Big Lots has big expansion plans
Big Lots is planning to open 500 new stores over the next six-plus years after having gone a decade holding the units it operates at a relatively steady number.
The discount retailer, CNN reports, announced during an investor presentation that it plans to open around 50 new locations this year and then around 80 annually thereafter. The company’s management believes that consumers will be hungry for its selection of closeout and discounted merchandise and that stores will be the primary distribution channel.
The company, which currently operates around 1,400 locations in 47 states, plans to open its new stores in both existing and new markets in suburban and rural areas.
Big Lots has set a sales goal of $8 billion to $10 billion through a combination of the new stores, e-commerce growth and “merchandise sales productivity initiatives.” The retailer, in a press release, said that it expects to achieve operating margins of between six and eight percent as it leverages its buying power and takes other steps to improve its gross on every sale.
The chain reported that sales in November and December were up nine percent compared to the same period in 2019. Big Lots has seen its customer traffic and sales soften this month due to harsh weather across the U.S. and the spread of the Omicron variant. It is forecasting a flat to low-single digit sales increase over a two-year basis when its fourth quarter is completed.
Big Lots remains bullish on its prospects, weather and COVID-19 variants aside.
“We see a clear and long runway for growth ahead of us, coupled with the opportunity to drive returns through margin expansion and judicious capital allocation,” Bruce Thorn, president and CEO of Big Lots, said in a statement. “We have all of the foundations in place to accomplish this, including a seasoned and ambitious team, new tools and technologies, and a proven pipeline of innovation.”
The retailer on its third quarter earnings call said that its e-commerce sales were up around 300 percent for the first three quarters of 2022 compared to 2019. It began moving to more of a store fulfillment model, with 65 of its stores engaged in that capacity. Mr. Thorn said Big Lots is looking to grow its online business to $1 billion a year.
- Big Lots is opening 500 stores – CNN
- Big Lots Provides Long-Term Growth and Margin Outlook and Q4 Business Update – Big Lots
- Big Lots, inc (BIG) Q3 2021 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: Do you see an opportunity now for chains such as Big Lots to substantially add to their store count numbers? Do you agree that store expansion, perhaps in different formats, has become a necessity for retailers looking to achieve the optimum combination of online and offline sales?