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12/03/2021

Own brand furniture, apparel key to Big Lots future

The Broyhill and Real Living lines doubled sales in Q3; apparel generated more than $200 million on a two-year comparison.
Dan Ochwat
Executive Editor
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Big Lots expects its Broyhill and Real Living brands to become $1 billion brands, while growth in own brand apparel has made the category “significant,” according to its third-quarter results.

Issues around supply chain and labor shortages played a hand in the Columbus, Ohio-based value chain reporting a 3.1% decrease in sales for the quarter ended Oct. 30, totaling $1,336 million compared with $1,378 million a year ago. However, on a two-year stack basis, Big Lots registered an increase in net sales of 14.4%. The decline to last year was driven by a comparable sales decrease of 4.7%, as the company lapped a 17.8% comparable sales increase last year.

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Focusing on its two-year gains, Bruce Thorn, president and CEO of Big Lots, said during the financial call that the retailer is facing a transformational moment, and expects the business to grow by several billion dollars over the next couple years.

Looking at two-year comps, Thorn said the quarter revealed strong gains in furniture, apparel, seasonal and home goods — areas where it has a strong own brands business.

On Broyhill, he reported that in Q3 2021 the furniture exclusive line generated $160 million in sales, up nearly half of its sales in 2020. The Real Living line also nearly doubled in sales in Q3 compared to the prior year. Thorn said both are on pace to be billion-dollar brands.

Broyhill, especially, is supported by successful merchandising inside stores.

In apparel, following the launch of its Weekend Soul store brand of casual wear, which he said has landed with shoppers, the category is becoming “significant,” earning $200 million in sales this year.

Thorn reported that food sales were down in the mid-single digits, mostly due to a reduction in square footage as part of its pantry optimization reset. Furniture as a whole was up low double digits on a two-year stack basis in Q3 and seasonal goods led the way increasing by 30% in sales on a two-year basis. Thorn said he anticipates seasonal gains to be bigger in Q4, after seeing its best sales for Thanksgiving and Black Friday in company history.

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Thorn said own brands are a key part of its future, a pillar of its Operation North Star strategy that includes a growth in store footprint and a bigger e-commerce presence.

For the holidays, Big Lots rolled out its Be A BIGionaire” campaign that in Q4 will feature ads with actors Eric Stonestreet and Molly Shannon. Thorn said the ads are driving attention to shop at Big Lots

Outside of holiday, Big Lots expects to grow its seasonal category, already headed by its patio sets and lawn and garden success in summer, but growing to offer more around Valentine’s Day and 4th of July weekend.“Looking forward, we expect to post a new record sales year in 2022, and we have ever-increasing confidence that our key growth drivers under Operation North Star — materially growing merchandise productivity, accelerating new store growth, and continuing to ramp up our ecommerce capabilities — represent a huge white space opportunity for us,” Thorn said. “In addition, we expect to see gross margin expansion in 2022 driven by promotional and pricing optimization, the deployment of new planning capabilities, and favorable mix effects. As we look towards closing out 2021 and beginning a new year, we are primed, pumped and laser focused on being the best destination home discount store."