Monday is proving a disaster for retail chain Big Lots (NYSE:BIG). It started out all right, with a small gain, but it quickly erased that gain as it plunged by a catastrophic 30% in Monday morning’s trading. What in the world caused such calamity? A report emerged stating that Big Lots is looking to get new financing amid liquidity issues. That means it’s been hitting up its bankers and investors to see if there’s any available cash it can use.
While Big Lots officials weren’t talking much about it, one of them did note that the company is taking “…significant actions to enhance our liquidity.” Apparently, its sales of late have not been great, and it’s already brought in an adviser—AlixPartners LLP—to help get its operations back on track.
Big Lots Receives an Analyst Downgrade
Big Lots is known as a “deep discount” retailer. If you’ve been in any of their stores lately, you know they’re not putting much into frills or augmenting their customers’ experience. We know that the economy overall has not been doing great; one report from the New York Fed noted that household debt stands at $17.5 trillion right now. Theoretically, deep discounters should perform well during slower economic periods. However, Anthony Chukumba of Loop Capital recently slashed his rating on BIG stock to Sell while assigning a $1 price target. This suggests that even Big Lots might be having a hard time moving couches and cookies in such an environment.
What Is the Outlook for Big Lots?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on BIG stock based on one Hold and three Sells assigned in the past three months, as indicated by the graphic below. After a 75.8% loss in its share price over the past year, the average BIG price target of $3.88 per share implies 4.02% upside potential.
