Big Lots Just Announced "An Accelerated Number of Closures"
The company noted that the current economic environment has affected sales.
Big Lots has been a beloved discount chain for decades—you might have been a loyal shopper since it was known by its former name, Odd Lots. Much like the shopping experience at a Tuesday Morning or T.J. Maxx, you never know what you're going to find at Big Lots, which carries everything from home décor to beauty supplies to electronics. But if you frequent your local Big Lots or just like to browse when you get the urge to shop, be warned that the retailer has announced "an accelerated number of closures." Read on to find out why Big Lots is closing stores.
READ THIS NEXT: Jo-Ann Fabrics Is Closing Stores, Starting Jan. 22.
Big Lots has actually been opening stores.
In January, Big Lots was singing a different tune, announcing plans to open approximately 500 new stores over the next few years, according to a presentation for investors. In 2022 alone, the company had plans to open 50 new stores, with 80 or more opening per year after that.
Prior to that announcement, Big Lots had had a "flat store count" for a decade, the company said, noting that they were introducing a "store intervention program" to reduce the number of closures. According to recent statements from executives, however, the situation has changed, and the number of closing stores is picking up.
Economic conditions have hurt profits.
During a Dec. 1 earnings call outlining results from the third fiscal quarter of 2022, Jonathan Ramsden, executive vice president, chief financial officer, and administrative officer for Big Lots, stated that the retailer has "an accelerated number of closures" planned.
According to Ramsden, the closures are intended to increase revenue, as Big Lots will be selling store properties that it owns. Other sites are "underperforming," he said, which is why the company is looking to speed up the closure process.
"The closures this year will end up being somewhat higher than the openings," Ramsden said. "Going forward, we would hope and expect to return to a normalized level of closures, but we'll certainly continue to look closely at underperforming stores."
In his opening statements, Big Lots President and CEO Bruce Thorn stated that inflation has impacted customers' discretionary spending—particularly on big-ticket items—thus affecting the retailer's performance during this quarter. Ramsden confirmed that net sales were down by 9.8 percent, and losses spiked to $87 million, compared with just $4 million during the same quarter last year.
RELATED: For more up-to-date information, sign up for our daily newsletter.
New openings are slowing down.
While store closures are now outpacing openings, Ramsden noted that growth remains at the forefront of Big Lots' initiatives. The company is still on track to open 50 stores in 2022, with the number of closures "similar or slightly higher." In 2023, this pace for openings will slow down, with Ramsden stating that there will be fewer than in 2022.
"We continue to grow the stores, albeit at a slower rate. We're projecting a lower amount of stores at this time than what we're seeing in the previous releases," Ramsden said on the earnings call. "But that's just because of the economic times. We think as we get better with that we'll accelerate back into [it] and we've got a very good team to do that."
Thorn further explained that the store strategy overall is focused on stores in "rural and small town markets," where Big Lots has less competition, especially in the home categories, and lower business costs.
"These typically generate more cash and profitability than urban stores," he said. "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."
One store is already set to close.
According to CBS News Sacramento, a Big Lots store in the Citrus Heights neighborhood of Sacramento, California, will be closing up shop in Jan. 2023.
A frequent shopper at the Citrus Heights store, Todd Chapman, told the outlet that increasing theft and the homeless population in the store's parking lot were the reason for the closure, per a conversation with an employee.
"She said theft is just out of control. People are filling up their shopping carts and just walking out of the store," he told CBS News. "And there's nothing they can do about it."
The outlet also spoke with Rachel Michelin, president of the California Retailers Association, who said that theft like this is part of a trend. She added that there is a "loophole" in the law that says anything below $950 in theft is only classified as a misdemeanor (as opposed to a felony).
Best Life reached out to Big Lots for comment on the Citrus Heights store and the impending closures, but has yet to hear back.