Posted on 10/07/2005 3:19:02 PM PDT by BurbankKarl
Big Lots Inc. is closing 126 underperforming stores and all 41 of its freestanding furniture outlets.
Big Lots (NYSE: BLI), which operates 14 stores in Western Washington, didn't say which ones would close, though many are expected to be in small or rural markets.
The closures are part of a restructuring process that will cost the Columbus, Ohio-based closeout retailer $60 million this year. The charges will cut Big Lots' 2005 profit by around 35 cents a share.
Because of the charges, Big Lots said can no longer make a guess at its 2005 profit. The company said last February it expected to earn between 54 cents and 60 cents a share in the current fiscal year, which ends in January.
The changes follow a disappointing 2004. Big Lots reported a profit of $25.7 million in 2004, or 22 cents a share; down from a profit of $81.2 million, or 69 cents a share, in 2003.
The restructuring program will look at Big Lots' fixed costs, which rose in recent years as the company undertook an extensive remodeling project. It will also examine merchandising, purchasing, and identify new markets in which to open stores.
Big Lots disclosed the charges along with its September sales figures. The company's same-store sales rose 2.9 percent in September and are up 1.5 percent in the first nine months of the year. Same-store sales measure receipts from stores open at least a year, and are considered a good measure of a retailer's condition.
I have yet to go to a Big Lots and find something I am seeking.
Big Lots is closing because enough of their customers finally realized that if they wanted to buy junk they could do better at a Salvation Army Thrift Store.
Where I live, there are Dollar Stores popping up everywhere. They go by various names, 99 Cents, Dollar Tree, Dollar General, Family Dollar, etc.
> Big Lots is closing because enough of their customers
> finally realized that if they wanted to buy junk they
> could do better at a Salvation Army Thrift Store.
Well, sure, but not new-in-box junk.
The BigLots business plan relies on a steady flow of
liquidated, overstocked, closeout and otherwise
impaired(*) products.
This has fundamental problems.
1. Its continued success requires lots of other
business to continue to screw up.
2. It assumes that these products won't find some
other way to reach market (many retailers closing
stores liquidate in place, for example).
* Impaired - I've seen clear evidence that many items
BL sells are there due to packaging or even branding
that needed changing that was uneconomical. I bought
a couple of cases of a fine breakfast cereal that had
an obvious trademark conflict with another company.
This sort of thing doesn't happen often enough to build
a business around.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.