Big Lots Adds More Brands to Food Assortment to Drive Sales - Analyst Blog

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To generate incremental sales, Big Lots Inc. ( BIG ) has revamped its food department by giving it a fresh look along with adding more brands to its food assortment in order to make shopping convenient for its customers.

Racks across Big Lots' 1,491 stores will showcase popular brands like Kraft,  Miracle Whip A.1., MIKE & IKE, Nutella, Macaroni & Cheese , Sauce, Life Savers, Velveeta, Smucker's, Duncan Hines and Pillsbury , at compelling prices.

In addition, the Broadline closeout retailer has laid special emphasis on its international food business, World Flavors , which has grown considerably over time. Responding to the demands of customers, World Flavors will now comprise selected food brands of the loved European, Hispanic and Asian cuisines.

After a mediocre financial run and dismal Canadian foray, Big Lots has launched a powerful turnaround strategy to reinstate itself on the growth trajectory. In addition to the broader "Edit to Amplify" initiative, management is paying special attention to furniture and food, and consumable categories as both continue to gain traction. Pulling back from the unprofitable Canadian operations was a brilliant move as it now allows full focus on domestic operations.

Food and consumable category has displayed strong same-store sales up in double digits for the first quarter and mid single-digits for the last two quarters of fiscal 2013, making it a profitable avenue. Therefore, the company has been actively rolling out cooler/freezer to expand merchandise of food-related items with an aim to target food stamp recipients. To benefit from the holiday season, it intends to cover 600 stores before the fourth quarter of fiscal 2014, bringing the total number of stores with cooler/freezer capacity to 725.

Moreover, to keep up with changing trends, Big Lots is laying emphasis on developing its e-Commerce/omnichannel capabilities. The company, which competes with Burlington Stores, Inc. ( BURL ), Dollar Tree, Inc. ( DLTR ) and Costco Wholesale Corp. ( COST ), is likely to invest nearly $15 million of capital toward e-Commerce development and it is likely to be operational sometime in fiscal 2015.

Though the company's efforts are in the right direction, sluggish discretionary sales might slow down the turnaround process.

This Zacks Rank #3 (Hold) stock is expected to reports its second-quarter earnings on Aug 25, 2014.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BIG , BURL , DLTR , COST

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