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Big Lots (BIG) Rides on Growth Strategies: Time to Hold?

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Big Lots, Inc. (BIG - Free Report) appears well poised for growth, thanks to the company’s impressive omnichannel initiatives. The company’s Operation North Star, which encompasses driving top-line growth, cost containment and enhancement in systems and infrastructure, appears encouraging as well. Management is steadily taking steps to control expenses.

Impressively, this Columbus, OH-based company has outperformed the industry in the past month. Shares of this retailer have increased 21.3% in the aforementioned period, compared to the industry's 3.5% rise. A Momentum Score of A coupled with a long-term expected earnings growth rate of 12% also highlights the inherent potential of this current Zacks Rank #3 (Hold) stock.

Let’s Delve Deeper

Big Lots is leaving no stone unturned to tap the best in the market, as clear from its efforts to leverage marketing strategies, with loyalty databases and e-commerce enhancement. The company is progressing well with the “Buy Online Pick-up In Store” (BOPIS) functionality and curbside pickup. Also, the company’s same-day service at Instacart and Pickup seems profitable. Management has further rolled out ship-from-store capabilities to a few of its outlets identified for two-day delivery. It has integrated web and store capabilities to drive enhanced returns, pricing, consistency and order visibility.

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Additionally, the company’s payment-type choices on sites, including Apple Pay and Google Pay, appear encouraging as well. It is also reducing transaction friction by introducing its third mobile wallet payment program, PayPal. Management has expanded the aisle assortment across the company’s shipping channels to enrich the customer experience.

During the first nine months of 2022, e-commerce sales grew 12%, accounting for 7% of its business. Some notable efforts in this space include multiple same-day and next-day delivery options, ship-from-store service, extended aisle assortment in its shipping channels, the introduction of payment options such as Paypal and Apple Pay, reduced friction at checkout and improved inventory. Further, the company’s private brands, Broyhill and Real Living have been performing well.

In addition, Big Lots has been gaining from its transformation initiative, referred to as Operation North Star. Operation North Star has been focusing on streamlining the cost structure and core enablers with significant capabilities and tools in several areas of business such as real estate, supply chain and store engagement. The company continues to experience strength in the Operation North Star strategy and is focused on its key drivers including customer growth, merchandise productivity, e-commerce and store count.

BIG’s pantry-optimization efforts, which include repositioning space from food staples to food entertainment, bode well. Additionally, the company made efforts to stay afloat via cost-management actions and strengthening the balance sheet. It has been on track to transform its business by offering amazing deals, particularly in toys, home appliances and soft homes, as well as improved assortments. Earlier, it had rolled out a tool that boosts the inventory flow to drive sales and cut down costs.

Solid Picks in Retail

We have highlighted three top-ranked stocks, namely Tecnoglass (TGLS - Free Report) , Chico's FAS (CHS - Free Report) and Boot Barn (BOOT - Free Report) .

Tecnoglass manufactures and sells architectural glass,windows and aluminum products for residential and commercial construction industries. TGLS currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Tecnoglass’ current financial-year sales and EPS suggests growth of 11.2% and 9%, respectively, from the year-ago reported figures. TGLS has a trailing four-quarter earnings surprise of 26.9%, on average.

Chico's FAS, an omnichannel specialty retailer, currently sports a Zacks Rank of 1. CHS has a trailing four-quarter earnings surprise of 87.5%, on average.

The Zacks Consensus Estimate for Chico's FAS’s current financial-year sales and EPS suggests growth of 19.6% and 127.5%, respectively, from the year-ago reported figures.

Boot Barn, a fashion retailer of apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 11.7%, on average.

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 11.8% from the year-ago reported figure.

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