Big Lots (BIG) fell 5% on Wednesday after Barclays analyst Meredith Adler downgraded the stock to Equal Weight on fears that the fourth quarter could prove disappointing. Among her concerns is Big Lots’ inability to offer good deals on electronics even as people give more electronic gifts. In addition, there appears to be a disconnect in its plans for its toy department.
“Although BIG said it will be de-emphasizing toys this year, our own observation is that the stores’ toy inventory is still very high. For this reason, we think 4Q sales and margins could be disappointing, and we are lowering our EPS forecast, primarily to reflect lower margins.”
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