An April slowdown dropped Big Lots to a loss in the first quarter as comparable sales fell into negative territory year over year.
The company missed a Yahoo Finance-published analyst consensus earnings per share estimate of 93 cents with revenues falling short of a $1.46 billion estimate.
Big Lots posted net sales of $1.37 billion versus $1.63 billion in the year-before period. A comparable sales decrease of 17% drove the decline versus the year-earlier quarter, as Big Lots lapped a 11.3% comp increase in the 2021 period versus the 2020 frame. Net new stores and relocations contributed 160 basis points of sales growth, the company indicated.
Operating loss was $13.5 million versus net income of $122.6 million in the year-previous quarter.
In announcing the financial results, Bruce Thorn, Big Lots president and CEO stated, “Our business has grown significantly over the past two years as we benefitted not only from home-related spending but from the positive growth fueled by our Operation North Star initiatives. We have greatly improved our customer shopping experience, evidenced by an all-time high Net Promoter Score of 85% in Q1. E-commerce remains a standout and now accounts for over 7% of our sales, with same-day deliveries growing 20% over last year. Our Broyhill and Real Living private label brands reached close to 30% of our sales, positioning us well to pursue consumer trade-down opportunities ahead.”
As it addresses the current market, Thorn added that Big Lots’ “accomplishments helped get 3-year comparable sales growth off to a solid start in February and March, but trends materially slowed in April, resulting in a need to increase markdowns. We believe the slowdown was caused by the spending pressure our consumers felt from higher gas prices and broader inflation, which is affecting discretionary purchases across the retail industry. As a result, we missed our sales plan by approximately $100 million, the vast majority in April, while supply chain impacts across gross margin and SG&A continued to be significant headwinds. We have reacted quickly to the changes in consumer demand by increasing value offerings to our customers, resulting in a significant acceleration to three-year comparable sales growth in the mid-teens in May. We expect the environment to remain challenging, and we remain highly focused on managing the business prudently, which includes aggressively right-sizing our inventories over the course of Q2. We are focused on opening price points that drive traffic and improving gross margin rates through capitalizing on significant close-out opportunities, more targeted pricing and promotions, minimizing supply chain charges, and reducing shrink. We are also accelerating SG&A cost reductions to generate over $70 million in additional savings this year. Further, we are strengthening our balance sheet by temporarily scaling back capital expenditures associated with new store openings and remodels.”
