Big Lots Inc. (BIG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We continue to maintain our Neutral recommendation on Big Lots. The company has launched an extensive 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 the domestic operations. Developing e-Commerce capabilities to cater to the changing trends is expected to be a long term growth driver. All these were well reflected in the better-than expected results for the first quarter of fiscal 2014. However, lingering macro economic headwinds and sluggish discretionary sales might run down all its turnaround initiatives. Stiff competition adds more to the woes.

Overview:

Based in Columbus, OH and founded in 1967, Big Lots, Inc. (BIG) is a broad-line closeout retailer in the United States. The company offers products under various merchandising categories, which include Consumables, Home, Furniture, Hardlines, Seasonal and Other. As of May 30, 2014, Big Lots operated 1,496 stores in the U.S.

Consumables Category: These include food, health and beauty, plastics, paper, chemical, and pet departments.

Home category: These include domestics, stationery and home decorative departments.

Furniture Category: These include the upholstery, mattresses, ready-to-assemble and case goods departments (consist of bedroom, dining room and occasional furniture).

Hardlines Category: These include electronics, appliances, tools and home maintenance departments.

Seasonal Category: These include lawn and garden, Christmas, summer and other holiday departments.

Other Category: These include the toy, jewelry, infant accessories and apparel departments.

In Dec 2013, Big Lots declared its exit from the unprofitable Canadian market. The company has shut down all primary operations and stores and has reported these as "discontinued" in first-quarter fiscal 2014. Notably, it had entered Canada in 2011 after acquiring Liquidation holdings Inc.


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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.



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