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Analyst Blog

On Jun 22, 2013, Zacks Investment Research downgraded Big Lots Inc. (BIG - Analyst Report) 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 - Snapshot Report) and Bon-Ton Stores Inc. (BONT), both of which hold a Zacks Rank #1 (Strong Buy). Fred's, Inc. (FRED - Analyst Report), which carries a Zacks Rank #2 (Buy) is also worth considering.

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