Big Lots’ ambitious long-term growth outlook includes 500 net store openings

Marianne Wilson
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Big Lots
Big Lots is targeting a sales goal of $8 billion to $10 billion.

Big Lots is thinking big.

The discounter on Monday provided a long-range growth and margin outlook that includes a sales goal of $8 billion to $10 billion driven by approximately 500 net store openings, merchandise sales productivity initiatives and continued ecommerce growth. Big Lots, which currently operates 1,431 stores in 47 states, reported net sales of $6.2 billion for fiscal 2020.

In addition, the company expects an operating margin goal of 6% to 8% driven by gross margin improvement and expense leverage, and a return on invested capital goal of 20% to 25%.

“We see a clear and long runway for growth ahead of us, coupled with the opportunity to drive returns through margin expansion and judicious capital allocation,” said CEO Bruce Thorn. “We have all of the foundations in place to accomplish this, including a seasoned and ambitious team, new tools and technologies, and a proven pipeline of innovation."

The retailer also provided an update on results for the fourth quarter of fiscal 2021. Through the end of fiscal December, its performance was at the upper end of its expectations. On a quarter-to-date basis through the end of fiscal December, the company achieved a two-year comparable sales increase of approximately 9%.

Since early January, however, Big Lots said it has seen a softening of traffic and sales trends which it believes, in addition to adverse weather conditions, has been significantly driven by the rapid spread of the Omicron strain of COVID-19 and its impact on consumer behavior. Also on Monday, Lululemon warned that omicron will take a toll on its fourth-quarter results even in the face of strong holiday results.

"We are pleased with our holiday performance, with two-year comps for fiscal November and December running up 9%,” said Thorn. “Our outstanding team has worked tirelessly to offset headwinds from the global supply chain to ensure our customer would find what she wanted in our stores and online. While the Omicron variant creates some near-term challenges, we look forward to rounding out another very successful year for the company.”

Based on a continuation of current trends, Big Lots expects to achieve a flat to low-single-digit percentage two-year comparable sales increase for fiscal January, below prior expectations, and resulting in diluted EPS for the quarter in the range of $1.80 to $1.95.

The company also announced that, for the quarter-to-date, it has repurchased approximately 1.6 million shares for an aggregate amount of approximately $70 million. The company has approximately $180 million remaining available under a $250 million share repurchase authorization approved by its board of directors on December 1, 2021.