fourth quarter is off to a “strong start,” but said it expects supply chain challenges to continue in the near term. The company expects fourth-quarter EPS of $2.05 to $2.20, below the FactSet consensus of $2.39, as gross margin is expected to be down 150 basis points from a year ago, driven by freight headwinds. Separately, the company said it authorized a new $250 million stock repurchase program. The stock has declined 8.7% over the past three months through Thursday while the S&P 500 SPX, -0.84% has gained 0.9%.
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