Loop Capital's Chukumba on Ollie's rating upgrade: Will keep benefitting from Big Lots bankruptcy

Kelly Evans (Anchor) 00:00.230

joining us now is luke capital 's anthony chukumba anthony and others on the street feel differently and are more concerned about the stocks prospects so tell us what you expect

Anthony Chukumba (Consumer Sector Head) 00:09.960

sure absolutely so i think that as you said i expect alice to be able to comp the comp in twenty twenty six i think that there's too much concern about the tough comparisons that they're going to face and it really to me comes down to four different factors first off you know

Anthony Chukumba (Consumer Sector Head) 00:25.320

they are going to continue to benefit from the big lots bankruptcy and a lot of that is going to be access to merchandise i mean folks who are supplying big lots now of this big hole to fail the second thing is that the management team i just really feel like they're much more

Anthony Chukumba (Consumer Sector Head) 00:39.470

scientific and data driven compared to their predecessors the third thing is that the macro environment remains quite challenged so i do think that they will benefit from a trade down and the fourth thing is that they are carrying more consumables which i think drives more

Anthony Chukumba (Consumer Sector Head) 00:53.310

consistent store traffic yeah

Kelly Evans (Anchor) 00:55.030

apparently the food is actually a big kind of business for them jeffrey says they're in the danger zone why why you don't share any of those concerns

Anthony Chukumba (Consumer Sector Head) 01:04.990

well i don't know exactly you know what jeffries wrote in terms of that being the danger zone but i'm not terribly concerned i mean look i think all they really have to do is count the competition in other words the more that folks see that this is a company that consistently

Anthony Chukumba (Consumer Sector Head) 01:18.030

grow their comp store sales and by the way they just have to be low single digits from my perspective and then you you kind of marry that with continued square footage growth continued margin expansion and the stock will work and you know part of the reason i feel very strongly

Anthony Chukumba (Consumer Sector Head) 01:33.230

about that is because other comparable companies trade at thirty times earnings and before our upgrade these guys were trading at more like twenty four twenty five

Kelly Evans (Anchor) 01:40.470

yeah tim seymour just put walmart on his naughty list says it's too expensive and maybe allies would be an example of one that's not you think the consumers going to do well next year or people getting too hyped up about this

Anthony Chukumba (Consumer Sector Head) 01:51.870

certainly in early twenty twenty six we are very optimistic about higher income tax returns and remember with this core low income consumer if they get a bigger tax return it's not going to save it they're going to spend it and so we definitely see a significant tailwind for

Anthony Chukumba (Consumer Sector Head) 02:07.950

allies in early twenty twenty six from those tax refunds