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 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.

The article Why Big Lots Shares Plunged originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool owns shares of Big Lots. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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