Big Lots

Big Lots

BIG.NYSE

Last Updated On: January 1, 2019

Share Price On This Date: $27.10 USD

General merchandise retailer.

Summary

Big Lots has over 1400 stores spread across the United States, selling a variety of goods from furniture to food and consumables to seasonal products. They specialise in closeout and discount merchandise. For the past 10 years, their strategy has been to keep their store footprint stable and recycle any excess profits they have into buying back their shares on the public market. As a result, even though sales and earnings have stayed relatively flat on an absolute basis, their per share numbers have shown healthy growth.

Results this year have disappointed, though, as they have fallen prey to the “retail apocalypse” that has been sweeping the sector. However, they remain solidly profitable and as a down-market retailer, my hope is that they might exhibit some resiliency if we are headed for a recession, as they did during the last economic downturn. At the current price of $27.10, the stock is trading at a very reasonable 8 times my reduced earnings expectations for this year of $3.50.

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