Yahoo Finance Big Lots' (BIG) Omnichannel Endeavors Appear Encouraging
Big Lots, Inc. BIG 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.
For fiscal 2024, the Zacks Consensus Estimate for Big Lot’s sales and earnings per share (EPS) shows corresponding growth of 0.6% and 43.5% year over year. A Growth Score of B with an expected long-term earnings growth rate of 12% speaks volumes for the stock. Shares of this general merchandise retailer with a Zacks Rank #3 (Hold) have increased 3.6% year to date compared to the industry’s 2.5% drop.
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 experiencing e-commerce growth, buoyed by the success of 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. It has further rolled out ship from store capabilities to its outlets identified for two-day delivery. It has also integrated web and store capabilities to drive enhanced returns, pricing, consistency and order visibility.
Big Lots, Inc. Price, Consensus and EPS Surprise
Big Lots, Inc. price-consensus-eps-surprise-chart | Big Lots, Inc. Quote
During fiscal 2022, e-commerce sales accounted for 6% of the company’s business, up from 2% three years ago. 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.
Management has also been taking steps to control expenses and drive productivity. This will help make solid investment decisions apart from boosting margins. Markedly, the company’s cost-control efforts in fiscal 2022 were successful, delivering over $120 million in savings with almost $70 million of the money being structural. In fiscal 2023, it expects generating above $70 million of incremental structural savings via supply-chain store labor efficiencies. This is likely to offset inflationary impacts across SG&A. In addition, Big Lots is focused on improving shrink costs.
Furthermore, Big Lots is launching into the next phase of the project, which is likely to aid it in optimizing orders, enhancing customer experience and managing costs. Moreover, both the Broyhill and Real Living brands have been performing well.
In addition, Big Lots’ transformation initiative, referred to as Operation North Star, is commendable. 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.
Impressively, BIG expects an improvement in financial results year over year for fiscal 2023. Management highlighted that earnings momentum is likely to be weighted toward the back half of the fiscal year on better actions and reductions in freight costs. It anticipates comparable sales to improve sequentially in the back half of the fiscal year on solid merchandising and marketing efforts. The gross margin is expected to improve year over year on less markdown activity and reduced costs, especially in freight import freight rates. Also, improvements in shrink trends will provide a boost to the gross margin during 2023. Net new stores will contribute nearly 40 basis points of growth year over year in the first quarter of fiscal 2023.
Solid Picks in Retail
We have highlighted three top-ranked stocks, namely Urban Outfitters URBN, American Eagle Outfitters AEO and Stitch Fix SFIX.
Urban Outfitters, a leading apparel and accessories retailer, 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 Urban Outfitters’ current financial-year sales and EPS suggests growth of 4.3% and 41.7%, respectively, from the year-ago reported figures. URBN delivered a negative earnings surprise of 7.1% in the trailing four quarters.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO delivered an earnings surprise of 23.3% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 15.5%, respectively, from the year-ago reported figures.
Stitch Fix, an online personal styling retailer, currently carries a Zacks Rank of 2. The company has a trailing four-quarter negative earnings surprise of 10.6%, on average.
The Zacks Consensus Estimate for Stitch Fix’s current financial-year EPS suggests growth of 1.2% from the year-ago reported figure.
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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Big Lots, Inc. (BIG) : Free Stock Analysis Report
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Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
