Big Lots, the American retail giant, is gearing up for a crucial holiday season by introducing a strategic shift in its Black Friday approach. The retailer has initiated weekly Black Friday deals, encouraging customers to visit its stores and capitalize on significant discounts. This move comes in the wake of two consecutive quarters of losses for the company, making this holiday season pivotal for its financial recovery.
Challenges in Q1 and Q2 2023
Big Lots faced a challenging start to the fiscal year, with its Q1 2023 net sales witnessing an 18.3% YoY decline to $1.12 billion. The furniture category bore the brunt of this downturn, experiencing a 27% drop in comparable sales. Seasonal items, soft home goods, and hard home goods also faced declines of 25%, 17%, and 15%, respectively. In response to these setbacks, the company announced plans to shutter four forward distribution centers across different states to streamline operations and reduce costs.
The struggles persisted into Q2 2023, with a 15.4% decline in net sales to $1.14 billion. To counterbalance these losses, Big Lots completed the sale and leaseback of 22 owned stores and a distribution center in Apple Valley, California, securing net proceeds of $294 million. Despite these efforts, the company continues to face financial uncertainty, with CreditRiskMonitor highlighting the risk of bankruptcy due to ongoing challenges, including the impact of inflation on low-income customers.
Inflation Impact and Competitive Landscape
The CEO, Bruce Thorn, cited inflation as a significant factor contributing to the company’s hardships, especially affecting its low-income customer base. Big Lots is navigating through a highly competitive landscape, with major retailers like Amazon, Walmart, Target, and Best Buy already rolling out their holiday deals. This heightened competition requires Big Lots to devise innovative strategies to attract consumer dollars and revitalize its financial performance.
Weekly Black Friday Deals Strategy
In response to the tough market conditions, Big Lots has taken a proactive approach by reimagining its Black Friday sales strategy. The retailer aims to entice shoppers with up to 50% off on one-day deals every Friday leading up to Christmas. This weekly approach not only provides consumers with consistent opportunities to snag significant bargains but also positions Big Lots as a go-to destination for holiday shopping throughout the festive season.
As Big Lots navigates its way through financial challenges, the implementation of weekly Black Friday deals showcases the company’s determination to revive its fortunes during the critical holiday season. By adapting to evolving consumer preferences and intensifying its promotional efforts, Big Lots aims to create a shopping experience that resonates with customers, fosters loyalty, and ultimately propels its Q4 performance on a positive trajectory.