With a difficult first quarter and a substantial probability of defaulting on its existing loans, a well-liked shop is now closing about 40 locations.
As a result of a challenging first quarter this year, Big Lots plans to eliminate 35 to 40 locations by 2024.
The bargain shop acknowledged that it had experienced financial losses in 2022 and 2023.
Compared to the same period in 2023, Big Lots’ comparable sales decreased by 9.9% for the first quarter of 2024, which concluded on May 4, 2024.
From $1.12 billion to $1 billion, net sales decreased 10.2% in Q1 2024 compared to Q1 2023.
Furniture and home products, food, and seasonal items are among the retailer’s top product categories. It runs over 1,400 locations throughout 48 states.
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As per the SEC filing, Big Lots’ management has “implemented plans to reduce costs, improve sales, and enhance its financial flexibility and liquidity.” However, whether these actions will be sufficient to correct the retailer’s direction remains questionable.
Big Lots reduced costs, sold off some real estate, and took other actions to increase cash flow during the course of the previous year.
That being said, an SEC filing suggests their efforts might not be enough.
“Big Lots 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,” the company wrote, based on its current cash and liquidity projections and uncertainties regarding the mitigating effect of management’s plans.
Chapter 11 or even Chapter 7 bankruptcy may be required of the company if it falls out of compliance, according to TheStreet. Its loans may also be called in.
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