Deemed an essential business, Big Lots (NYSE: BIG) has kept its stores open during the coronavirus pandemic. But the company has been confronting sluggishness in sales and adjusted operating income for several years. In fiscal 2019, sales grew less than 2% year over year, from $5.2 billion to $5.3 billion, with same-store sales increasing a tepid 0.3%. Its adjusted operating income fell from $229 million to $207.9 million.
With this kind of performance, it's no wonder the stock's return has been negative over the last five years, lagging both the S&P 500 and S&P 500 Retail Indexes. This has drawn the interest of activist investors Macellum Advisors and Ancora Advisors, which own a combined 11.2% of the company and are seeking to replace the entire nine-member board of directors and improve capital allocation.
While Big Lots is fortunate to remain open during these trying times, the pandemic isn't the only issue that has weighed on the stock recently. The company was already off to a sluggish start in the first quarter when it reported fourth-quarter earnings at the end of February, before the widespread stay-at-home orders (although there were supply chain disruptions). This leads to the question of whether Big Lots is up for the challenges when we get back to the new normal.