<< back
Research
Publication Date: 11 Dec 2018 - By Robert P. By Robert P.Equity Fundamental Equity USA Consumer
Big Lots, Inc. (“BIG”) is a community retailer operating in the United States. Notably, management categorizes the company as a Discount Retailer. Big Lots was incorporated in Ohio in May 2001 and was the surviving entity in a merger with Consolidated Stores Corporation.
Qualitative Concerns
• Big Lots faces increasing competition from different competitors in each of its 7 merchandise categories.
• The furniture space is being penetrated by online companies such as Amazon and Wayfair that offer a compelling alternative to brick and mortar stores.
• Discount grocers continue to wage an intense price war in the food category and BIG has been unable to successfully compete thus far.
• Dollar stores and large retailers compete with Big Lots in all categories and are pushing huge discounts during the holidays.
Fundamental Concerns
• Net sales and comparable store sales remain weak despite new growth initiatives.
• The few merchandise categories with positive comps, Furniture, Seasonal and Soft Home, are experiencing increased levels of competition.
• Gross and operating margins are showing weakness as transportation and pay-roll related costs grow.
• Inventory levels appear elevated and may be cause for concern should it go unchecked.
• Insiders have been selling and analyst estimates do not appear to properly account for present risks.