On Jun 10, we downgraded our long-term recommendation on
Big Lots, Inc.
) to Underperform based on the company's dismal first-quarter
fiscal 2013 performance. The stock currently carries a Zacks Rank
Why the Downgrade?
Estimates for Big Lots have shown a downtrend since the
company reported disappointing first-quarter results on May 30,
2013 that prompted management to take a conservative stance on
its future sales and earnings outlook.
The quarterly earnings, including the U.S. and Canadian
operations, came in at 61 cents a share that met the Zacks
Consensus Estimate but dipped 10.3% from the prior-year quarter.
Net sales also portrayed an unimpressive growth of 1.3% to
$1,311.3 million and fell short of the Zacks Consensus Estimate
of $1,326 million. The company stated that delay in tax refund
and adverse weather conditions refrained consumers from buying.
Comparable-store sales declined 2.9%.
Following soft first-quarter results, Big Lots now projects
fiscal 2013 earnings between $2.87 and $3.12 per share down from
a range of $3.05 to $3.25 forecasted earlier. Net sales are now
expected to increase in the range of 1% to 2%, down from 2% to
Consequently, we are witnessing a fall in the Zacks Consensus
Estimate. The Zacks Consensus Estimate for the second quarter of
fiscal 2013 plunged 41.9% to 25 cents over the past 30 days but
remained unchanged for the third quarter, portraying a loss of a
penny. Moreover, the Zacks Consensus Estimate for fiscal 2013
fell by 5% to $3.02 and for fiscal 2014 it tumbled by 6% to $3.27
per share, over the same time frame.
Cause for Concern
The key concerns for Big Lots remain waning domestic
comparable-store sales, sluggish sales of discretionary items in
a low income consumer environment, and soft sales of the higher
margin seasonal products. The fall in the Zacks estimates
indicates losing market share, which is hurting its profitability
and the grappling consumables category, when compared with other
Other Stocks That Warrant a Look
Not all stocks in the non-food retail, wholesale sector are
performing as disappointingly as Big Lots. Other stocks worth
Flowers Foods, Inc.
Bon-Ton Stores Inc.
), both of which hold a Zacks Rank #1 (Strong Buy), and
J&J Snack Foods Corp.
), which carries a Zacks Rank #2 (Buy).
BIG LOTS INC (BIG): Free Stock Analysis
BON-TON STORES (BONT): Get Free Report
FLOWERS FOODS (FLO): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
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