Part 6/10:
Despite the initial pandemic gains, several strategic missteps led to Big Lots’ eventual decline. The company miscalculated ongoing demand in the furniture market. As spending habits normalized, furniture and soft home sales plummeted—by 23% and 77% respectively in 2022. Additionally, rising operational costs—due in part to increased wages to attract employees during a tight labor market—added further strain.
In a particularly poor decision, Big Lots authorized over $400 million in stock buybacks during its stock price high, effectively draining cash reserves that could have been utilized for stability during the downturn. As revenues continued to misalign with fixed costs, by 2023, adjusted operating losses amounted to nearly $600 million.