Big Lots (BIG) Stock Forecast & Price Target

Big Lots Inc. anticipates a year-over-year increase in operating income for each quarter of 2024, indicating positive momentum in its financial performance. The company's guidance for a 4Q23 comparable store sales improvement to high single digits reflects a recovery from a significant decline of 13.2% in 3Q23, supported by an expected gross margin increase of 170 basis points year-over-year to approximately 38%. Additionally, the projection of a 53rd week contributing around 400 basis points to total sales growth in 4Q23 demonstrates the potential for enhanced revenue, despite challenges such as store closures.

Big Lots Inc's financial outlook remains negative due to several key factors, including a significant decline in sales and diminishing operating margins, with a reported EBIT dollar loss of $113 million in 3Q23. The company is grappling with challenging macroeconomic conditions, such as high inflation and elevated interest rates, which have led to a substantial decrease in consumer spending on discretionary items, particularly big-ticket categories like furniture. Additionally, the unexpected closure of United Furniture Industries has further compounded these issues, while competitive pressures in the food and consumables sectors have hindered sales performance, as evidenced by notable declines across various product categories.