Big Lots says its quarterly earnings show the impact of a cautious consumer.
The discount retailer’s numbers, released Thursday (Nov. 30), showed comparable sales down 13.2%, as shoppers demonstrated hesitancy about buying big-ticket items such as furniture, and the company faced intense competition for food sales.
“Look, the food and consumables marketplace right now is a fiercely competitive marketplace,” CEO Bruce Thorn told analysts during an earnings call.
“And for us to be able to compete better, it very much requires us to get more extreme bargains, closeouts, if you will, high-quality closeouts,” he added. “We weren’t as aggressive in pursuing those in the quarters before Q3. We have changed our stance on that, we’re making room for it or open to buy in those areas has increased and we’ve got a team working on it and that should start changing this quarter.”
“Extreme bargains” was something of a buzzword on the call, and part of a broader strategy by the retailer as it continues its fourth quarter.
“Our next phase is to offer more extreme bargains, whereas a typical bargain would be at a price that’s significantly below most retailer’s prices, an extreme bargain would be priced significantly below price leading retailers,” the CEO said.
To that end, the company has named Seth Marks to serve in the newly-created position of senior vice president of extreme value sourcing to help lead a team of closeout buyers.
Recent reporting here shows that Big Lots is witnessing the same consumer hesitancy that a lot of other retailers are seeing.
As Walmart CEO Doug McMillon noted during an earnings earlier this month, despite “pockets of disinflation” particularly in categories like dry grocery and consumables, “pricing levels in many food categories continue to be a concern overall.”
He added that “product costs are up versus last year, and they remain up even more on a two-year stack, which is putting pressure on our customers.”
And PYMNTS noted Thursday that in spite of “positive Black Friday numbers, where consumers stretched their budgets to do some shopping, data suggests that the rest of the holiday shopping season may be more moderate.”
The decline of purchasing power due to the persistent inflation of recent years, along with the current economic uncertainty, might finally cause households to restrict their holiday spending. “Voices warning of spending restraint in the coming months are sounding from multiple fronts, from market analysts to brands and merchants themselves,” that report said.
And recent PYMNTS Intelligence research forecasts a contraction of consumer spending in non-gift categories during this holiday season, happening alongside an anticipated uptick in gift expenditures by 2.2%.
For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.