Big Lots Q1 sales fall amid spending pullback by core customers
Big Lots reported a loss and disappointing sales for its first quarter as its core consumers remain under financial pressure and continue to rein in spending, particularly in high-ticket discretionary items.
In a statement, president and CEO Bruce Thorn said that although near-term conditions have been challenging, the company is not slowing down on making progress to transform its business.
“The current financial performance does not yet reflect the stronger business model that we’ve created through our five key actions, but we expect the fruits of those efforts to become more apparent in the back half of the year,” Thorn said.
The five actions include to “own” bargains, to communicate unmistakable value, to increase store relevance, to win customers for life with omnichannel efforts and to drive productivity. Big Lots is moving to its goal of 75% bargain penetration and, within that, to substantially grow its extreme bargain penetration to 50% by year-end.
“Extreme bargains provide significant savings over price leaders and are working, as we've seen the sales trend shift from negative to solidly positive in several categories along with a better gross margin outcome,” Thorn said. “We still have a lot of work ahead of us, but remain confident that the five key actions are putting us on the right path to turn around our business.”
The discounter reported a net loss of $205 million, or $6.99 a share, for the quarter ended May 4, compared to a loss of $206 million, or $7.10 a share, in the year-ago period. The company’s adjusted loss per share came to $4.51. Analysts had expected a loss of $3.92 per share. (The 2024 results include a net after-tax loss of $72.7 million, or $2.48 per share, associated with impairment charges, fees related to Project Springboard and distribution center closure costs.)
Sales fell 10.2% to $1.009 billion, missing estimates of $1.040 billion. Same-store sales fell 9.9%. In April, Big Lots opened two international buying offices, “strategically” located in Shanghai, China and Ho Chi Minh City, Vietnam in a move to enhance its competitiveness in sourcing products, including closeout deals and extreme bargains.
In February, the company closed on a deal to acquire the entire inventory of the Hearthsong brand of children's toys. The inventory, valued at more than $22 million, will bring more than 500 new SKUs to Big Lots stores across the country.
"Our operational initiatives to offer a larger assortment of new and exciting extreme bargains, cut costs, and increase productivity exceeded our targets in Q1,” Thorn stated. “This enabled us to improve consumer perceptions about our brand and the value we offer, and to deliver a year-over-year improvement in gross margin and operating expenses, despite significant sales pressure.”
Big Lots has more than 1,300 stores in 48 states.