*If you’re a Big Lots shopper, we’ve got some bad news for you. The Ohio-based discount retailer is grappling with mounting financial troubles and plans to close between 35 to 40 stores in 2024. In a recent SEC filing, Big Lots attributed these closures to elevated inflation, significantly impacting customer purchasing power.
Big Lots, which operates over 1,300 stores nationwide, revealed in the filing that it has experienced net losses and negative cash flow from operating activities in 2022, 2023, and the first quarter of 2024. Although currently compliant with its credit agreements, the retailer expressed concerns about its ability to maintain this compliance, citing expected future operating losses.
“Based on our current cash and liquidity projections, and uncertainties concerning the mitigating effect of management’s plans, the company has concluded there is a significant likelihood that it will be unable to comply with the Excess Availability Covenant under the 2022 Credit Agreement and the term loan facility within the next 12 months, which raises substantial doubt about the company’s ability to continue as a going concern,” Big Lots stated in the filing.
Despite the grim outlook, Big Lots plans to “vigorously pursue its plans to enhance its liquidity, improve the performance of the business, and avoid a covenant violation.” To improve liquidity, the company is exploring alternatives such as lease concessions, and deferrals, entering a letter of credit facility, managing its working capital, and raising additional capital. Additionally, Big Lots is considering further monetizing its remaining real estate properties through outright sales or sale and leaseback opportunities, reports Chain Store Age.
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Sales for Big Lots plummeted by 10.2% to $1 billion in the first quarter, which ended on May 4, with a 9.9% decrease in comparable sales. CEO Bruce Thorn attributed this decline to a continued reduction in consumer spending by the retailer’s core customers, especially on high-ticket discretionary items.
“While we made substantial progress on improving our business operations in Q1, we missed our sales goals due largely to a continued pullback in consumer spending by our core customers,” Thorn stated in the earnings release.
Looking ahead, Thorn emphasized that Big Lots is taking aggressive actions to drive positive comparable sales growth later in the year and into 2025. The company is focused on improving liquidity through various measures, including managing operating expenses, capital expenditures, and inventory and securing a new $200 million term loan facility for additional financial flexibility.
As of the end of the first quarter of fiscal 2024, Big Lots had $44.0 million in cash and cash equivalents and $573.8 million in long-term debt under its lending facilities. The company’s future remains uncertain as it continues to navigate these financial challenges and attempts to turn its fortunes around.
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