First quarter sales at Big Lots were down double-digits as officials with the retailer pointed to “significant macroeconomic headwinds” as the main factor in the company’s drop in revenue.
For the quarter ended April 29, net sales were $1.124 billion, an 18.3% decrease compared to net sales of $1.375 billion for the same period last year. Comparable store sales were down 18.2% stemming in part from shortages in furniture as the result of an unexpected closure of Big Lots’ largest supplier in November of 2022
Net loss for the quarter was $206.1 million, or $7.10 per share, compared to a net loss of $11.1 million, or $0.39 per share, in the first quarter of 2022. The first quarter net loss includes a net after-tax charge of $107.4 million, or $3.70 per share, associated with the net impact of synthetic lease exit costs, forward distribution center closure costs, store asset impairment charges, and a gain on the sale of real estate and related expenses.
"Macroeconomic headwinds have created significant challenges for us, which are reflected in our results and outlook,” said Bruce Thorn, president & CEO of Big Lots . “But we are confident that these headwinds will abate, and that when they do, we will see a major boost to our business. We expect furniture and seasonal to return to being the strong growth drivers for our business as they have been in the past, as consumer confidence improves and as we continue to bring newness and incredible value to our assortment."
He noted that Big Lots lower-income shoppers were hurt by several factors including inflation, lower tax refund, higher interest rates, and concern about recent banking failures. Additionally, he said the company continues to cycle the pull forward of higher-ticket purchases that occurred during the pandemic.
The company’s in house furniture brand, Broyhill, continued to be adversely impacted by product shortages as a result of the abrupt closure of the retailer’s largest suppliers.
“We addressed these sales challenges quickly with increased markdown and promotional activity which hurt our gross margins, but successfully brought our year-over-year inventories down approximately in line with the sales decline,” he said. “We also tightly managed costs, with SG&A that came in better than our guidance."
Additionally, the company on May 24, entered into a letter of intent for a sale and leaseback of its Apple Valley, Calif., distribution center; corporate headquarters building in Columbus, Ohio; and most of the remaining owned stores. The value of the transaction is expected to be $340 million, or $240 million in net proceeds after considering the $100 million balance remaining on lease for the Apple Valley distribution center, which would be used to pay down debt under the Asset-Based Lending Facility.