Big Lots, Inc. · OTC:BIGGQ
Big Lots — Q2 2022 Earnings Presentation
28 slides from Big Lots's earnings presentation, Sep 1, 2022
Slide 1: Quarterly Results Presentation Second Quarter 2022
Q2 | 2022 | 1 QUARTERLY RESULTS PRESENTATION SECOND QUARTER 2022
Slide 2: Forward-Looking Statements
Q2 | 2022 | 2 FORWARD-LOOKING STATEMENTS Certain statements in this release are forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “a
Slide 3: Second Quarter Results, Outlook, Operation North Star, Wrap-Up, Appendix
Q2 | 2022 | 3 SECOND QUARTER RESULTS OUTLOOK OPERATION NORTH STAR WRAP-UP APPENDIX
Slide 4: CEO Comment
Q2 | 2022 | 4 We remain laser focused on helping our customers navigate these challenging times by delivering outstanding value across our assortment. We are managing the business prudently, while working hard to build a stronger company and deliver on our commitments to our customers, associates, a
Slide 5: Big Lots at a Glance
Q2 | 2022 | 5 25% 22% 13% 11% 11% 9% 9% Seasonal Furniture Food Soft Home Consumables Hard Home The Lot, Apparel, Electronics, etc. Chart based on Q2 2022 sales Broad Category MixNational Store Footprint Easy checkout and multiple payment types in-store and on-line Growing Omnichannel Capabilities 1
Slide 6: Second Quarter Highlights
Q2 | 2022 | 6 Down 9.2% to 2021 Over 7% eCommerce Penetration $180M Inventory Reduction vs. Q1 Up 22.8% vs. LY vs. up 48.5% in Q1 YOY >80% Net Promoter Score ~1,400 bps Increase Since 2020 3.6% 3-Year Comp 35% eCommerce Demand Growth SECOND QUARTER HIGHLIGHTS
Slide 7: Q2 Comp Sales
Q2 | 2022 | 7 Q2 COMP SALES Lapping Strong Home-Related Spending In 2020 31.3% -13.2% -9.2% Q2 2020 Q2 2021 Q2 2022
Slide 8: Q2 2022 Comp Sales by Category
Q2 | 2022 | 8 Q2 2022 COMP SALES BY CATEGORY 2022 vs 2019 Comp sales = (1 + TY Comp) * (1 + LY 2 Year Comp) - 1 3-Year Comparable Sales Growth Despite Continued Consumer Spending Pressure -10% -9% -5% -5% -3% 31% 50% 4% 1-Year Comparable Sales Included Strong Growth in Seasonal -30% -17% -14% -9% -6
Slide 9: Inventory Reduction Efforts on Track
Q2 | 2022 | 9 48.5% 22.8% Q1 Q2 Q3E Q4E 2022 YOY Inventory Growth(1) INVENTORY REDUCTION EFFORTS ON TRACK (1) 2022 Q3 and Q4 are estimates Up Mid to HSD YOY Flat to Down YOY
Slide 10: Q2 2022 Summary Income Statement
Q2 | 2022 | 10 Net Sales Gross Margin Gross Margin Rate Adjusted Operating Expenses(1)(2) Adjusted Operating Expense Rate(2) Adjusted Operating (Loss) Profit(2) Adjusted Operating Margin Rate(2) Adjusted Diluted (Loss) Earnings Per Share(2) Diluted Weighted Average Shares Q2 2022 SUMMARY INCOME STAT
Slide 11: Year-to-Date 2022 Summary Income Statement
Q2 | 2022 | 11 Net Sales Gross Margin Gross Margin Rate Adjusted Operating Expenses(1)(2) Adjusted Operating Expense Rate(2) Adjusted Operating (Loss) Profit(2) Adjusted Operating Margin Rate(2) Adjusted Diluted (Loss) Earnings Per Share(2) Diluted Weighted Average Shares YEAR-TO-DATE 2022 SUMMARY I
Slide 12: Capital Allocation
Q2 | 2022 | 12 $160M Annual CAPEX CAPITAL ALLOCATION $0.30 Quarterly Dividend(1) $900M(2) New ABL Credit Facility Progressing Down from prior guidance of $175 million Approximate 5.9% yield (as of July 29, 2022) Expect to enter new facility to replace existing $600M facility in Q3 (1)The payment of
Slide 13: Second Quarter Results, Outlook, Operation North Star, Wrap-Up, Appendix
Q2 | 2022 | 13 SECOND QUARTER RESULTS OUTLOOK OPERATION NORTH STAR WRAP-UP APPENDIX
Slide 14: Rising to the Challenge
Q2 | 2022 | 14 RISING TO THE CHALLENGE • Right-sizing inventory to pursue more closeout opportunities • Better opening price points • Capitalize on trade-down demand with quality and value assortment Unlocking Sales Opportunities • More targeted and efficient pricing and promotions • Freight and non
Slide 15: Launching More Compelling Offers
Q2 | 2022 | 15 LAUNCHING MORE COMPELLING OFFERS… BARGAIN HUNT TREASURE HUNT ESSENTIALS TRIP
Slide 16: Simplified Endcaps Focused on Bargains and Treasures
Q2 | 2022 | 16 …WITH SIMPLIFIED ENDCAPS FOCUSED ON BARGAINS AND TREASURES CURRENT FUTURE (Oct and beyond) PRIOR
Slide 17: Shifting Assortment Mix Creates More Reasons to Shop Us
Q2 | 2022 | 17 …AND SHIFTING ASSORTMENT MIX CREATES MORE REASONS TO SHOP US BARGAIN HUNT Closeouts and limited-time deals Target Mix: 33% Shifting our assortment to offer more bargains TREASURE HUNT Unique seasonal or trending items ESSENTIALS TRIP Never outs and category staples Target Mix: 33% Tar
Slide 18: Q3 2022 Outlook
Q2 | 2022 | 18 COMP SALES NEW STORE SALES GROSS MARGIN SG&A 1-year comps down low double-digit range Net new and relocated store openings to deliver 140 basis points of growth vs 2021 Sequentially improved gross margin rate in the mid-thirties Low-single-digit growth vs. 2021 Q3 2022 OUTLOOK
Slide 19: Q4 2022 Outlook
Q2 | 2022 | 19 IMPROVING COMP SALES GROSS MARGIN IMPROVEMENT SG&A COST REDUCTION Sequential improvement in 1-year comps driven by better opening price points, more closeout/bargains, trade-down, and lapping 2021 supply chain issues Sequential improvement in Q4 to approximately in-line vs. prior year
Slide 20: Second Quarter Results, Outlook, Operation North Star, Wrap-Up, Appendix
Q2 | 2022 | 20 SECOND QUARTER RESULTS OUTLOOK OPERATION NORTH STAR WRAP-UP APPENDIX
Slide 21: CEO Comment
Q2 | 2022 | 21 We are moving faster to provide even better deals and assortments for our customers by leveraging our vendor relationships and excellent private label brands. We are also building additional capabilities to grow our ecommerce business. We remain highly confident in the enormous value
Slide 22: Operation North Star Multi-Year Transformational Growth Plan
Q2 | 2022 | 22 OPERATION NORTH STAR IS OUR MULTI-YEAR TRANSFORMATIONAL GROWTH AND VALUE-CREATION PLAN LAUNCHED IN 2019 FUND ENABLE GROW Store count growth Sales productivity e-commerce acceleration Brand activation and customer growth Pricing and COGS program Promos and markdowns Shrink and loss red
Slide 23: Ambitious Long-Term Financial Targets
Q2 | 2022 | 23 SALES $8-$10B AMBITIOUS LONG-TERM FINANCIAL TARGETS OPERATING MARGIN 6%-8% ROIC1 20%-25% Defined growth drivers Gross margin expansion and disciplined expense management Accretive investments and ongoing return of capital 1 ROIC defined as trailing 12-month net operating profit after
Slide 24: Second Quarter Results, Outlook, Operation North Star, Wrap-Up, Appendix
Q2 | 2022 | 24 SECOND QUARTER RESULTS OUTLOOK OPERATION NORTH STAR WRAP-UP APPENDIX
Slide 25: Q2 Wrap-Up
Q2 | 2022 | 25 Q2 WRAP-UP • 3-year comparable sales growth of nearly 4% in Q2, an acceleration from ~2% in Q1 • Q2 adjusted EPS loss of $2.28 due to year-over-year sales decline and significant cost pressures • 1-year comps to be down in the low double-digit range in Q3, with sequential improvement
Slide 26: Second Quarter Results, Outlook, Operation North Star, Wrap-Up, Appendix
Q2 | 2022 | 26 SECOND QUARTER RESULTS OUTLOOK OPERATION NORTH STAR WRAP-UP APPENDIX
Slide 27: Second Quarter 2022 GAAP to Non-GAAP Reconciliation
Q2 | 2022 | 27 SECOND QUARTER 2022 GAAP TO NON-GAAP RECONCILIATION The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjuste
Slide 28: Year to Date 2022 GAAP to Non-GAAP Reconciliation
Q2 | 2022 | 28 YEAR TO DATE 2022 GAAP TO NON-GAAP RECONCILIATION The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted