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

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Summary:
Big Lots continues to reinstate itself on the growth trajectory after a dismal run. The company is focused on growth avenues (Furniture financing and Food consumables category) and has exited the unprofitable Canadian market, making us more constructive on the stock. Moreover, to regain momentum the company has undertaken several initiatives such as store remodel, "Edit to Amplify" merchandising strategy and developing its e-Commerce capabilities to cater to the changing trends. However, Big Lots continues to disappoint as fourth-quarter fiscal 2013 adjusted earnings of $0.98 per share tumbled 53% year over year. The company also provided a tepid outlook for fiscal 2014, triggering a downtrend in the Estimate. Also, waning comps, sluggish sales of discretionary items and competitive backdrop keep us on tenterhooks. Currently, we maintain our long term Neutral recommendation.

Overview:

Based in Columbus, Ohio 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 March 7, 2014, Big Lots operated 1,495 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 is likely to shut down all primary operations and stores and report these as "discontinued" by 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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