Big Lots Reports Q4 and Full Year 2022 Results

Rhea-AI Summary

Big Lots reported a net loss of $12.5 million, or $0.43 per share, for Q4 FY 2022, which includes a $4.4 million charge related to store asset impairments and real estate sales. This adjusted loss stands at $8.1 million, or $0.28 per share, compared to a profit of $53.6 million in Q4 FY 2021. Net sales fell 10.9% year-over-year to $1.543 billion, mainly due to a 13% drop in comparable sales impacted by vendor issues. The company reduced inventory significantly and managed expenses better than expected. Big Lots anticipates further financial improvements in FY 2023, despite challenging market conditions.

Positive

• Improved management of SG&A expenses, leading to better-than-expected cost outcomes.
• Significant decrease in inventory levels, indicating better inventory management.

Negative

• Q4 FY 2022 net loss of $12.5 million, worsening from a profit of $53.6 million in Q4 FY 2021.
• Net sales declined by 10.9% year-over-year, primarily due to a 13% decrease in comparable sales.

Q4 comparable sales and gross margins in line with guidance; expenses, excluding adjustments, better than expected

Q4 GAAP EPS loss of $0.43; adjusted EPS loss of $0.28

Right-sized inventory position and strengthened balance sheet with asset monetization

Expect to drive significant business improvements during FY 2023

For the Q4 Results Presentation, Please Visit: https://www.biglots.com/corporate/investors

COLUMBUS, Ohio, March 2, 2023 /PRNewswire/ -- Big Lots, Inc. (NYSE: BIG) today reported a net loss of $12.5 million, or $0.43 per share, for the fourth quarter of fiscal 2022 ended January 28, 2023. This result includes a net after-tax charge of $4.4 million, or $0.15 per share, associated with the net impact of store asset impairment charges and a gain on the sale of real estate and related expenses. Excluding this charge, the adjusted net loss in the fourth quarter of 2022 was $8.1 million, or $0.28 per share (see non-GAAP table included later in this release). Adjusted net income for the fourth quarter of fiscal 2021 was $53.6 million, or $1.75 per diluted share (non-GAAP).

Net sales for the fourth quarter of fiscal 2022 totaled $1.543 billion, a 10.9% decrease compared to $1.732 billion for the same period last year. The decline to last year was driven by a comparable sales decrease of 13.0%. We estimate comparable sales were adversely impacted by approximately 130 basis points due to product shortages in furniture, resulting from the unexpected closure of our largest vendor in November. This impact excludes the attachment impact on adjacent categories, such as soft home. Net new stores and relocations contributed approximately 210 basis points of sales growth compared to the fourth quarter of 2021.

Commenting on today's results announcement, Bruce Thorn, President and CEO of Big Lots stated, "Despite the extremely difficult consumer environment throughout 2022, we've taken action to strengthen and transform our business model. Against that backdrop, we made sequential progress to improve our margins, tightly manage expenses, and right-size our inventories over the last few quarters." 

"Even though our furniture business was adversely impacted by the unexpected closure of our largest vendor, we were able to deliver fourth quarter sales and gross margins that were in line with guidance. Further, our year-over-year inventories came down materially to appropriate levels. We also saw favorability in SG&A, as we tightly managed costs, and have further strengthened our balance sheet through asset monetization efforts. I remain impressed by the agility and efforts of the team, who once again delivered on our targets under challenging conditions."

"As we enter 2023, we remain excited about the opportunity to provide more value to our customers, while improving our sales and earnings momentum as the year progresses. We continue to accelerate the transformation of our business through key action points. These include offering even more compelling opening price points and better bargains and treasures, which are easier to find and more convenient to shop. In addition, we will continue to take strides to meet our customer's needs, grow our relevance, and be more efficient across our fleet. We remain focused on growing margin, reducing expenses, and making highly disciplined investment decisions."

A summary of adjustments to loss per diluted share is included in the table below.

	Q4 2022	FY 2022
Earnings (loss) per diluted share - as reported	($0.43)	($7.30)
Adjustment to exclude store asset impairment charges and a gain on the sale of real estate and related expenses (1)	$0.15	$1.35
Earnings (loss) per diluted share – adjusted basis	($0.28)	($5.96)
(1) Non-GAAP detailed reconciliation provided in statement below

 

Fiscal 2022
For fiscal 2022, the company reported a net loss of $210.7 million, or $7.30 per diluted share. Excluding the net charge for store asset impairments and a gain on the sale of real estate and related expenses, the adjusted net loss was $171.9 million, or $5.96 per diluted share compared to adjusted net income of $181.6 million, or $5.44 per diluted share (non-GAAP) for fiscal 2021.

Net sales for fiscal 2022 totaled $5.468 billion, an 11.1% decrease compared to $6.15 billion last year, with the decrease resulting from a comparable sales decrease of 12.9% partially offset by sales growth in new and relocated non-comp stores.

Inventory and Cash Management
Inventory ended the fourth quarter of fiscal 2022 at $1.148 billion compared to $1.238 billion for the same period last year, with the 7.3% decrease driven by lower in-transit inventory and on-hand units.

The company ended the fourth quarter of fiscal 2022 with $44.7 million of Cash and Cash Equivalents and $301.4 million of Long-term Debt, compared to $53.7 million of Cash and Cash Equivalents and $3.5 million of Long-term Debt as of the end of the fourth quarter of fiscal 2021.

Dividend and Share Repurchases
As announced in a separate release, on February 28, 2023 the Board of Directors declared a quarterly cash dividend of $0.30 per common share. This dividend payment of approximately $8.7 million will be payable on March 31, 2023, to shareholders of record as of the close of business on March 17, 2023. The company did not execute any share repurchases during the quarter. The company has $159 million remaining under its December 2021 $250 million authorization.

Company Outlook
For the first quarter, the company expects comps to be down in the low to mid-teens range. Net new stores will add about 40 basis points of growth versus 2022. The company expects the first quarter gross margin rate to improve sequentially versus Q4 into the high-30s range. Given an atypically wide range of potential outcomes, the company is not providing EPS guidance at this point. The company expects a share count of approximately 29.1 million for Q1.

With regard to the full year, the company is targeting improvement in financial results versus 2022. Earnings momentum will be weighted towards the back half of the year, as key actions to improve the business gain traction, and as freight cost reductions continue to be realized. Given greater than usual uncertainty in the macroeconomic environment, at this point the company is not providing formal full year guidance.

Conference Call/Webcast
The company will host a conference call today at 8:00 a.m. ET to discuss the financial results for the fourth quarter of fiscal 2022. A webcast of the conference call is available through the Investor Relations section of the company's website http://www.biglots.com. An archive of the call will be available through the Investor Relations section of the company's website http://www.biglots.com/ after 12:00 p.m. ET today and will remain available through midnight ET on Thursday, March 16, 2023. A replay of this call will also be available beginning today at 12:00 p.m. ET through March 16 by dialing 877.660.6853 (Toll Free) or 201.612.7415 (Toll) and entering Replay Conference ID 13736230.

About Big Lots
Headquartered in Columbus, Ohio, Big Lots, Inc. (NYSE: BIG) is one of America's largest home discount retailers, operating more than 1,425 stores in 48 states, as well as a best-in-class ecommerce platform with expanded fulfillment and delivery capabilities. The Company's mission is to help customers "Live Big and Save Lots" by offering unique treasures and exceptional bargains on everything for their home, including furniture, seasonal decor, kitchenware, pet supplies, food items, laundry and cleaning essentials and more. Big Lots is the recipient of Home Textiles Today's 2021 Retail Titan Award. For more information about the company or to find the store nearest you, visit biglots.com.

Cautionary Statement Concerning Forward-Looking Statements
Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words "anticipate," "estimate," "approximate," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect business, financial condition, results of operations or liquidity.

Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, developments related to the COVID-19 pandemic, the current economic and credit conditions, inflation, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This release should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
			JANUARY 28		JANUARY 29
			2023		2022
			(Unaudited)		(Unaudited)
	ASSETS
Current assets:
	Cash and cash equivalents		$44,730		$53,722
	Inventories		1,147,949		1,237,797
	Other current assets		92,635		119,449
	Total current assets		1,285,314		1,410,968
Operating lease right-of-use assets			1,619,756		1,731,995
Property and equipment - net			691,111		735,826
Deferred income taxes			56,301		10,973
Other assets			38,449		37,491
			$3,690,931		$3,927,253
	LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$421,680		$587,496
	Current operating lease liabilities		252,320		242,275
	Property, payroll and other taxes		71,274		90,728
	Accrued operating expenses		111,752		120,684
	Insurance reserves		35,871		36,748
	Accrued salaries and wages		26,112		45,762
	Income taxes payable		845		894
	Total current liabilities		919,854		1,124,587
Long-term debt			301,400		3,500
Noncurrent operating lease liabilities			1,514,009		1,569,713
Deferred income taxes			0		21,413
Insurance reserves			58,613		62,591
Unrecognized tax benefits			8,091		10,557
Other liabilities			125,057		127,529
Shareholders' equity			763,907		1,007,363
			$3,690,931		$3,927,253

 

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
			13 WEEKS ENDED			13 WEEKS ENDED
			JANUARY 28, 2023			JANUARY 29, 2022
				%			%
			(Unaudited)			(Unaudited)
Net sales			$1,543,113	100.0		$1,732,021	100.0
	Gross margin		560,901	36.3		646,082	37.3
	Selling and administrative expenses		525,905	34.1		541,228	31.2
	Depreciation expense		43,051	2.8		37,376	2.2
Operating (loss) profit			(8,055)	(0.5)		67,478	3.9
	Interest expense		(7,370)	(0.5)		(2,133)	(0.1)
	Other income (expense)		4	0.0		227	0.0
(Loss) income before income taxes			(15,421)	(1.0)		65,572	3.8
	Income tax (benefit) expense		(2,958)	(0.2)		15,734	0.9
Net (loss) income			($12,463)	(0.8)		$49,838	2.9
Earnings (loss) per common share
	Basic		($0.43)			$1.67
	Diluted		($0.43)			$1.63
Weighted average common shares outstanding
	Basic		28,957			29,860
	Dilutive effect of share-based awards		-			807
	Diluted		28,957			30,667
Cash dividends declared per common share			$0.30			$0.30

 

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
			52 WEEKS ENDED			52 WEEKS ENDED
			JANUARY 28, 2023			JANUARY 29, 2022
				%			%
			(Unaudited)			(Unaudited)
Net sales			$5,468,329	100.0		$6,150,603	100.0
	Gross margin		1,913,503	35.0		2,397,007	39.0
	Selling and administrative expenses		2,020,144	36.9		2,014,682	32.8
	Depreciation expense		154,859	2.8		142,572	2.3
Operating (loss) profit			(261,500)	(4.8)		239,753	3.9
	Interest expense		(20,280)	(0.4)		(9,281)	(0.2)
	Other income (expense)		1,363	0.0		1,339	0.0
(Loss) income before income taxes			(280,417)	(5.1)		231,811	3.8
	Income tax (benefit) expense		(69,709)	(1.3)		54,033	0.9
Net (loss) income			($210,708)	(3.9)		$177,778	2.9
Earnings (loss) per common share
	Basic		($7.30)			$5.43
	Diluted		($7.30)			$5.33
Weighted average common shares outstanding
	Basic		28,860			32,723
	Dilutive effect of share-based awards		-			632
	Diluted		28,860			33,355
Cash dividends declared per common share			$1.20			$1.20

 

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			13 WEEKS ENDED		13 WEEKS ENDED
			JANUARY 28, 2023		JANUARY 29, 2022
			(Unaudited)		(Unaudited)
	Net cash provided by operating activities		$134,753		$118,056
	Net cash provided by (used in) investing activities		15,911		(37,141)
	Net cash used in financing activities		(168,072)		(97,789)
Decrease in cash and cash equivalents			(17,408)		(16,874)
	Cash and cash equivalents:
	Beginning of period		62,138		70,596
	End of period		$44,730		$53,722

 

BIG LOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			52 WEEKS ENDED		52 WEEKS ENDED
			JANUARY 28, 2023		JANUARY 29, 2022
			(Unaudited)		(Unaudited)
	Net cash (used in) provided by operating activities		($144,286)		$193,762
	Net cash used in investing activities		(108,940)		(159,686)
	Net cash provided by (used in) financing activities		244,234		(539,910)
Decrease in cash and cash equivalents			(8,992)		(505,834)
	Cash and cash equivalents:
	Beginning of period		53,722		559,556
	End of period		$44,730		$53,722

 

BIG LOTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)

The following tables reconcile: selling and administrative expenses, selling and administrative expense rate, depreciation expense, depreciation expense rate, operating (loss) profit, operating (loss) profit rate, income tax (benefit) expense, effective income tax rate, net (loss) income, and diluted earnings (loss) per share for the fourth quarter of 2022, the full year 2022, and the full year 2021 (GAAP financial measures) to adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted operating (loss) profit, adjusted operating (loss) profit rate, adjusted income tax (benefit) expense, adjusted effective income tax rate, adjusted net (loss) income, and adjusted diluted earnings (loss) per share (non-GAAP financial measures).

Fourth Quarter of 2022 - Thirteen weeks ended January 28, 2023
			As Reported		Adjustment to exclude store asset impairment		Adjustment to exclude gain on sale of real estate and related expenses		As Adjusted (non-GAAP)
Selling and administrative expenses			$             525,905		$                  (22,568)		$                         18,581		$             521,918
Selling and administrative expense rate			34.1 %		(1.5 %)		1.2 %		33.8 %
Depreciation expense			43,051		-		(1,734)		41,317
Depreciation expense rate			2.8 %		-		(0.1 %)		2.7 %
Operating loss			(8,055)		22,568		(16,847)		(2,334)
Operating loss rate			(0.5 %)		1.5 %		(1.1 %)		(0.2 %)
Income tax benefit			(2,958)		5,408		(4,040)		(1,590)
Effective income tax rate			19.2 %		(1.6 %)		(1.2 %)		16.4 %
Net loss			(12,463)		17,160		(12,807)		(8,110)
Diluted earnings (loss) per share			$                  (0.43)		$                        0.59		$                            (0.44)		$                  (0.28)

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") store asset impairment charges of $22,568 ($17,160, net of tax) and a gain on sale of real estate and related expenses of $16,847 ($12,807, net of tax). The depreciation expense included within the adjustment to exclude gain on sale of real estate and related expenses is the accelerated depreciation associated with the disposal of fixtures and equipment at each of the store locations included in the sale.

Full Year 2022 - Fifty-two weeks ended January 28, 2023
			As Reported		Adjustment to exclude store asset impairment		Adjustment to exclude gain on sale of real estate and related expenses		As Adjusted (non-GAAP)
Selling and administrative expenses			$          2,020,144		$               (68,396)		$                        18,581		$          1,970,329
Selling and administrative expense rate			36.9 %		(1.3 %)		0.3 %		36.0 %
Depreciation expense			154,859		-		(1,734)		153,125
Depreciation expense rate			2.8 %		-		(0.0 %)		2.8 %
Operating loss			(261,500)		68,396		(16,847)		(209,951)
Operating loss rate			(4.8 %)		1.3 %		(0.3 %)		(3.8 %)
Income tax benefit			(69,709)		16,739		(4,040)		(57,010)
Effective income tax rate			24.9 %		0.0 %		0.0 %		24.9 %
Net loss			(210,708)		51,657		(12,807)		(171,858)
Diluted earnings (loss) per share			$                  (7.30)		$                     1.79		$                          (0.44)		$                  (5.96)

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with GAAP store asset impairment charges of $68,396 ($51,657, net of tax) and a gain on sale of real estate and related expenses of $16,847 ($12,807, net of tax). The depreciation expense included within the adjustment to exclude gain on sale of real estate and related expenses is the accelerated depreciation associated with the disposal of fixtures and equipment at each of the store locations included in the sale.

Fourth Quarter of 2021 - Thirteen weeks ended January 29, 2022
	As Reported		Adjustment to exclude store asset impairment charges		As Adjusted (non-GAAP)
Selling and administrative expenses	$        541,228		$                     (5,033)		$  536,195
Selling and administrative expense rate	31.2 %		(0.3 %)		31.0 %
Operating profit	67,478		5,033		72,511
Operating profit rate	3.9 %		0.3 %		4.2 %
Income tax expense	15,734		1,251		16,985
Effective income tax rate	24.0 %		0.1 %		24.1 %
Net income	49,838		3,782		53,620
Diluted earnings per share	$              1.63		$                         0.12		$        1.75

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with GAAP store asset impairment charges of $5,033 ($3,782, net of tax).

Full Year 2021 - Fifty-two weeks ended January 29, 2022
			As Reported		Adjustment to exclude store asset impairment charges		As Adjusted (non-GAAP)
Selling and administrative expenses			$     2,014,682		$                    (5,033)		$                   2,009,649
Selling and administrative expense rate			32.8 %		(0.1 %)		32.7 %
Operating profit			239,753		5,033		244,786
Operating profit rate			3.9 %		0.1 %		4.0 %
Income tax expense			54,033		1,251		55,284
Effective income tax rate			23.3 %		0.0 %		23.3 %
Net income			177,778		3,782		181,560
Diluted earnings per share			$              5.33		$                        0.11		$                            5.44

 

The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating profit, adjusted operating profit rate, adjusted income tax expense, adjusted effective income tax rate, adjusted net income, and adjusted diluted earnings per share are "non-GAAP financial measures" as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with GAAP store asset impairment charges of $5,033 ($3,782, net of tax).

Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.

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SOURCE Big Lots, Inc.

FAQ

What were Big Lots' Q4 FY 2022 financial results?

Big Lots reported a net loss of $12.5 million, or $0.43 per share, with adjusted EPS loss of $0.28.

How did comparable sales perform for Big Lots in Q4 FY 2022?

Comparable sales decreased by 13.0% for Q4 FY 2022 compared to the same quarter in the previous year.

What is the outlook for Big Lots for FY 2023?

Big Lots expects a challenging environment but aims for improvement in sales and earnings momentum as the year progresses.

What was the impact of vendor issues on Big Lots' sales?

Vendor issues, particularly the unexpected closure of its largest furniture vendor, negatively impacted comparable sales by approximately 130 basis points.

When will Big Lots pay its quarterly dividend?

Big Lots declared a quarterly cash dividend of $0.30, payable on March 31, 2023, to shareholders of record by March 17, 2023.