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Big Lots Downgraded to Strong Sell

Zacks Equity Research

On Jun 8, 2013, Zacks Investment Research downgraded Big Lots Inc. (BIG) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Big Lots has been witnessing sharp downward estimate revisions after the company reported disappointing first-quarter fiscal 2013 results that prompted management to take a conservative stance on its future sales and earnings outlook.          

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.

Excluding Canadian operations, adjusted earnings from the U.S. operations came in at 69 cents per share, down 10.4% year over year.

Consolidated net sales increased 1.3% year over year to $1,311.3 million but missed the Zacks Consensus Estimate of $1,326 million. Comparable-store sales declined 2.9%. The company stated that delay in tax refund and adverse weather conditions refrained consumers from buying.

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 the growth range of 2% to 3%.

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.

Other Stocks to Consider

Not all stocks in non-food 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), and J&J Snack Foods Corp. (JJSF), which carries a Zacks Rank #2 (Buy).

Read the Full Research Report on BIG

Read the Full Research Report on BONT

Read the Full Research Report on JJSF

Read the Full Research Report on FLO

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