Big Lots misses on Q2 earnings as consumers pull back on spending

Yahoo Finance Live anchors discuss second-quarter earnings for Big Lots.

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BRIAN SOZZI: Hello, hello. We're still a few minutes away from the opening bell. So let's take a look at what is moving here on this Tuesday morning. Brad, let's start with some Big Lots because I would say I almost don't even understand this move. You're seeing the stock up close to 7% in the premarket. Not a good quarter. Same store sales down 9.2%. Margins under pressure. Like we heard from Best Buy, third quarter looks to have started on a sour note. They're looking for third quarter same store sales to be down low double digits. Our inventory man, Connor Hickey, flagging almost 23% increase in inventory year over year. A lot of red flags throughout this quarter. Yet, the stock is up.

BRAD SMITH: Yeah, and the comps were difficult for Big Lots, as they had kind of lapped some of their stronger home related spending in 2020 and even 2021 that they were kind of citing. But even as we're looking at where people have pulled back from some of that home spending, of course, Big Lots was going to be impacted by that.

Because if there's one thing within home spending that we've seen be strong, it's more of still that direct-to-consumer approach, whether it's a joy bird within a lazy La-Z-Boy, and some of the other categories where it is less kind of annexed to that retail relationship, and instead, going straight to the manufacturer of that product. Because that is, at this point for consumers who are looking to get these items, that's the best sign to know exactly when you're going to get one of these large home products. Otherwise, it's just going to kind of be up in the air.

BRIAN SOZZI: I do like going into Big Lots. They opened a Big Lots by me in a former-- my childhood Toys 'R' US store. I like it because--

BRAD SMITH: Do they greet you on the way in?

BRIAN SOZZI: No, nobody bothers me.

BRAD SMITH: Because nobody greets him on the way in.

BRIAN SOZZI: I just walk in there and buy heavily discounted products. What I don't like-- and I think there could be an opportunity for them-- sell some more fresh food. You go into these Big Lot stores, there's a lot of canned food that probably nobody's even eating. You can get all that stuff at the Dollar General, Dollar Tree, Walmart, or Target. Sell some fresh food. I'd buy from Big Lots.

BRAD SMITH: All right.