Big Lots reported a much wider-than-expected first-quarter loss as sales declined 18% and its customers dealt with inflation, lower tax refunds and higher interest rates.
The discounter said it is being “very aggressive” in how it manages its business and has raised its cost-cutting target to over $100 million in 2023 from the $70 million it announced earlier this year. The company has also identified more than $200 million of opportunities it will pursue to boost the bottom line over the next 18 months.
“We are also highly focused on ensuring we have plenty of liquidity to get through this period of macroeconomic challenges,” stated Big Lots president and CEO Bruce Thorn. “In addition to cost and inventory reduction efforts, these actions include expected further asset monetization of approximately $340 million, and the decision made by our board of directors this week to suspend our dividend."
The company reported a net loss of $206.1 million, or $7.10 a share, for the quarter ended April 29, compared to a loss of $11.1 million, or $0.39 a share, in the year-ago period. The adjusted loss of $3.40 a share exceeded the Street estimate of a loss of $1.78 a share.
Sales fell 18.3% to $1.12 billion, below estimates of $1.19 billion. Comparable sales were down l 18.2%, which the retailer attributed partially to product shortages in furniture that resulted from the unexpected closure of its largest vendor in November 2022. Seasonal lawn and garden sales were also hurt by unfavorable weather.
Thorn said that the company’s lower-income consumer was hurt by inflation, lower tax refunds and higher interest rates. He also said their confidence has been shaken by banking failures.
“Macro-economic headwinds have created significant challenges for us, which are reflected in our results and outlook,” Thorn stated. “But we are confident that these headwinds will abate, and that when they do, we will see a major boost to our business. In particular, we expect furniture and seasonal to return to being the strong growth drivers for our business they have been in the past, as consumer confidence improves and as we continue to bring newness and incredible value to our assortment."
For the second quarter, Bit Lots expects same-store sales to be down in the “high-teens” percentage range. The company didn’t provide full-year guidance, citing “significant uncertainty” in the macroeconomic environment. It expects sales and gross margin momentum to be weighted toward the back half of the year.
Headquartered in Columbus, Ohio, Big Lots operates more than 1,420 stores in 48 states.