Big Lots is going country
“Green Acres is the place to be.
Farm livin’ is the life for me.
Land spreadin’ out so far and wide
Keep Manhattan, just give me that countryside.”
Big Lots is looking to leave the city life behind as it sees plenty of opportunities to grow in places with wide open spaces.
“We will increasingly focus on rural and small town markets where we know we outperform with our strong assortment of furniture and home goods, while taking a prudent near-term approach to opening stores,” Bruce Thorn, president and CEO of the retailer, told analysts on the company’s third quarter earnings call. “Overall, new stores continued to perform with strong performance in rural and small town markets. In these markets, we face less direct competition in our home categories and have a lower cost structure. Therefore, these typically generate more cash and profitability than urban stores. As we think about our real estate strategy in store openings and closings in the future, we see an opportunity to reshape our store portfolio more towards these rural and small town markets with an emphasis on furniture and home goods.”
The discounter will need to find some answers that go beyond rural markets and small towns coming off a third quarter for which it reported a net loss of $103 million or $3.56 a share. The chain’s same-store sales fell 11.7 percent year-over-year. New and relocated stores added 190 basis points of growth.
Mr. Thorn said that Big Lots customers have pulled back on higher ticket discretionary purchases and focused their buying on staples. He said that the chain is making progress in adjusting its assortments and promotions to meet the needs of its low-income customers and discourage them from shopping elsewhere.
Big Lots, according to Mr. Thorn, has made progress simplifying and communicating its value offerings to its customers. The chain is also looking to leverage its scale and work more closely with trading partners “to deliver compelling opening price points” across product categories and segments.
“Through cost engineering and using our scale and relationships with suppliers, our opening price points in furniture are now at pre-COVID levels across more than 60 percent of SKUs,” said Mr. Thorn. “We expect nearly all of our furniture to see price revision in Q1 2023.”