QUOTE AND NEWS
SeekingAlpha  Sep 2  Comment 
By James Bjorkman: How Big a Buy is Big Lots? Big Lots (NYSE: BIG) reported its second quarter earnings for fiscal year 2014 on Friday, 29 August 2014, and it was a tepid picture. The company beat earnings estimates by a penny and reported...
Market Intelligence Center  Sep 2  Comment 
After closing Friday at $46.35, Big Lots Inc (BIG) presents an attractive opportunity to get a 5.26% return in just 137 days, which is an annualized return of 14.02% (for comparison purposes only). To enter this trade, sell one Jan. '15 $45.00...
SeekingAlpha  Aug 31  Comment 
By Orange Peel Investments: Big Lots (NYSE:BIG) is the biggest closeout retailer in the U.S., but it has been struggling over the past few years due to increased competition (mostly from the different dollar stores). The company on Friday posted...
Benzinga  Aug 30  Comment 
Steve Grasso said on CNBC's Stock Pops & Drops that he wanted to buy Orbitz Worldwide (NYSE: OWW) on a recent pull back but he failed to do that. On Friday, the stock bounced 3.4 percent and he thinks that it will go even higher. Josh Brown...
Motley Fool  Aug 29  Comment 
The discount retailer posted solid results in its fiscal second quarter, but future guidance shows the pace of its recovery isn't as fast as many investors would like to see.
TheStreet.com  Aug 29  Comment 
NEW YORK (TheStreet) -- Shares of Big Lotsa are lower by -1.76% to $46.37 in early market trading asathe discount retaileraraised the bottom end of its earnings guidance for the fullayear to a range ofa$2.40 to $2.50 after postingafiscal second...
Benzinga  Aug 29  Comment 
UBIC (NASDAQ: UBIC) shares slipped 9.03% to $20.60. The directors of UBIC resolved to acquire all of the outstanding shares of TechLaw Solutions. Kandi Technolgies Group (NASDAQ: KNDI) shares dropped 8.37% to $17.52 after the company announced...
Benzinga  Aug 29  Comment 
Big Lots (NYSE: BIG) shares declined 2% to $47.00 in pre-market trading on Q2 results. Big Lots reported better-than-expected fiscal second-quarter earnings and raised its FY14 earnings forecast. The company also announced a new $125 million...
newratings.com  Aug 29  Comment 
WASHINGTON (dpa-AFX) - Big Lots, Inc. (BIG) reported income from continuing operations of $17.2 million, or $0.31 per share for the second-quarter of 2014. Net income from continuing operations was $21.94 million or $0.38 per share, prior year....
Wall Street Journal  Aug 29  Comment 
Big Lots Inc. said its fiscal second-quarter profit topped its expectations as the company posted higher sales.




 

Big Lots (NYSE:BIG) is a U.S. off-price retailer that sells everything from food and clothes to furniture and appliances. Specifically, it is a closeout retailer -- it purchases merchandise, at very low prices, directly from vendors that result from production overruns, packaging changes, discontinued products, liquidations, or returns -- and thus is able to offer products at much lower prices than traditional discount retailers like Dollar Tree Stores (DLTR). The company is also able to acquire merchandise from brand name retailers and appeals not only to the lower-class but also price-conscious middle-class consumers.

Big Lots is somewhat shielded from the negative impacts of tough economic times by its position as a niche market retailer for thrift-minded middle-class consumers who put emphasis on quality and value. During economic slowdowns, discount stores like Big Lots typically have an influx of customers looking to save money. Big Lots faces the challenge of maintaining and strengthening the customer base it gained during the recession.

Company Overview

Business Model

Big Lots is a national retailer of closeout merchandise that results from production overruns, packaging changes, discontinuation of products, liquidations, and returns. The company's business model is organized into two distinct and important steps. The first step is to find and maintain a steady supply of closeout merchandise. Due to the nature of closeout merchandise, BIG has formed important arrangements with top vendors to ensure that its store are stocked with merchandise from all categories. The second step is to price significantly below general and other discount retailers to appeal to value-minded consumers interested in purchasing brand-name merchandise at a large discount.

Business Segments

Big Lots sells closeout merchandise from different retail categories, including:

  • Consumables (30.8% of net sales): food, health and beauty, plastics, paper, chemical, and pet products.
  • Home (15.2% of net sales): domestics, stationery, and home decorative products.
  • Furniture (15.2% of net sales): upholstery, mattresses, bedroom, dining room, and occasional furniture.
  • Hardlines (14.3% of net sales): appliances, electronics, video games, tools, and home maintenance products.
  • Seasonal (12.5% of net sales): lawn & garden, Christmas, summer, and other holiday products.
  • Other (12% of net sales): toy, jewelry, infant accessories, and apparel products.

Business Growth

FY 2010 (ended January 30, 2010)[1]

  • Net sales increased 4.7% to $4.95 billion.
  • Net income increased 11% to $222 million.

Trends and Forces

Supply of Closeout Merchandise Depends on Economy

During slow economic times, big brand retail stores struggle getting merchandise off store shelves, and many of them are left with excess inventory. Additionally, retailers that go bankrupt, like Circuit City Stores (CCTYQ), Linens n' Things, and KB Toys, enter liquidation during which they are looking to get rid of their merchandise by any means necessary. During the recession, both of these occurrences were highly advantageous for Big Lots because it relies on finding sources of closeout merchandise from brand-name retailers to maintain its store inventory of discounted goods. Furthermore, as general retailers and bankrupt companies were eager to clear out excess merchandise, Big Lots was be able to purchase closeout merchandise at lower prices, reducing cost and increasing profit margins. A strong economy means that retailers will have less trouble getting items off store shelves and fewer of them will go bankrupt. If Big Lots isn't able to provide its customers with quality items at low enough prices, the company's bottom line would be negatively impacted.

Merchandise Supply Affected by Exchange Rates

Big Lots purchases a quarter of its merchandise directly from foreign vendors (most coming from Chinese vendors). A substantial portion of the merchandise Big Lots purchases domestically are also originally supplied by overseas vendors. As the value of the dollar fluctuates against foreign currencies, especially the Chinese yuan, Big Lots risks decreases in its profit margins, since the cost of acquiring merchandise from overseas vendors will increase if the dollar weakens relative to foreign currencies.

Competition

Big Lots vs. Dollar Stores

Big Lots is a discount retailer that competes with other stores that have similar business models. Thus, Big Lots faces direct competition from dollar-store chains, such as Family Dollar Stores (FDO) and Dollar Tree Stores, that sell many products are very low prices.

Big Lots vs. Big-Box Sellers

As a discount retailer, Big Lots also faces significant competition from big-box sellers, such as Wal-Mart Stores (WMT) and Target (TGT), whose enormous scale allows each to extract value in their inventory purchases and pass these savings on to consumers. With an average square footage per store of 29,800 sq. ft., Big Lots stores are smaller than Wal-Mart's or Target's, but larger than comparable dollar discount retailers. In some sense, it is more nimble and less concentrated than big-box competitors, but does not necessarily enjoy the same economies of scale (though, as a large closeout discount retailer, it has some).

News

  • In July 2011, Big Lots completed the purchase of Liquidation World Inc., which represents the company's first expansion of retail operations outside of the United States.

References

  1. BIG 2010 10-K pg. 19
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki