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Big Lots to Shut Wholesale Biz

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Big Lots Inc. (BIG - Free Report) announced the decision to shutter its wholesale operations, including Big Lots Wholesale, Consolidated International and Wisconsin Toy wholesale by fiscal 2013 end. During the shutdown, inventories are expected to liquidate and associates will be absorbed by the retail segment in the next 90 days.

Following the announcement, pre-tax charges for the third quarter are estimated to range between $5 and $8 million. Also, post the wind down, the wholesale business financials will be treated as discontinued operations for fiscal 2013.

With the rising competition, sales and growth margins of the wholesale segment have fallen below expectations, leading the company to shift its attention to retailing and seeking other avenues to improve customer relations and generate higher returns for its shareholders.

Although the wind down will be detrimental for many associates involved with the wholesale segment, Big Lots is striving to build and implement new long-range strategies to reach out to its customers. Taking into account its current financial status and future business opportunities, it has already undertaken initiatives. These include enhancing cooler and freezer program, commencing furniture financing and foray into the digital world.

This leading North American closeout merchandise and toy retailer is expected to announce its third-quarter fiscal 2013 results on Dec 2, 2013. Our proven model does not conclusively show that Big Lots is likely to beat the Zacks Consensus Estimate this quarter. This is because the company carries a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. For a stock to outperform, it needs both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3.

Other stocks in the retail discount industry that warrant a look include Dollar General Corporation (DG - Free Report) , Dollar Tree, Inc. (DLTR - Free Report) and Ross Stores Inc. (ROST - Free Report) all holding a Zacks Rank #2 (Buy).

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