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Big Lots Down to Strong Sell

Zacks Equity Research

On Jun 22, 2013, Zacks Investment Research downgraded Big Lots Inc. (BIG) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Muted top-line performance on account of the struggling consumables category and waning domestic comparable-store sales is taking a toll on Big Lots’ profitability. The company took a conservative stance on its future sales and earnings outlook following the disappointing first-quarter fiscal 2013 results.

This broad-line closeout retailer in the United States declared its results on May 30, 2013, wherein earnings, including U.S. and Canadian operations, came in at 61 cents a share that met the Zacks Consensus Estimate but dipped 10.3% from 68 cents earned in the prior-year quarter.

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% – 2%, down from the growth range of 2% – 3%.

Consequently, the company has been witnessing sharp downward estimate revisions. The Zacks Consensus Estimate for fiscal 2013 fell by 6.3% to $2.95 over the past 30 days, while for fiscal 2014 it tumbled 4.1% to $3.29 per share, over the same time frame.

Moreover, 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 2 cents.

Other Stocks to Consider

Not all stocks in the retail, wholesale sector are performing as disappointingly as Big Lots. Other stocks worth considering include Flowers Foods, Inc. (FLO) and Bon-Ton Stores Inc. (BONT), both of which hold a Zacks Rank #1 (Strong Buy). Fred's, Inc. (FRED), which carries a Zacks Rank #2 (Buy) is also worth considering.

Read the Full Research Report on BIG

Read the Full Research Report on BONT

Read the Full Research Report on FRED

Read the Full Research Report on FLO

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