Big Lots Inc. shares are down 1.4% in Monday trading after the low-priced retailer was downgraded to hold from buy at Deutsche Bank. Bank analysts have concerns that margin pressure will come from a few directions, including wage inflation and increased online promotions or free shipping to gain consumer attention. The bank also believes the retailer will have trouble reaching the 2.2% same-store sales increase forecast for the first quarter, which the company will report on Friday. Deutsche Bank lowered the price target to $47 from $49. While Deutsche Bank analysts believe Big Lots has made gains from furniture financing, better merchandising and marketing, and other improvements, the retailer is facing increased competition, including from Wal-Mart Stores Inc. which reported earnings that beat estimates on Thursday and gave an upbeat outlook. The retail giant also plans to make major price investments. The Wal-Mart threat impacts other retailers in the low-priced space, like Dollar General Corp and Dollar Tree Inc. , Deutsche Bank wrote. “We also believe the core dollar store shopper is healthy today, with spend driven by employment & wage gains and less impacted/swayed by market volatility and political fear-mongering,” the note said. Big Lots shares are up 11.4% for the year so far while the S&P 500 is up 0.5% for the same period.
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