Big Lots Reports Significant Decline in Financial Performance, Announces Store Closures and Files for Chapter 11 Bankruptcy

Big Lots, Inc. reported a significant decline in financial performance for the second quarter of fiscal 2024, which ended on August 3, 2024. Net sales totaled $1,046.6 million, down 8.1% from $1,139.4 million in the same period of the previous year. This decrease was attributed to a 5.3% drop in comparable store sales, alongside a reduction in non-comparable sales due to the closure of 33 stores since the second quarter of 2023. All merchandise categories experienced declines, except for the Furniture category, which showed slight improvement.

The company's cost of sales for the quarter was 65.1% of net sales, a decrease from 67.0% in Q2 2023. Gross margin improved to 34.9%, up from 33.0% year-over-year, reflecting better inventory alignment and a lower markdown rate. However, selling and administrative expenses surged to $553.7 million, representing 52.9% of net sales, an increase of 1,250 basis points compared to the prior year. This rise was driven by increased store asset impairment charges and professional fees related to financial evaluations and strategic options.

Big Lots reported an operating loss of $(221.8) million for the quarter, worsening from a loss of $(122.1) million in Q2 2023. The loss before income taxes also increased to $(238.1) million, compared to $(133.3) million in the previous year. The net loss for the quarter was $(238.5) million, slightly improved from $(249.8) million in Q2 2023, resulting in a basic loss per share of $(8.04), compared to $(8.56) a year earlier.

As of August 3, 2024, the company’s total assets decreased to $2.92 billion from $3.33 billion at the end of the previous fiscal period. Total current liabilities rose significantly to $1.33 billion, up from $831.0 million. The company reported a total shareholders’ equity deficit of $(154.6) million, a stark contrast to the $284.5 million equity reported earlier in the year.

In a strategic move, Big Lots announced the closure of 296 stores in Q3 2024 as part of its efforts to reduce operating expenses and capital outlay. This decision is expected to lead to accelerated amortization and depreciation expenses. The company also recorded substantial asset impairment charges totaling $99.2 million in Q2 2024, primarily related to the planned store closures.

On September 9, 2024, Big Lots filed for Chapter 11 bankruptcy, with approximately $556.1 million in debt classified as current due to the filing. The company is currently operating under bankruptcy court jurisdiction and has secured debtor-in-possession financing to support its operations during the restructuring process.