Analyst Expects Solid Q3 Results From Big Lots Despite Seasonal Challenges

Big Lots, Inc. BIG is expected to report Q3 earnings on Friday before market open with a street consensus of -$0.01 earnings per share and $1.12 billion in revenue.

MKM Partners analyst Patrick McKeever maintains a Buy rating going into the results with a $60 12-month price target.

McKeever’s favorable view is based on four key aspects:

1. Big Lots model’s growing consistency.
2. A “broad improvement” in merchandising and execution.
3. Likely continued momentum in focus categories: furniture (22 percent total sales) and soft home (12 percent of total sales).
4. Little to no perceived threat from e-commerce.

Comparable Estimates In Line

Same-store sales are at 1 percent, reflecting less clearance merchandise from Big Lots, according to McKeever.

“The lower clearance reflects strong sales of seasonal merchandise in the early spring period and likely had the biggest impact on August, as clearance becomes less important in September–October,” said the analyst.

McKeever also cited furniture growth driven by more floor space, expanded assortment, new leasing options and an in-store credit card launched in June.