Big Lots on Thursday reported net sales for the quarter fell to $1.03 billion, a 14.7% decrease from $1.2 billion last year. Comparable sales fell 13.2%. Net income was $4.7 million, swinging from a loss of $103 million a year ago, thanks to the sale of real estate and other measures. Adjusted net loss was $127.9 million.
The company ended the quarter with inventory at $1.2 billion, down from $1.3 billion a year ago. Big Lots said lower in-transit inventory, on-hand units and average unit cost drove the decline.
- Also Thursday, the company announced the appointment of two people to senior leadership roles. Kristen Cox is joining Big Lots as the new chief stores officer. Seth Marks will fill a newly created position of senior vice president of extreme value sourcing. Cox and Marks will both report to CEO Bruce Thorn.
Big Lots completed the sale and leaseback of its California distribution center and 23 owned stores in Q3, which helped its liquidity in the near term. The company received net proceeds of $302 million from the transaction and used $101 million of that cash to fully pay down the synthetic lease on the distribution center, while the remainder of that cash was used to provide additional liquidity to the business, Big Lots said.
The company had $533 million in long-term debt for the quarter ended Oct. 28. That’s up year over year from about $460 million.
While comps were in line with the company’s guidance and improved relative to Q2, “we are clearly not happy that comps were negative,” Thorn said during a call with analysts. As a result of the economic climate, Thorn said customers remain cautious on big-ticket purchases like furniture and competition is stiff in the food and consumables space.
Thorn said the company was “not aggressive enough with offering bargains in these highly competitive categories,” and Marks’ new role and responsibilities will include focusing on accelerating the penetration of bargains.
Marks served as vice president of merchandising at Big Lots from 2004 through 2007. He’s returning to the company from reverse logistics company Channel Control Merchants. His experience in the liquidation and off-price sector includes serving as senior vice president of merchandising and strategic initiatives at Overstock and head of off-price at Sears Holdings.
Cox’s responsibilities as chief stores officer will include developing and implementing operational strategies to drive sales, improve margins and enhance customer service across stores. She joins Big Lots from Burlington, where she was senior vice president of human resources for all stores. Cox replaces Nick Padovano, who retired earlier this year.
While sales continued to fall in Q3, Chief Financial Officer Jonathan Ramsden said Halloween and Christmas merchandise sales drove trends up in the quarter. Thorn added that the company optimized and reset its consumables assortment in hygiene and healthcare. The pet category also performed well in Q3.
Analysts with Telsey Advisory Group, led by Joe Feldman, noted that comps improved sequentially each month in Q3 and have continued to rise so far in the fourth quarter. “Notably, Big Lots’ has seen strong sell-through of Christmas merchandise so far, and new products are performing well,” Feldman said. Big Lots’ Q4 guidance is for comp sales to improve over Q3, but still decline in the high single-digit range.