About Big Lots

Big Lots, Inc., through its wholly owned subsidiaries, operates as a home discount retailer operating in the United States (U.S.). The company manages its business on the basis of one segment: discount retailing. The company uses the following seven merchandise categories, which are consistent with its internal management and reporting of merchandise net sales: Food; Consumables; Soft Home; Hard Home; Furniture; Seasonal; and Apparel, Electronics, & Other. The Food category includes its beverage & grocery; specialty foods; and pet departments. The Consumables category includes its health, beauty and cosmetics; plastics; paper; and chemical departments. The Soft Home category includes the company’s home decor; frames; fashion bedding; utility bedding; bath; window; decorative textile; and area rugs departments. The Hard Home category includes the company’s small appliances; table top; food preparation; stationery; home maintenance; home organization; and toys departments. The Furniture category includes the company’s upholstery; mattress; ready-to-assemble; and case goods departments. The Seasonal category includes the company’s lawn & garden; summer; Christmas; and other holiday departments. The Apparel, Electronics, & Other department includes the company’s apparel; electronics; jewelry; hosiery; and candy & snacks departments, as well as the assortments for The Lot, the company’s cross-category presentation solution, and the Queue Line, its streamlined checkout experience. The company focuses on its customers’ expectations has improved its ability to provide a more relevant and desirable assortment of offerings in its merchandise categories. Advertising and Marketing The company employs an integrated approach for its marketing touchpoints and investments consisting of paid media, including television, print, digital, social media, internet, e-mail, and payment card-linked marketing; earned media, including public relations and organic social media; and owned media, including its website, customer loyalty programs, and in-store signage. The company has conducted extensive consumer research to enhance its understanding of why customers shop us and the reasons why others do not shop it. The company’s customer data is an important marketing tool that allows it to communicate with its customers, The company’s BIG Rewards Program rewards its customers for making frequent and high-ticket purchases and offers a special birthday reward. The company utilizes insights gained through the BIG Rewards Program to evaluate the effectiveness of its promotions, tailor promotions to its customers’ shopping habits, and gain consumer insights. The company’s research shows that membership in the BIG Rewards Program is a driver of net sales, and it has incentivized its store associates to encourage customer enrollment into the program. The company serves the community on a national level through its Big Lots Foundation, which focuses on healthcare, housing, hunger, and education. In addition, the company is pleased to support its local community in Columbus, OH through its partnership with Nationwide Children’s Hospital. Warehouse and Distribution While certain of the company’s merchandise vendors deliver directly to its stores, the large majority of its inventory is staged and delivered from its distribution centers to facilitate prompt and efficient distribution and transportation of merchandise to its stores and help maximize its sales and inventory turnover. The majority of the company’s merchandise offerings are processed for retail sale and distributed to its stores from five regional distribution centers located in Alabama, California, Ohio, Oklahoma, and Pennsylvania. The company selected the locations of its regional distribution centers to help manage transportation costs and to minimize the distance from its distribution centers to its stores. In addition to its regional distribution centers that handle store merchandise, the company operates two other warehouses within its Ohio distribution center. One warehouse distributes fixtures and supplies to the company’s stores and its five regional distribution centers and the other warehouse serves as a fulfillment center for its direct-ship e-commerce operations. To supplement its e-commerce fulfillment center, the company also fulfills direct-ship e-commerce orders from 65 of its store locations, which it strategically selected based on geographic location, size, and other relevant factors. The company also fulfills some of its e-commerce orders using supplier direct fulfillment, a process in which the customer purchases merchandise through its e-commerce platform, but the merchandise is shipped directly from the supplier to the customer. The company continues to evaluate its e-commerce fulfillment capabilities to reduce shipping times. In 2021, the company opened two small-format forward distribution centers located in Georgia and Pennsylvania, to divert processing and logistics for bulk goods out of its regional distribution centers into its forward distribution centers and, increase the efficiency and capacity of its regional distribution centers, which were designed to efficiently process cartons as opposed to bulk goods. In 2022, the company opened two additional small-format forward distribution centers in Washington and Indiana, to accommodate projected purchasing volumes. Each of the company’s four forward distribution centers are operated by a third-party logistics services provider. In March 2023, the company communicated to its third-party logistics service provider its plans to close all of its forward distribution centers by August 2023 due to the decreases in sales and purchasing volumes. The company will continue to evaluate its supply chain needs based on projected purchasing volumes and adjust the capacity of its distribution and fulfillment network accordingly. Seasonality The company has historically experienced seasonal fluctuations in its sales and profitability, with a larger percentage of its net sales and operating profit realized in its fourth fiscal quarter, which includes the Christmas holiday selling season. The company historically receive a higher proportion of merchandise, carry higher inventory levels, and incur higher outbound shipping and payroll expenses as a percentage of sales in its third fiscal quarter in anticipation of increased sales activity during its fourth fiscal quarter. Performance during the company’s fourth fiscal quarter (year ended January 28, 2023) typically reflects a leveraging effect, which has a favorable impact on its operating results because net sales are higher and certain of its costs, such as rent and depreciation, are fixed and do not vary as sales levels escalate. The company’s net sales in the second quarter of 2020 as a percentage of full year were disproportionately higher as a result of increased demand arising from the onset of the COVID-19 pandemic and related government stimulus payments. Similarly, the company’s net sales in the first quarter of 2021 as a percentage of full year were disproportionately higher as demand increased due to government stimulus payments related to the COVID-19 pandemic. The seasonality of the company’s net sales in 2022 generally aligned with its historical seasonality. The seasonality of the company’s operating results, however, differs significantly due to its recording an operating loss in each quarter of 2022 compared to recording an operating loss in only one quarter (the third quarter of 2021) in the prior two years. This change in the seasonality of the company’s operating results is primarily attributable to inflationary and macroeconomic pressures experienced throughout 2022, which resulted in decreased net sales, decreased gross margin as a percentage of net sales, and increased selling and administrative expenses. History Big Lots, Inc. was founded in 1967.