Short Sellers In Big Lots Ahead of Earnings (BIG)

On Wednesday morning we’ll get to see earnings out of Big Lots Inc. (NYSE: BIG). The estimates for the closeout retailer from First Call are $0.84 EPS on $1.41 billion in revenues.  Next quarter estimates are $0.26 EPS on $1.11 billion in revenues. Estimates for fiscal Jan-2009 are $1.53 EPS on $4.64 billion in revenues.

Its strategy change to add some slightly more upscale items couldn’t have come at a worse time when you consider that the discretionary income of its customers flew out the window of the 1978 station wagon. 

Analysts have an average price target of $18.00.  We’d also note that the short interest has grown to more than 24 million shares, which is almost 8-days worth of trading volume.             

Big Lots’ 52-week trading range is $12.40 to $36.15.  This is one we have been critical of for a while, although it appears that at least most of the damage to the stock may have been seen.  Either way, we think it will take a long time, a lot patience, and maybe even a miracle for this to not stay in the bottom third of ist 52-week trading range since it has already recovered sharply.

Despite our negativity, we’ll still be the first to admit that any "non-atrocious news" will probably create a minimum of a short covering rally.

Jon C. Ogg
March 1, 2008