Big Lots has experienced a big drop today after its sub-par projection of third-quarter same-store sales. The discount retailer now expects sales results to be slightly negative for the fiscal third quarter, down from an earlier predicted growth rate of 1% to 3%. Per-share earnings, meanwhile, are expected at the top of the company's previous announced forecast of 9 to 13 cents.
Investors are dismissing the continued hope for decent earnings results and concentrating on the bleak sales outlook. Volume has been heavy today and the stock's decline, as aforementioned, has been steep. The stock isn't far from matching its mid-August nadir, but remains about 17% higher than its annual low.
There's the faint possibility that short covering could swoop in to rescue the shares. Currently, about one quarter of the equity's available float is sold short, amounting to a short-interest ratio of 9.6 days to cover. If the bears decide that today is the best it's gonna get, they could take some profit off the tables by buying back their positions. This behavior could help spur a recovery, but BIG has a long path trek ahead of it. Once it retraces today's losses, the stock is still facing short-term resistance from its 10-day and 20-day moving averages.