If You’ve Got a Big Lots Gift Card, You Better Use it Today.

A few years back, I had this brilliant idea that I could conquer a mini-marathon. Yeah, that delusion lasted about 8 minutes before my legs staged a full-blown mutiny, screaming, "Dude, what in the world were you thinking?" Fast forward to today, and Big Lots is pulling the same stunt, except their marathon is the economy, and the course is like running uphill through a minefield of inflation, spiking interest rates, and a consumer spending freeze.

(Source: CNN)

Let’s rewind a bit. Big Lots, the discount retailer known for its bargain deals and massive inventory of just about everything, is about to shut down over 300 stores across the U.S. That’s nearly a quarter of its entire fleet. 

We’re talking about a company that’s been around for 57 years, a staple for budget-conscious shoppers who don’t mind navigating narrow aisles stuffed with everything from patio furniture to Campbell's soup. Now, hundreds of these stores will soon be plastered with "Closing Sale" signs, and shoppers will be left talking about the good ol' days when they could score a recliner and a bulk pack of Oreos in the same trip.

So, what’s driving this retail apocalypse? May I introduce Jay Powell and his trusty interest rate hikes. The Federal Reserve’s aggressive push to cool down inflation has sent ripples through the economy, and retailers like Big Lots are taking a serious hit. When interest rates go up, borrowing gets more expensive, and consumers start clutching their wallets a little tighter. Big Lots’ core customers—who were never exactly splurging on yachts to begin with—have cut back even more on non-essential purchases. The result? A 10% drop in sales and a $205 million loss for Big Lots in just one quarter. 

But it’s not all Jay Powell’s fault. It doesn’t help that the competition is fiercer than ever. Amazon is lurking around every corner, making it way too easy to shop from the comfort of your couch, while traditional brick-and-mortar stores are left wondering if they should’ve gotten into the e-commerce game sooner. And let’s not forget about Dollar General, Big Lots’ longtime nemesis, which has been holding up surprisingly well despite the economic turmoil (There are 5 Dollar Generals within 2 miles of my house).

It’s not surprising that Big Lots CEO Bruce Thorn tried to fib us all back in June, saying the company “missed our sales goals due largely to a continued pullback in consumer spending by our core customers, particularly in high ticket discretionary items.” Translation: People stopped buying the expensive stuff, and we’re in deep trouble.

And here’s the kicker: Big Lots' stock has plummeted nearly 90% this year. That’s right, 90%. The only thing dropping faster than Big Lots’ stock is probably my faith in humanity after learning people still eat at Long John Silver’s.

So, what’s the game plan for Big Lots? They’re “taking decisive actions” and “reviewing our store footprint,” which is corporate speak for “closing a bunch of stores and hoping for a miracle.” They’re aiming to return to their roots and reclaim that bargain space they’re known for, but let’s be real, that’s going to be as big of an uphill battle as the Cubs winning another World Series. With consumers searching for extra change in the couch cushions, Big Lots might be in for a large dose of reality. If you’ve got a Big Lots gift card, you better use it today. 

Stocks.News holds positions in Big Lots, Campbell’s, and Dollar General.