Big Lots reported sales and profit that missed expectations and provided an unexpected loss outlook for its third quarter.
“Our results for the quarter were tempered by continued supply chain and freight headwinds, as well as other inflationary pressures,” stated president and CEO Bruce Thorn.
Thorn expects the supply chain headwinds will continue into fall and holiday, and the situation remains “fluid.”
“But our team is working exceptionally hard to get through this and make sure that our assortments continue to surprise our customers and deliver phenomenal value,” he added.
Against this backdrop, Thorn said, the discount retailer continues to invest in its future growth. To enhance the in-store experience, Big Lots has launched “Project Refresh, a multi-year program to upgrade approximately 800 stores not included in its previous remodel initiative. Also, the company’s first forward distribution center became operational at the end of the quarter, and the second will begin operations next week.
Big Lots’ net income totaled $37.7 million, or $1.09 a share, for the quarter ended July 31, compared to $452.0 million, or $11.29 a share, in the year-ago period, which included a $341.9 million after-tax benefit. Analysts had expected earnings per share of $1.12.
Net sales totaled $1.46 billion, which represented a 11.4% decrease from the year-ago quarter and an increase of 16.4% compared to the second quarter of fiscal 2019.The sales decline to last year was driven by a comparable sales decrease of 13.2%, as Big Lots lapped an historic 31.3% comparable sales increase last year. On a two-year basis, comparable sales increased 14.0%.
Big Lots had two-year comp sales growth across all merchandise categories other than food, with strong double-digit two-year growth in furniture, soft home, hard home, apparel, and electronics. Furniture sales were up over 30% to 2019. The company said it added nearly 1.7 million new rewards customers during the quarter
E-commerce demand grew by 10% in the second quarter compared to fiscal 2020. This represents over 400% growth to the second quarter of 2019. Demand was driven by strong sell-through in the chain’s lawn & garden assortment.
Looking ahead, Big Lots expects a third-quarter per-share loss of $0.10 to $0.20, compared analysts’ estimates for earnings per share of $0.05. The retailer expects full-year earnings per share of $5.90 to $6.05, which is also below expectations.
Headquartered in Columbus, Ohio, Big Lots operates 1,422 stores in 47 states.