Tough Q2 doesn’t shake Big Lots’ ‘laser focus’ on value

2022.09.22

The Columbus, Ohio-based discount retailer reported a net loss of $84.2 million, or $2.91 per share, for the second quarter of fiscal 2022 ended July 30, 2022. This result includes an after-tax charge of $18.1 million, or 63 cednts per share associated with store asset impairment charges. Excluding this charge, the adjusted net loss was $66.0 million, or $2.28 per share. Net income for the second quarter of fiscal 2021 was $37.7 million, or $1.09 per diluted share.

Net sales for the second quarter of fiscal 2022 totaled $1.35 billion, a 7.6% decrease compared with $1.46 billion for the same period last year, and an increase of 7.5% compared with the second quarter of 2019. Officials noted the decline to last year was driven by a comparable sales decrease of 9.2%. The three-year comparable sales growth rate was 3.6% in the second quarter of fiscal 2022, an acceleration from 1.9% in the first quarter.

Bruce Thorn, president and CEO of Big Lots, noted that the numbers were in line with expected financial guidance, and the retailer remains committed to value.

“We remain laser focused on helping our customers navigate these challenging times by delivering outstanding value across our assortment,” he said. “We are managing the business prudently, while working hard to build a stronger company and deliver on our commitments to our customers, associates, and shareholders.

“I’d like to thank our associates for rising to the challenge in Q2, by continuing to provide an elevated customer shopping experience and again achieving a top-tier Net Promoter Score above 80%. Our outstanding team helped us to deliver results in line with the financial guidance we provided coming into the quarter,” Thorn continued. “We managed costs tightly, made great progress on repositioning our assortment towards better bargains/closeouts and lower price points, and took important steps to enhance our balance sheet and secure our liquidity. We also brought inventories down materially versus Q1, putting us on track to right-size our inventory position by Q4.”

Thorn said by right-sizing inventory, Big Lots will be positioned to bring more deals to customers, many of whom are stretched by inflation and are starting to trade down more.

For the third quarter, Big Lots expects one-year comps to be down in the low double-digit range with continued significant promotional activity in Q3, resulting in a quarter gross margin rate into the mid-30s, and that SG&A dollars will grow low single-digits to 2021. Given an atypically wide range of outcomes, Big Lots is not providing EPS guidance at this point.