Off-price retailer Big Lots said Thursday it is moving forward with turnaround efforts, and is optimistic about its outlook for 2024, including in the food and consumables categories.
Comparable store sales improved “modestly” in the food and consumables categories in the fourth quarter, relative to the third quarter, on a year-over-year basis, the company said in a conference call discussing on results for the financial year, which ended on Feb 3.
“We are focused on accelerating the penetration of extreme bargains, especially in the food category, which should drive even more significant improvements going forward,” said Bruce Thorn, president and CEO.
Extreme bargains in food categories are often priced 10-20% below prices offered at other discounters, he explained.
The pet products category was a standout in the fourth quarter, he said, with positive comp-sales growth driven by the company’s assortment expansion last fall.
Overall, Big Lots reported a loss of $30.7 million for the 14-week fourth quarter, compared with a loss of $12.5 million in the 13-week, year-ago period. Sales in the quarter fell about 7.2%, to about $1.43 billion, as comparable store sales fell 8.6%.
The quarterly loss included a net, after-tax loss of $22.4 million for costs related to distribution-center closings and other charges. Adjusted net loss for the quarter was $8.3 million, compared to an adjusted net loss of $8.1 million in last year’s fourth quarter.
Despite continuing losses, the company said its fourth quarter produced its first quarterly adjusted operating profit in two years.
For the full, 53-week fiscal year, the loss more than doubled, to $481.9 million, on sales down 13.6%, to $4.72 billion, compared with the 52-week period a year ago.
Thorn said the retailer has a multi-pronged strategy to drive sales and improve profitability, including a focus on stronger bargains across stores.
“These extreme bargains create a more exciting treasure hunt experience, which will keep our customers coming back to our stores and help drive comparable sales growth,” he said.
The company is aggressively looking for opportunities for great bargains, Thorn said, including in food categories.
“We’re still early in our journey to offer more extreme bargains, but we’ve already had strong sell-through in some of our food offerings, such as coffee and cereal, as well as hair care , sheets, laundry, and cooking utensils. ,” he said.
Big Lots has also focused its marketing efforts more sharply on calling attention to the availability of bargains, such as its recently launched “Bargains to Brag About” ad campaign.
The retailer is also adding inventory in top-performing categories and stores, and reducing inventory in lower-performing categories and stores, Thorn said. This creates more opportunities for high-performing categories such as pet products, and for more productive SKUs, “especially in food and consumables,” he added.
The company is also focusing on selling “less depth and breadth” in its assortments, aiming to encourage customers to act quickly and shop more often to find deals.
In addition, Big Lots is taking steps to improve store operations and strengthen the omnichannel experience. In the fourth quarter, it launched its first mobile app for customers, and also began partnering with Uber Eats for delivery.
Big Lots said it expects sequential, improving comp-sales in the first quarter, although comps are still expected to be in the “negative mid-single-digit range.” The company also said it expects continued gross margin improvements, driven by reduced markdown activity, lower freight costs, and cost reduction and productivity initiatives.
The company, which operates more than 1,300 stores in 48 states, said it plans four store openings by 2024, all in the third quarter. Three of the planned openings were originally scheduled for 2023, and one was a relocation.
“In general, all new store commitments remain on hold until our business situation improves,” said Jonathan Ramsden, executive VP and chief financial officer.
