Soft Home Sales Struggle to Recover to Pre-Pandemic Levels Amidst Ongoing Challenges
- Details
- Published: Saturday, 30 December 2023 16:43
Big Lots, a prominent retail player, is facing a substantial setback in its home textiles category, reporting a staggering nearly $170 million decline in sales compared to 2019. While the latest filing with the Securities and Exchange Commission (SEC) reveals a sequential improvement in soft home sales throughout 2023, the year-over-year comparison paints a challenging picture for the retailer in this particular category.
According to the filing, soft home sales for the quarter ended October 28 were reported at $141.2 million, reflecting a 15% drop from the same period last year. Despite this decline, the figure represents an improvement from Q2's $143.9 million and Q1's $141.9 million in home textiles sales.
During a recent investor call discussing third-quarter results, Big Lots CEO Bruce Thorn acknowledged the positive impact of improved furniture sales on the soft home category. Thorn stated, "The improvement in furniture is also providing a positive halo effect on soft home sales." He further highlighted the introduction of new assortments in areas such as accent, decor, and modern styles, expressing optimism that sales momentum will continue to build as the company focuses on newness and value offerings.
However, a broader examination of the category breakout data reveals a concerning trend. Home textiles sales for both the third quarter and the nine-month period have steadily declined over the past three years. The cumulative effect is significant, with soft home sales for the first nine months of the current fiscal year nearly $170 million lower than the same period in 2019.
It's noteworthy that the store count remains consistent between 2019 and the year-to-date (YTD) 2023, with 1,418 locations in 2019 compared to 1,420 locations at the close of the recent third quarter. Despite this consistency, the decline in home textiles sales suggests broader industry challenges or shifts in consumer preferences.
As of the end of the quarter, Big Lots reported total inventory at $1.177 billion, marking a 12.5% decrease compared to $1.345 billion in the year-ago period. The reduction in inventory may indicate a strategic move to align with changing consumer demands and streamline operations.
In the face of these challenges, Big Lots remains optimistic about the potential for recovery. The company emphasizes its commitment to leveraging new assortments and value-driven offerings to boost sales in the soft home category. Stakeholders will be closely monitoring the retailer's strategies to navigate these headwinds and restore growth in the critical home textiles segment.