UPDATE: Deutsche Bank Downgrades Big Lots to Sell on Structural Challenges

Deutsche Bank reduced its rating on Big Lots

from Hold to Sell and announced a $23 price target. Deutsche Bank noted, "The more we study BIG's consumables segment, the greater our concerns mount - 2 points. First, while we originally thought BIG could shift its closeout mix lower/add coolers (to help drive frequency), we've recently learned that b/c closeouts carry a much higher merchandise margin rate (> 40%) vs. low-30's for replenishment, such a move would considerably alter BIG's merchandise margin structure. Second, given the proliferation of the $ stores and their own augmentation in consumables, BIG is losing out on trips. " Big Lots closed at $28.91 on Monday.