Big Lots (BIGGQ) 27 May 222022 Q1 Earnings call transcript

Ladies and gentlemen, good morning, and welcome to the Big Lots First Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

On the call today are Bruce Thorn, President and Chief Executive Officer; and Jonathan Ramsden, Executive Vice President, Chief Financial and Administrative Officer.

Before starting today's call, the company would like to remind you that any forward-looking statements made on the call involve risks and uncertainties that are subject to the company's safe harbor provisions as stated in the company's press release and SEC filings, and that actual results can differ materially from those described in the forward-looking statements. The company's first quarter earnings release and related financial information are available at biglots.com/corporate/investors. website company's previously goals. long-term the presentation January on the highlighting strategy available is released a investor Also and financial will of call and the now Bruce I President Thorn, over Chief Lots. Big to Officer Executive turn Mr. Thorn, please go ahead.

joining and for Good morning, you us. everyone, thank

to will in clear purchases off by prices April the more the early to solid through you going inflation, and quarter our gas to being broadly, recall broader which transition. promotional. that in trends consumers and major this felt our be the a pressure caused from increasingly drove spending immediately March, of As start, industry. is slowdown our the We the first but affecting felt economy most our comments discretionary higher income customer More the got across a slowed was is believe materially We lower need due retail affected. from brunt it's

those discretionary X past the Over buoyant. especially years, the spending on home, were purchases, that consumer enhance

We high again the inflation now of that once are Americans ticket make to to paycheck items. is chapter purchases, high discretionary many where new of consumers limiting We ability are greatly know in living paycheck. a now especially

we omnichannel trade our to do we And out. environment, a draw want as very new well across capabilities, transition the We a are advantages, will very of opening we experience our of challenged and tremendous found in transformed demonstrating Star levels. serve In In day income range the our going underlying be customers, did a where, support forward. and believe and ourselves the business Our that fact closeout, price have expect as meantime, many softening offer North delivering high. from stand this over-inventoried past clear agility all the down some in going merchandise more across we how consumers X over very forward. wide strong too years and in stead have benefited range, good to I with our Operation a in day customer spending of and serve broad we home-related we value many against including business, well that deep very alongside improving our points we us aspects we others, to and trends opportunity economic of

this But our quickly. We financial impacted. the significantly fix term, be will results short in will

performance expectations to Our goal is today an out is and we the forward. going in speak of half what review to for and achievable think lay QX, back level acceptable QX, and

In a pre-COVID. first to results Operation were but trees. this Thanks difficult midst manage Star belief got Our are we miss this than strategy. Operation in a much our our Star, in for quarter we the stronger caught period, do to can't position not North forest North we of through number of in crosscurrents, diminish the the

big and we importantly, need corrections, we ahead help noble her intend or save from see While value the lots. opportunity our purpose from live us, of we side-tracked longer-term don't tremendous to be to most creation to near-term make

her right to be will inflation. family works We her there by is she as buffeted that severely manage being with budget

X-year vast March, not up for QX historic materialize comps into million, and plan on builds February April. comp were softer. missed April $XXX to much sales in But We majority by well close back the quarter did basis. performed to results. Turning our Seasonal the XX% our a and in

pullback confidence and is is Why? has the at directly consumer ticket environment, better. too saw high Poor drove help. the discretionary inflation. balance Consumer quickly been thought customer slowed these big that purchases, impacted much markedly opposite. sales While sheets while X down And opportunity, income a this did have trends softness chasing especially gas and income discretionary about as depleted Furniture, home, in April, a particular we Southeast as of It's by miss stimulus correlated didn't to on pointed furniture, inventory items. all-time to big high-ticket in was another saw low our clear total, ourselves plan. is to the for what recedes in acceleration XX% bought mirror. our spring a lower rearview with real an prices well weather disposable in into higher the And plan ongoing had And were April. divisions Midwest, with was seasonal, there while the quarter. we category, we but up we soft indicators declining. relative also In In the found worried

strategically adjust and our promotional meant closeouts we offer elevated inventory through that levels. be Furniture more clear that deals positioned sought same points, this through alone price of as It retailers clear cannot and we else. to Soft truly otherwise, and were anywhere Home, than opening saw inventory, get through in we to know we needed Seasonal, to all our the is excess customer and to compelling other expected. move slowdown of need be not they All Across

second Moving into quarter. the

expected. also in merged and to chain down. we have customers are incur These congestion. continued who Import quarter higher pressure And expect were the her. rates We continued incrementally to margin basis, for Freight likely than improvement This shop significant XX% teens Seasonal by trading stronger high month customers to helped our more retention can and were more that great and on many X-year income charges put up when much X-year we significant we Seasonal up will year-over-year. in supply continue more have have deliver seen weather. in to up with due effects comps, freight much ready promotional in significant higher QX month-to-date, are value mid-teens be erosion success gross to to still and are of our also a May QX. through driving is shows favorable the comps comps for X-year customer markdowns than QX, and to around on we

this Importantly, we pressure as view transitory. margin rate gross

the increase to our in Moving highly opportunities; XXs high buy, a remaining focused of expense the efforts. end to the But position go after opportunities to challenging. on ahead, will including: to to our the rate us we cleaner in leverage by QX; environment getting closeout continuing expect QX, acceptable while getting beyond third, open reduction to business margin back muscle managing we which back second, accelerate first, QX, our prudently, enabling an inventory significant remain gross by see

year. come the supplies, from the take million and to costs. headquarters goods and we not years, store savings million In of we for past $XXX out to These other have will X payroll, out additional expect $XX over this taken addition SG&A resale an

to and reorganized slow come. cost fourth, as have reduction, we prudently much And on with on efforts growth We more lowering store spend. and pull CapEx redoubled our other back

million our to now original up guidance for planning million. $XXX the of are around year $XXX versus We

stores putting We cumulative additional on around project XXX total refreshes the have now. completed XXX, hold year-to-date, but refresh bringing for are to over

We starting to that a chain. $XX open buy and our have to charges, strong and will and we charges price incurred lower detention receipts much net work are our million be drive trailing XX-plus in back to to CapEx. already we detention drive our More actioning. basis, and to On as XX-month early QX. demurrage and with store pricing to chase and efficient Being we from reduce see; there a food traffic; openings of pressure annualized more targeted our indicates are the more significant promotions, expect demurrage consumables minimizing where on new lowering opportunities, we which having we points closeout and gross and on in priorities starting XXXX are margin XX-plus include: opening to supply million a specifically key margin, focus levels opportunity $XX that reducing reducing on deferring other gross and around FTCs lower already

our of We will out sales that the evident visibility, both are optimistic inventory become our rolling where in progresses. and will of to are more drive shrink year new the as that midst support efforts enhance costs. a down chain on tool the flow supply Improving we results

we important to incurred some turn. to charges import million versus $XX additional substantial container over This XXXX. are will starting but we very time. we effect through over QX it be addition, come In numbers, of believe In rates time in alone, our see take can

to we are ending again, cleaner receipts. inventories about year ability are when excited more opportunities. QX committed with we We as go Once reduce and after drive have we to open sell-throughs in buy our the higher to will later closeout

lose up the the of ended money erosion. will where of end be inventory by total to will be QX. will of we again that, driven XX% rate which of cost QX substantial all narrowing We represent gross to inventory margin we effect spread from a above to the XXXX, around sales in net at QX, The expect at

get year full gross margin at these We conditions. deliver providing again, a are is our this during to expenses But primary inflationary to margin guidance our point. line and in operating not inventory sustainable rate, focus

achievable a We continue end than today. deliver can by Operation believe are ago, are value. different and moment can to in a tremendous confident very stated we of that as year the QX the place Star do Overall, and North I goals we

During making. the we're quarter, progress were the of many there points proof

how the versus serve an grew members, she and around sales of are continue And ago, Same-day loving rewards high the of remains XX% our a record million our added we stimulus all-time tough provide, e-comm delivery QX. impact shopping business growing our Net members traffic business new X% with Our a X.X holding to wants rewards XX Promoter when, in fueled we on shop experience Score million. total year a XX% where Despite we at around customer total customers quarter with to and standout, of business. us. as

the critical quarter, becomes and do are credit and challenging. represented available year. from mid-XXs well, up all program in we environment Leasing close the to economic label card our as options to private last to believe the and Easy Lots helping Across Real offering be business, label during these XX% ahead. quarters and private up down go have Living opportunities will to continued of Our our customers momentum trade after glad the divisions, Broyhill Big us more picked in we notably the our

other Having But again the positioned we furniture up on on conditions. have as years. continue our Star scaling both the store delivering in challenging me we we navigating the stores focused furniture slowdown. another growth average seen past our continue prudently to where growth leader are clear the Our of pace amazing Furniture pick of running And openings of of opportunity. confident despite over rolled XXXX success chapter new we be while very the be in to downs business. time. have to strong initiatives headwinds when XXXX openings double-digit the Today the will not on year weather X X to stronger ahead are believe least, deliver plan well our but by lifts model to ups said, we with that, thanks well and be that the And store current later stores to in time continuing recognized highly add as the were do results we in to years, it let back That Broyhill over year new right. to well, and the ability is perform see Overall, last pack Operation this the in QX last XXXX as North And and said recently with out. well in much the sales near-term long-term and will we is fully we to on

I tremendous And do their that. thank efforts. associates ever, team XX,XXX them I all can we of know As on our fantastic to count for

as go big And We will to lots. this through sight noble save of stronger. not will our we help and and customer grow we our through emerge lose purposes this live

a and make in Jonathan, moments comments few questions. to I over closing your some to before Now will taking return

for compared incredible results more the start Thanks, on Bruce. A financial and into Big detail for outlook found to then guidance quarter to of by and presentation. to And we my were double-digit by first team comparable decrease. versus results be can our results low year I'm original add I driven to Page billion our $X.XXX XXXX decrease XX%, X sales QX of net XX.X% a decrease our of QX address have our summary like Lots. a ago. QX of thanks a below billion, The on going would beyond. was going quarterly $X.XXX our at the here sales a decline

and mentioned, driven Seasonal, Bruce mix As the was by Soft Furniture Home.

Our were biggest comps flat. with X-year quarter, the in X.X%, the coming month April, of

rate income net last biggest for loss $XX.X million the quarter EPS, reduction $XX.X margin net to loss and gross quarter margin quarter compared $X.XX This was from Our versus basis the included with XXX first a the was last impacts share EPS guidance. year-over-year driver QX of for $X.XX The of Sales year. in points being significant of freight significantly down per gross rate, XX.X%, diluted of The major million year's rate driver. also markdowns. were approximately was underperforming XXXX. higher in the first from the both our

the first by Total was SG&A. and offset were both depreciation, billion, of to from distribution Total by was came Outbound accounted our year of the quarter rate last driven than in bonus higher with year's for and discrete transportation. mix in into due offset the by for million, Turning to up expenses planned quarter, to while receipts. compared was at first change XX.X% impact the increase, and and miss the settlements, last costs. inventory including modestly, up equity tax and by back a driven rate of awards profit year, sales continue XX.X%, $X.X credits. compensation, was these costs related audit higher quarter And driven the $X.X employment-related X.X% accruals ending rate units quarter quarter by with earlier-than-expected million the year. compared in X% was XX.X% to million of most by XXXX. in increases effects. the inflationary beginning cost the for down reduction margin Interest of of $XXX and primarily slightly some the million, half last This to last and above QX $XXX equity The up trucking of by the negative $X we items in transportation expense million, expect settlement cost increases quarter fuel income Operating from guidance $X.XXX the driven the year. headwinds tax for average through with to

and part increase the a to However, inventory. improve substantial deal inflationary planned continued with also positions in-stock of we as was impacts on our

$XX During equivalents free the over square the first $XXX under expect of million of QX, closed $XXX $XXX inventories. $XXX during We the million, in million total fiscal quarter of any of remaining to generate We ended stores QX revolver, X,XXX had rebuilding million the for The we XXXX XX.X XXXX same period $XXX execute last and $X.X first did flow we XX, repurchases and the fiscal to executed the availability cash last of record the under was quarter stores the and announced compared quarterly that $XX XXXX, We debt. today X of Capital We million of of QX. is year. June opened on This XXXX of common business million share. we of X debt. XX, Directors $X.XX the cash a to and of were per cash cash At million dividend declared with Board during dividend on and first first of long-term for quarter XXXX. close to share ended footage with payable of change as of available and around quarter, equivalents repurchases selling and $XX.X during our the up quarter share stores. not million remaining our of end million year. QX, June By have XXXX, shareholders million. but authorization. $XX cash December of new million our $XX reflects expense QX and long-term million end had expenditures year-over-year we cash Depreciation

second the quarter. to Turning

versus mid- in high about mid- the equating positive a be We expect digits, basis to negative to new well high single to above add QX XXXX. comps growth Net stores versus single-digit points XXX and comp to X-year will XXXX. of

Our activity promotional our rate current that into low will gross the expectation margin XXs. is QX drive

another this We dollars XXXX. will Overall, result significant SG&A for in to loss expect the operating quarter. be up slightly to

We have much actions in corrective XX.X be expect later year million believe positioned approximately effect. the we our taken better deliver We for a will of count results when QX. to share

improvement benefit note gross versus erosion actions. the year that margin QX, other is intensity from to sequential QX our expect in of that important with a is demurrage moderates QX in and rate begin line It rate see and to year of basis, quarter, approaching prior gross a we margin gross XXXX. We costs, the margin including points are in promotional as full with ending XXX margin year on basis detention approximately inbound freight and rate higher charges, each

XXXX. of expense expense transportation XXX versus outbound addition, is operating driving around points basis deleverage In

trailing it of we significant On run believe SG&A our now detention million we the take have that see margin $XX all million accruals expense on to demurrage additional of $XX transportation cost will bonus around chain to referenced, turn, significantly fuel plan, partially be be near by basis, as some a at lower While $XXX costs rates. flex million expense, to to XX-month term, driven normalization In on outbound Bruce will time higher impact reduce and tailwind planning expect costs, time. over continue year distribution original are of of sales, the a to down reductions, supply this basis. around full we including a and and higher by which offset lower

we reduction have We million. to of net capital of store We expect and openings. total versus versus representing prior intentionally total about XXXX significant count our number now XXXX in from reduced stores XX the the XXXX ending as expect we $XXX levels. around QX at basis, expenditures low XX% XXs a grow XX-plus by versus QX be guidance plus On cost in expect XXXX XXXX, to up around inventory end inventory to up a

around confident back QX. prepared North will approximately in year challenging for now $XXX turn over Operation shareholder million deliver to but reiterate call outstanding million, full $XX its Star our remain To are and growth I expect navigating expect depreciation potential. to in long-term fulfill the through a runway of comments, we continues including We to transition, as value Bruce. Bruce's

you, remarks our reaffirming in to long-term Thank want by model. our prepared Jonathan. I end our confidence

retailers period new as dislocation consumers We through a are a going and environment. to of adjust

the now new year better compelling, We are proposition the taking much adjust aggressive in results to years to value is to ourselves and environment, come. our for later ensure and position actions for

As many things of tough while promising may look never back value heard moderator And times, say I now now, can you goes over I'll Thank begin our excited the you. the questions. to address to that we out future. style. have call us am about your turn so

[Operator coming from question Our today Instructions] Greg is Badishkanian first from Research. Wolfe

Spencer if normal back for has we the by going are confident getting on is How are impacted to this of you Hanus buyers And the aggressive the planning how inventory. Greg. for end And Maybe holiday? on start then to XQ? This how your be this could year?

couple off maybe on I'll add that, and Bruce comments. of a kick then will

on increase, we year-over-year are at the of the end focused we as to QX. QX. to versus The getting end of where should level were aggressively we at want We half cut in be inventory guided to, roughly the

to But why into QX, there. committed bit there's want will assumption be there to we we open will one little of which open go think deals we is that QX out to for was in be impact a after is to into getting that. But have absolutely more still come great up we So rate buy some reasons so there. There that that. assumption obviously, to a can going cleanup are the the still margin through baked and baked sales markdown a

those hit we're So can numbers. confident we

Yes. add I'll to just it.

closeouts. Full productive at reacting on is is job going closeouts open rich more right forward. And to that team now. a for to the inventory getting our bigger. merchant Our getting looking moving great buy The the through opportunity same and we've bigger really We're got. the at doing throttle focusing environment time, on and inventory

our we now. good deal obviously, a we're the seeing which is from and at to help look that margin product. to us the see smoothing at get right the We're half, and that inventory it, we also to chain better opportunity back good going that, supply get us As of flow with deal for with

price, price So get we points, get value at and for that's customer and ability the sell through that better margin see for the the and have of place, get inventory, also opening our back better good our new in closeouts the half to good items better year. in

helpful. really that's X-year drive And the that just improvement of then view May and a comp? seasonal Or That's step-up sign helping to the in trends of comp Got a underlying turn? function the as the starting breaking is to you it. do in discounting weather in

hard been it's through. Spencer, think the bit But be so a given out we of promotional to going pass that. precise for helped, of to it's a whether it but we've level there's pickup, little us it's activity been probably hard probably about

guys it. CapEx fair. back what to need you growth Got then expansions? start I current of this the more see XXXX story Okay. you're understand capital point? a on for would that the pulling to That's and deploying again that Is at those given that And trends, store

I Yes. our lead renew is fairly long. source the of Spencer, time, mean

already So baked. the for 'XX well pretty they're were plans --

still on regard open we'll 'XX. some take on how to to openings few from net in 'XX. we with many want into 'XX next view a have We XXXX. months, And a So out stores latitude we have significant pushed to the over basis

stabilization plans. would just recently. think us the to in we've And I be give the the business seen obviously reaccelerate see those some looking from to we'll improvement that some and trends confidence then

also we do our from leave to customers the that. that to it moved why with We add top stores. a mention To what stores. reasons little is us like just of we're know they one our Just seeing bit, new away

the where important in is to location she being us. relevant, is, being So

'XX conversion fleet, of Class of class store rate new got Our great and XXXX, are expectations. beating XX They've -- stores baskets. our

with pleased how they're we're So performing.

things improving, to we'll back we something that is so And it. get -- see is right as this

is line of next Feldman Group. from from question the Joe Advisory today Telsey Our coming

price about ask the I to wanted opening point.

what price think far point, price guess, just need But points off lower? are So those you is come something you actions that you that in to that price are beyond with taking, And to order some guys opening in, of points guess? opening I get new to the those I now? mark get product right markdowns, to you how do

Joe, this is Bruce. Yes. Good question.

plan good up inventory we've to think mix so, rich got last over Right as in can high our and our freight buy. getting and now, get year that, of it's has that price down The rates, so those just points we up a place. AURs that points or I with gone some basics as up. open the open taken cost the you pushed inflation, see. go all bit, our a squeeze, that the we've lowered get rich or margin inventory to remove But to too. back of that price we forward, we've to a can opening is And

good, tabletop, on are opportunity those. points examples, good margin opportunities and Apparel rate in up consumables those good opening all seeing points. it closeouts get great categories, on we're types food, pop XX-plus price we're but bedding, home less well. seeing soft home, to to XX-plus closeouts at Specifically, products, and all of shoes, across as very a And seeing that. do points nice we're place Recent cetera, et the over

buy in open big to play our a our to role move So are that. through clean inventory, we up feel closeouts that going and like we as

of where And vendors. we price as half and is business going us what's we're also place the on. can to we as going back too in They're product because year. ecosystem to And margin another new we good Our see new vendors. they through allow better our have bring in-and-out the points that's with speak go reengineering of products, helping

merch going right investors. they're our for prouder lot inventory now. doing and So replace and through sell for customers it of what inventory more of current the a Couldn't to team and be productive with our work on the

gives you're with the last getting of you close the out pretty end guess and the I regard something, can year to in levels what costs get seeing year. to are more look the guess my that share can that know, get terms -- anything half, don't of to will to you back kind And level? you I think question, gross a Got freight I about as I to of we're color know it. back there? you you second margin, other or that on and you Like, by why guys confidence talking little you

Joe. the be first part to able want may I'll Bruce and that then Yes, comment. to take of

So will a back in do us help all. necessarily think in levers a to the demurrage are year. that we going number of improvement are there year-over-year detention there of the and we get at the year. come back half down big the think Freight, not significantly But the half of

we're from years, an doing get DCs finally our we we're X get going inventories clean to standpoint. what of inventory is after in clean upsides the of QX, One our

be backlogs, significant it We'll than process which yards supply we've having stuff So as in really the the chain. will empty. these in comes able rather drive to be seen costs

going can see see don't benefit to benefit, booked there's in bringing think a that didn't of as QX benefit be do -- year's a closeouts accretive. a balance because -- we of year. shrink, we're one third work The if in And we're it a will that that be to was we're the of in margin from over then remain pricing even that's to accelerate fourth and last, do will be incremental we're but -- piece the going We and benefit And full the if think quarter. even margin promo, that. we we the that. accounting anticipate starting we going doing we're we worth from get we So get of optimistic around the of think that we an what promotional to we less to Shrink, benefit substantive essentially it. QX see environment which a XXXX, didn't

little out a back to pretty there's other to pretty line. QX aggressive I into activity bit, And promotional many came spreads. their able retailers high with to be inventory in slowed things get sales inventories there some think been as

be fairly that then. normalized And we expectation would more were XXXX, promotional finally, Our QX by of we'll in environment a be QX.

So we're the have lapping of a quarter prior we year. where in level a did promotion higher

confidence line those We close fourth things we in QX. year-over-year we there there to in can think the can but get that won't us in we all quarter. back do get So in get QX, give

our to can I And Keep the home rebalance we a we're business, think produce margin. And a assortment. we're and add. will greater a speak We assortment, to well. as high-quality closeout as trade seeing customer a out in reengineering, what vendors get also that, is just especially products, in we've business, There's seasonal product gross commitment also as lean typical again, product, that we in businesses. factor. would the our with said, in-and-out down harder, seasonal closeout in of Once And a much harder business, our considerably our to lot customer. then higher-income our in assortment mind the I margin-rich got never out with and

Living we're doing in promising. it's inflation Consult Morning April. line, I showing think persists, Both as Broyhill positioned is And at to think down well Real analysis, if with already still of starting that I our pick our That's up you trade look them well. line.

very model customers. significantly good In fact, grown our And and is has Real value that's for Broyhill. outpacing Living a

of future is we is, in do. that the what of we think, think can All positivity I

Peter question Sandler. Your from Piper Keith coming from next is today

the consumers trying you interesting. the dynamics opportunity out certainly, maybe seeing seeing are close the for today? couple Bruce, Are Are that of to out? attracting You've -- the up sounds or outperformance to year in by right closeout been an last stores of area plus. teased What now? year. And you ramp category. you margin So a So closeouts is you a

Yes.

the more slowed supply. years, everything, as over during environment. tight that been core think even that. and down, back I last get of in couple of things more walls, the and pandemic, off a to into paint seeing And got and the it's closeouts the But sell opportunity chasing we're

expect apparel, margin don't home companies always and their I closeouts ton food, quite up categories, frankly, are see our tight. think quite the into have be past of to done And a committed and is going after tightened future CPG have And with and could better job food in I in rich, it's we that muscle And which even that. to on consumables think But that's today. a we've the got fully opening the We grow. going SKUs. nicely. The team up there.

that you we're home of Lots, that book it's in that's And working that's So really good something value there, think Big shoes in We hard our big And biting creation. something of our out when level. and lots. our buy about it's rebalancing real And to some and creators. closeout get just a up about We're open lot close areas. ready live to a I to canceled in we're especially that bullet, good are that. buy to It's it for save purpose. getting the opportunity and think we're value help DNA. back her margin-rich inventory the And QX, and check the apparel our categories orders shape

the team that the get us. improve that, to our strong to margin and So from commitment customers after value proposition for points there's a for

Okay. guidance. Very or sales in does not guess have I know EPS SG&A you're reduction And sound some it But you providing plans like on helpful. really I CapEx.

in right that actually like worse? or feel you terms get economic assumed of is bit now backdrop the outlook? plan in Do the perhaps you're So might a continue the to planning it going what's little

Yes.

environment it's lower-income that's that for opportunity. a we as obviously think the more the assuming well. us, likely a time, ladder remain for the over going for that pretty economic so also tough probably is customer, And challenge we're for particularly but people an up higher but Peter, So income while, to

price We opportunity we it's think have points. have the of want business, trade also to we that started to there's to go to lot go we a down really after come. more of. But why a sure bit compelling opening back making to we And see which

while adjusting can think trade supporting consumer. to make And inventory we from our And there at won't want of points. compelling sure our really have part with forever. it opening prices struggling prices particularly sure flowing And down we benefit inflation. lasts, we price we're high supporting we they're core well. last gas So obviously right we're them. as making now But It that, in is

Yes.

doubt in Just future. feeling the she's adding consumer the There's is little the concerned increase no and bit. inflation a about

this the last sentiment I and think something was much inflation time like maybe about sort saw where U.S. decreased ago. so XX years

need now. So things she's her she's shopping to that But feeling also in shopping where she'll events. to she's money. like needs go work that's And it's somewhat that. back new of us the and spending for all And right it basic

incomes, Our is while all customer. customer penetrate serve the do lower-income -- base to we household we

or about Our customer -- XXs. the for making is American customers $XXX,XXX in XX% population's had we about there, less, an penetrated

we why has to to in go for So product, through through trade important penetrate the stronger. opening And back do the lower-income through do great her us. of her go do. history pinch And that as abandon come just get out we closeout, transitory going then as this. And And it. store. We'll value points a we for as important proven, That's this during us traffic back, she tough inflation. not It's get and job. grow us our margin It's a times. That's customer. what see important well that's these to price to us so just that's for times this basics. and to us back, now. for right it's quite after after the new we we'll for difficult up shops the We getting a it's to we're And good the

is from from coming Sachs. McShane Goldman today Kate Next question

as in issue know quarter. talked call flagged about a improvements that pretty if X you something I any questions. seeing last last big processes We I the you have the was that shrink implementing actually you. just were for of in quarterly you wondered some actually after

to I'll that Yes. be take one. happy

in middle the year. started our runs it cycle of through we annual physical January, the So and inventory

higher caused a in which been the that rate when significantly also that And So itself. rate January the quarters QX, to this shrink a related but was hit shrink both take and to manifesting us the cycle to when year, prior QX, of catch-up in been the significant was essentially we began than accruing the at. related prior we've had year

actions we able we taking. we're have So include we XXXX. fully the on have tagging, whole of They roll But which apparel started in a because to now to apparel. weren't out. out rolled That's range fully we tag had limitations supply,

real our carts about retraining many our shrink last which associates. forward. have We've a stores. We shrink done whole higher we with also point-of-sale on in looking store the had shopping We've fixed on we of the these going warranty, talked with issue call

that. issue, and will beyond that actions eliminate other So that

to So Until as we're a going very start solid doing a provide we those on things. find optimistic to really visibility get We're going benefit have are our to we this to hold forward. year, try particular. physical later inventories in QX to But a through that we we they're way more to go that. going all do won't that

lapping would we of to And headwind performance have the be components improve we same we optimistic XXXX. QX and accounting improving now in about that. in case again, Store the and year. past. at all we the So of feel big linked because wasn't took of in for a an each bit But even come the about on it. it our year-over-year, it's sort benefit QX optimistic we'll there QX But we feel in will which are the hit of -- end -- if be a a shrink, didn't And reason. doesn't of all, QX QX bonuses at

we the motivated rate can and So everybody is And down. we bring definitely focused. think

into may historically? more you away you discretionary is in or would a that bit tougher been little and seeing addressed look consider do have from wondered already. slightly you've this maybe Or macroeconomic something And given last that But so? consumables times, been just Okay. I the in month to what lean

for Having Good question, home value quarter, even what we And very matter. sales categories. consumables do now. our food she's that, That's held Kate. nicely. on first margin In great in consumable said and tough buying a times, business assortment we've the food the up got and And good very and right make her.

not and, an us. or for And so it's an

And just very ability point just to point in all continue do a do got We items the needs We've in recliner, right We've also, to Pre-pandemic, and she on those May, were became She's she'll we back food wants buying at the she give will now right maybe in market that We We well that. marketplace get to that. those promotional. we X%. price to those digit. doing double merchandising continue that We've to gainer good great despite price those value, that recliner, proven proven and late that at were consumables I'm in her the expect at desk get growing that and our that. new these we points. basics well categories team's times, tough our during things. in. value, a share still when confident opening that a in at in child do for to And growing April buy were times.

an or. across got an assortment value. it's and a categories, going multiple And to and, We've not so we're good her bring

from today from next coming Our America. of Jason is question Bank Haas

inventory. on is first The

if curious that you're fund if bit you elevated, it I'm expecting you I gave still apologies that? I know see think through you I'm so, year, by how do plan build through little XQ. that I What But this like to for curious, a that's the the look think number year? you're build end it. the to we inventory the of case running typically inventory should year. for year. missed the I but the if And

year-over-year the reminder, was end just up we at inventory so a as XX.X%. of said Jason, QX,

roughly We expect cut QX. in in that half to

QX We in slightly in the be and expect probably to it. we're sort single is of down flat digits it to by seeing QX then how

a chain. percentage the stores performing. follow-up variance you rest among aren't have then just curious about profitability I'm of the I'm to And they're question. curious helpful. your a how That's the Great. and if if Okay. certain profitable could you stores maybe relative that of talk the

Yes.

that on regular we So at basis. look a obviously

of range with pretty other stores broad pretty relatively is profitability. a stores unprofitable. and of the a are that loss-making little factors. Varies We number There's some geography small of number But have actual small. bit that's a

I Got last it. squeeze if could helpful. in. And one That's one

seen prepared other think think driven I increasingly that? the credit that. could had that I use around Leasing, Lots And customers Easy you've mentioned curious any color Big and remarks, I'm what's in provide the Bruce you card

just tough to Yes. for a Those think, build her tools It's, I great her needs. us help are inflationary times.

checks, saw a stimulus Easy so we the And pandemic, decrease Leasing during with program. in

That's for usage during that XX% increase issuance checks. the penetrating and think to to we're stimulus on it about pandemic, benefit obvious and pandemic substantially now, I maybe the sales, of the reasons. starting declined prior furniture of

and If her the at inflationary the point. you heights across at has everywhere, gas at through needs just the consumer what her purchase about to vehicles help needs been point, but not think just this this pumps, she

simple to And trying going lot of continue for is a and and her seeing we grow her I that that's high really cash. too. think Big and stays low so to we're that, sentiment job. she's up, we're preserve on And Leasing. nice traction Lots made credit and as positioned inflation Easy to to go a So our to done well with card it expected We've has use,

next is Short from coming Barclays. question from Karen The

discretionary So terms to but into wanted in category. bit in a talk closeouts, inventory because you're obviously choosing inventory of I little lean to in

So at you are the where the categories? that triangulate you think that fact of I more and with consumer transitory do bigger And terms leaning another discretionary I closeouts of I picture mean, is in kind then guess, had this why question. that is into in

Yes. Karen. off, I'll kick

some of what we're categories in discretionary saying we were over-inventoried QX. overall, that So in clearly is the

seeing trend up in we're I alone the a bought that. particularly course of over QX, in And others, deteriorated not to we April. has think like that

our to are some we get items, seasonal to inventories in down ticket right furniture. So very in now high working hard degree

levels in our that also is it those of inventory is some categories. part But open just down. to And we up value want of it to that bring great because we in to need closeout get

So it. that's seeing how we're

just recliner discretionary. it's breaks your Yes. you're it we would it. add replace if call going old, And that, too or to But I

it. buy If your going you're desk, daughter to needs a

low, for get X-year the a So price it's percent points at X-year look for seeing we're right just are XX-plus the now comp categories. But comps, we pricing what across May in And to we're seasonal discretionary point. the as just comps a we her, to if double-digit right when all mid seeing you proof I her. get think points right

It's us. do So and Well, it the that better it on, points business. closeout things just gross a good to well, It's good you at puts is do with working it vendors back but point our right. gross to margin? price up to She's get and to there. margin how the us buying up, And now. reengineer through price that right the get demand it's margin is products,

So that's into why we'd lean it.

price So too or things growing to they it's going get just a those businesses. to she's just better about Discretionary a opening break getting our and point, good old. as replace place, points mix to

then of deleverage is, your the pandemic. the But model clearly the now And P&L. on is leverage model my risks the your Okay. of demonstrating second question during clearly benefits obviously, demonstrated

global more perspective get X% because that how to year. to at can next the I likely I'm margin can that So sure guess, slightly year you still overall reiterated algorithm. comfortable of negative margins context, for several stabilize a in you from quarters importantly, end But flat X% not the business you'll the the operating kind for we your margins,

how on possibly So see maybe some you path that playing could out. color

Yes.

where QX. dealing the QX think the we're QX will with of Karen, So in get challenges we facing I some a to be along rate better can we key of gross think, much after way and margin back points the one

also called control all to and But certainly of out freight detention the points I we own come we've pretty levers the rate about we margin think about script, talked able some relative get then time. or to relevant, quickly. so think going we've in help is think be up outbound, to demurrage, do got our freight XXX as that of we'll get to costs, that other figure expecting time. rate and all down we're we We're run which a we under to starting it's the think basis will see it turn. gross to got We can back, back we margin which low pretty and transportation inbound come And of about XXXX. rates and million loss from over that between over not talked $XX rate

thinking after time, that's the same on out. we'll SG&A be taking And we're in take about out about the environment. continue year. from another a that we'll And then reduction. this So we normalized how we're that think far QX, that $XX that And going at it. more talked done to go to fact we're continue million to We by

levels certainly, getting for gross QX up QX to back and than which we it's the of in rate be some running we're it part has closer us, historical path confident in of to and So can do. margin QX,

if this going its And dealing work That's we way out. look lot a to mean all where macro the I'll that. we're but It's just that over we're can't get you add -- on to better, it's to systemic. time, It's it, Karen. I with. lot count at a at I impact here, going of is think

really execution. our it's So about

what the what product, we're an how we're the of laid gross improve execution things out goes about the map all in what we're road course I operating control better laid the we're way expenses, we around what we are the are hard Jonathan margin, and over going us of can have through last of things as to doing think our plan improve. there do to could year. But we've to a It's done to all out how things. things we've presentation. going laid these those anticipate about investor all control out that going some But conditions

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