QUARTERLY
RESULTS
PRESENTATION
Fourth Quarter 2023
Q4 | 2023 | 2
FORWARD-LOOKING STATEMENTS
Certain statements in this presentation are
forward-looking statements within the meaning
of the Private Securities Litigation Reform Act
of 1995, and such statements are intended to
qualify for the protection of the safe harbor
provided by the Act. The words “anticipate,”
“estimate,” “continue,” “could,” “approximate,”
“expect,” “objective,” “goal,” “project,” “intend,”
“plan,” “believe,” “will,” “should,” “may,” “target,”
“forecast,” “guidance,” “outlook,” and similar
expressions generally identify forward-looking
statements. Similarly, descriptions of our
objectives, strategies, plans, goals or targets
are also forward-looking statements. Forward-
looking statements relate to the expectations
of management as to future occurrences and
trends, including statements expressing
optimism or pessimism about future operating
results or events and projected sales, earnings,
capital expenditures and business strategy.
Forward-looking statements are based upon a
number of assumptions concerning future
conditions that may ultimately prove to be
inaccurate. Forward-looking statements are
and will be based upon management’s then-
current views and assumptions regarding
future events and operating performance, and
are applicable only as of the dates of such
statements. Although we believe the
expectations expressed in forward-looking
statements are based on reasonable
assumptions within the bounds of our
knowledge, forward-looking statements, by
their nature, involve risks, uncertainties and
other factors, any one or a combination of
which could materially affect our business,
financial condition, results of operations or
liquidity.
Forward-looking statements that we make
herein and in other reports and releases are
not guarantees of future performance and
actual results may differ materially from those
discussed in such forward-looking statements
as a result of various factors, including, but
not limited to, the current economic and credit
conditions, inflation, the cost of goods, our
inability to successfully execute strategic
initiatives, competitive pressures, economic
pressures on our customers and us, the
availability of brand name closeout
merchandise, trade restrictions, freight costs,
the risks discussed in the Risk Factors section
of our most recent Annual Report on Form
10-K, and other factors discussed from time
to time in our other filings with the SEC,
including Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. This
presentation should be read in conjunction
with such filings, and you should consider all
of these risks, uncertainties and other factors
carefully in evaluating forward-looking
statements.
You are cautioned not to place undue reliance
on forward-looking statements, which speak
only as of the date they are made. We
undertake no obligation to publicly update
forward-looking statements, whether as a
result of new information, future events or
otherwise. You are advised, however, to consult
any further disclosures we make on related
subjects in our public announcements
and SEC filings.
Q4 | 2023 | 3
CEO COMMENT
For the third quarter in a row, we did what we said we would do, and despite a challenging macroeconomic
environment and well documented weather challenges in January, we finished the year in a much better
place than where we started. That said, there’s a lot of work to do in 2024, and we are moving
aggressively to accelerate our transformation, return to positive comparable sales, and continue to improve
our gross margin rate over the course of the year.
For Q4, as we announced on February 12, we delivered on our guidance for comparable sales, gross
margin rate, operating expenses, and inventory. We believe progress on the five key actions that underlie
our strategy, which are to own bargains, communicate unmistakable value, increase store relevance, win
customers for life with our omnichannel efforts, and drive productivity, enabled us to deliver adjusted
operating profit growth in Q4, marking the first quarter of adjusted operating profit in two years.
Our efforts to aggressively manage costs, inventory, and capital expenditures, as well as monetize owned
assets, have enabled us to maintain liquidity through a challenging period. As we look into 2024, we
continue to evaluate additional financing options as a normal part of prudently managing our business.
While near-term conditions may remain challenging, we look forward to returning the company to health
and prosperity, and believe we are taking the right actions to do that.
Bruce Thorn, President & CEO
FOURTH
QUARTER
RESULTS
Q4 | 2023 | 5
BIG LOTS AT A GLANCE
Strong Omnichannel
Capabilities
Diversified Category
Mix
National Store
Footprint
1,392 Stores in 48 States Industry-leading delivery options, easy
checkout, and multiple payment types
to win customers for life
23%
19%
17%
14%
15%
12%
Furniture Food
Soft Home Consumables
Seasonal Hard Home
Chart based on Q4 2023 sales
Q4 | 2023 | 6
FOURTH QUARTER SUMMARY
Inline with Guidance Inline with Guidance,
Up 170bps vs. LY
-17.0%
Inventory vs. LY
Inline with Guidance,
Strong turn
improvement
-3.5%
Adjusted
operating
expense
1
vs. LY
Inline with Guidance
-8.6%
Comps
38.0%
Gross margin
1
Adjusted Operating Expenses are comprised of adjusted Selling and Administrative Expenses and Adjusted Depreciation Expense. Adjusted 2023 results
are non-GAAP financial measures. A reconciliation of reported GAAP results to the adjusted non-GAAP results is included in the appendix.
Q4 | 2023 | 7
Q4 2023 COMP SALES BY CATEGORY
-18%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Hard Home Seasonal Soft Home Food Consumables Furniture Total
-17%
-14%
-9%
-8%
-4%
-4%
-9%
Significant Sequential Improvements Relative to Q3 in Furniture/Soft Home
Note: In the Q4 2023, we realigned our merchandise categories and eliminated our Apparel, Electronics, & Other merchandise category. We have reallocated the departments
that previously comprised Apparel, Electronics, & Other into the following merchandise categories: Hard Home, Soft Home, Consumables, and Food.
Q4 | 2023 | 8
YEAR-OVER-YEAR INVENTORY REDUCTION
Inventory Managed Down More than Q4 Sales
-7.3%
-18.8%
-15.2%
-12.5%
-17.0%
Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023
Q4 | 2023 | 9
ADJUSTED Q4 2023 INCOME STATEMENT
Q4 2023 Q4 2022 Change vs. 2022
Net Sales
$1,432,484 $1,543,113 (7.2%)
Gross Margin
544,443 560,901
Gross Margin Rate
38.0% 36.3% 170 bps
Adjusted Operating Expenses
(1)(2)
543,380 563,049
Adjusted Operating Expense Rate
(2)
37.9% 36.5% 140 bps
Adjusted Operating Profit (Loss)
(2)
$1,063 ($2,334)
Adjusted Operating Profit (Loss) Rate
(2)
0.1% (0.2%) 30 Bps
Adjusted Diluted (Loss) Earnings Per Share
(2)
($0.28) ($0.28)
Diluted Weighted Average Shares
29,217 28,957
(In thousands, except for earnings per share)
(1) Adjusted Operating Expenses are comprised of adjusted Selling and Administrative Expenses and Adjusted Depreciation Expense.
(2) Adjusted 2023 and 2022 results are non-GAAP financial measures. A reconciliation of reported GAAP results to the adjusted non-GAAP results is included in the appendix.
Q4 | 2023 | 10
ADJUSTED FY 2023 INCOME STATEMENT
FY 2023 FY 2022 Change vs. 2022
Net Sales
$4,722,099 $5,468,329 (13.6%)
Gross Margin
1,686,611 1,913,503
Gross Margin Rate
35.7% 35.0% 70 bps
Adjusted Operating Expenses
(1)(2)
2,029,300 2,123,454
Adjusted Operating Expense Rate
(2)
43.0% 38.8% 420 bps
Adjusted Operating Loss
(2)
($342,689) ($209,951)
Adjusted Operating Loss Rate
(2)
(7.3%) (3.8%) (350) Bps
Adjusted Diluted (Loss) Earnings Per Share
(2)
($11.30) ($5.96)
Diluted Weighted Average Shares
29,155 28,860
(In thousands, except for earnings per share)
(1) Adjusted Operating Expenses are comprised of adjusted Selling and Administrative Expenses, Adjusted Depreciation Expense, and Adjusted Gain on sale of real estate.
(2) Adjusted 2023 and 2022 results are non-GAAP financial measures. A reconciliation of reported GAAP results to the adjusted non-GAAP results is included in the appendix.
Q4 | 2023 | 11
CAPITAL ALLOCATION
*Net liquidity is defined as ABL Credit Facility availability, net of covenant-based borrowing limitations, plus Cash and Cash Equivalents.
~$60M
FY2024 CAPEX
$900M
ABL Credit Facility
Up to
$200M
Monetizable Assets
Inline with or somewhat below
FY 2023 spend
Available for use as collateral
for additional financing or sale
Net available liquidity of
~$254M* at end of Q4
GUIDANCE
Q4 | 2023 | 13
Q1 2024 GUIDANCE
SG&A
REDUCTION
COMP SALES
GROSS MARGIN
IMPROVEMENT
Down low single-digit range,
inclusive of sale/leaseback
Significant improvement versus
last year, up between 200-
250 basis points
Down mid-single-digit range;
continued sequential
improvement
Q4 | 2023 | 14
5 KEY ACTIONS
Q4 | 2023 | 15
PROJECT SPRINGBOARD
Cumulative benefit of
~$175M by end of
2024
~40%
of savings in
other gross
margin items
Inventory optimization,
marketing, pricing &
promotions
~20%
of savings
in SG&A
Store & field operations,
supply chain, general
office
$200M+
Bottom-line
opportunities
~40%
of savings
in COGS
WRAP-UP
Q4 | 2023 | 17
Q4 WRAP UP
• Comparable sales decline of 8.6% in Q4, in line with our guidance range; GAAP EPS of -$1.05, with adjusted EPS loss of -$0.28
due to year-over-year sales decline and continued cost pressures
• Successfully reduced inventory, down more than sales
• Comps will continue to improve sequentially in Q1; focused on unlocking additional sales opportunities (e.g., more bargains and
extreme bargains, exciting assortment, clearer value communication)
• Q1 gross margin continues to improve vs. last year, driven by more normalized markdown activity, lower freight costs, and cost
savings initiatives
• Continue advancing five key actions to drive improvements through 2024, with a path to positive comparable sales
• Project Springboard on track to deliver bottom-line opportunity of $200M+ in gross margin/SG&A; cumulative benefit of $175M
expected to be realized by the end of 2024
• Maintained liquidity through a challenging period; will continue to evaluate additional financing options as a normal part of
prudently managing our business
• Look forward to returning the company to health and prosperity, and are taking the right actions to do that
APPENDIX
Q4 | 2023 | 19
FOURTH QUARTER 2023 GAAP TO NON-GAAP RECONCILIATION
($ in thousands, except for earnings per share)
The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted gain on sale of real estate, adjusted gain on sale of real estate rate, adjusted operating (loss) profit, adjusted operating (loss)
profit rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are “non-GAAP financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part
244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) FDC contract termination costs and related expenses of $2,168, store asset impairment charges of $11,724, a gain on sale of real estate and related expenses of $551 ($1,114, net of tax), fees
related to a cost reduction and productivity initiative which we refer to as “Project Springboard” of $11,495, and an adjustment to our valuation allowance of which a portion was attributable to the initial valuation allowance on deferred tax
assets recorded in the second quarter of 2023 of $1,846.
Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our
operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses
these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.
As Reported
Adjustment to
exclude forward
distribution center
("FDC") contract
termination costs and
related expenses
Adjustment to
exclude store asset
impairment charges
Adjustment to
exclude gain on sale
of real estate and
related expenses
Adjustment to
exclude fees related
to a cost reduction
and productivity
initiative
Adjustment to
exclude initial
valuation allowance
on deferred tax assets
As Adjusted
(non-GAAP)
Selling and administrative expenses 535,249$ (2,168)$ (11,724)$ -$ (11,495)$ -$ 509,862$
Selling and administrative expense rate
37.4% (0.2%) (0.8%) - (0.8%) - 35.6%
Gain on sale of real estate (551) - - 551 - - -
Gain on sale of real estate rate (0.0%) - - 0.0% - - -
Operating profit (loss) (23,773) 2,168 11,724 (551) 11,495 - 1,063
Operating profit (loss) rate (1.7%) 0.2% 0.8% (0.0%) 0.8% - 0.1%
Income tax benefit (1) (3,904) - - 563 - 1,846 (1,495)
Effective income tax rate 11.3% - - 0.9% - 3.1% 15.3%
Net loss (30,709) 2,168 11,724 (1,114) 11,495 (1,846) (8,282)
Diluted earnings (loss) per share (1.05)$ 0.07$ 0.40$ (0.04)$ 0.39$ (0.06)$ (0.28)$
Q4 | 2023 | 20
FOURTH QUARTER 2022 GAAP TO NON-GAAP RECONCILIATION
($ in thousands, except for earnings per share)
The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted gain on sale of real estate, adjusted gain on sale of real estate
rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are “non-GAAP financial measures” as that term is
defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in
accordance with accounting principles generally accepted in the United States of America (“GAAP”) store asset impairment charges of $22,568 ($17,160, net of tax) and a gain on sale of real estate and related expenses of $16,847
($12,807, net of tax). The depreciation expense included within the adjustment to exclude gain on sale of real estate and related expenses is the accelerated depreciation associated with the disposal of fixtures and equipment at each of the
store locations included in the sale.
Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our
operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial conditions. Our management uses
these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.
As R e porte d
(R e cas t)
Adjus tme nt to
e x clu d e s tore as s e t
impairme nt
Adjus tme nt to
e x clu d e g ain on s ale
of re al e s tate and
re late d e x p e n s e s
(R e cas t)
As Adju s te d
(n o n -G AAP )
(R e cas t)
S e lling and ad min is trativ e e x p e n s e s
544,486$ (22,568)$ -$ 521,918$
S e lling and ad min is trativ e e x p e n s e rate
35.3% (1.5% ) - 33.8%
De pre ciation e x p e n s e
43,051 - (1,734) 41,317
De pre ciation e x p e n s e rate
2.8% - (0.1% ) 2.7%
G ain on s ale of re al e s tate
(18,581) - 18,581 -
G ain on s ale of re al e s tate rate
(1.2% ) - 1.2% -
O pe rating los s
(8,055) 22,568 (16,847) (2,334)
O pe rating los s rate
(0.5% ) 1.5% (1.1% ) (0.2% )
Income tax be ne fit
(2,958) 5,408 (4,040) (1,590)
E ffe ctiv e in come tax rate
19.2% (1.6% ) (1.2% ) 16.4%
Ne t los s
(12,463) 17,160 (12,807) (8,110)
Diluted e arn ing s (los s ) pe r s h are
(0.43)$ 0.59$ (0.44)$ (0.28)$
Q4 | 2023 | 21
FY 2023 GAAP TO NON-GAAP RECONCILIATION
($ in thousands, except for earnings per share)
The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted gain on sale of real estate, adjusted gain on sale of real estate rate,
adjusted operating loss, adjusted operating loss rate, adjusted income tax expense (benefit), adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are “non-GAAP financial measures” as that term is defined
by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable financial measures calculated and presented in accordance with GAAP
synthetic lease exit costs and related expenses of $53,610 ($39,780, net of tax), FDC contract termination costs and related expenses of $23,567 ($18,757, net of tax), store asset impairment charges net of liability extinguishment for terminated
leases of previously impaired stores of $148,595 ($128,385, net of tax), a gain on sale of real estate and related expenses of $212,463 ($210,444, net of tax), fees related to a cost reduction and productivity initiative which we refer to as “Project
Springboard” of $31,359 ($30,087, net of tax), and an initial valuation allowance on deferred tax assets of $146,004 recorded in the second quarter of 2023, and subsequently adjusted in the fourth quarter of 2023.
Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for measuring our operating
performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial condition. Our management uses these non-GAAP
financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.
As R e p o rted
Adjus tme n t to
e x clud e
s yn the tic le as e
e x it cos ts an d
re late d
e x p e ns e s
Adjus tme n t to
e x clud e fo rward
dis tribution ce nter
(" F DC " ) contract
termin ation co s ts
and re late d
e x p e ns e s
Adjus tme n t
to e x clude
s tore as s e t
impairme nt
ch arge s
Adjus tme n t
to e x clude
gain on s ale
of re al
e s tate and
re late d
e x p e ns e s
Adjus tme n t to
e x clud e fe e s
re late d to a cos t
re duction and
productiv ity
initiativ e
Adjus tme n t
to e x clude
initial
v aluation
allo wance o n
de fe rre d tax
as s e ts
As Adjus ted
(n o n -G AAP )
S e llin g an d admin istrativ e e x pe ns e s
2,141,927$ (53,610)$ (15,537)$ (148,595)$ -$ (31,359)$ -$ 1,892,826$
S e llin g an d admin istrativ e e x pe ns e rate
45.4% (1.1% ) (0.3% ) (3.1% ) - (0.7% ) - 40.1%
De p re ciation e x p e ns e
144,504 - (8,030) - - - - 136,474
De p re ciation e x p e ns e rate
3.1% - (0.2% ) - - - - 2.9%
G ain o n s ale of re al e s tate
(212,463) - - - 212,463 - - -
G ain o n s ale of re al e s tate rate
(4.5% ) - - - 4.5% - - -
O p e rating los s
(387,357) 53,610 23,567 148,595 (212,463) 31,359 - (342,689)
O p e rating los s rate
(8.2% ) 1.1% 0.5% 3.1% (4.5% ) 0.7% - (7.3% )
Income tax e x p e n s e (be ne fit)
49,768 13,830 4,810 20,210 (2,019) 1,272 (146,004) (58,133)
E ffe ctiv e in come tax rate (1)
(11.5% ) (3.4%) (1.2% ) (5.0% ) 0.5% (0.3% ) 35.9% 15.0%
Ne t los s
(481,876) 39,780 18,757 128,385 (210,444) 30,087 146,004 (329,307)
Dilute d e arnin gs (los s ) pe r s h are
(16.53)$ 1.36$ 0.64$ 4.40$ (7.22)$ 1.03$ 5.01$ (11.30)$
Q4 | 2023 | 22
FY 2022 GAAP TO NON-GAAP RECONCILIATION
($ in thousands, except for earnings per share)
The above adjusted selling and administrative expenses, adjusted selling and administrative expense rate, adjusted depreciation expense, adjusted depreciation expense rate, adjusted gain on sale of real estate, adjusted gain
on sale of real estate rate, adjusted operating loss, adjusted operating loss rate, adjusted income tax benefit, adjusted effective income tax rate, adjusted net loss, and adjusted diluted earnings (loss) per share are “non-GAAP
financial measures” as that term is defined by Rule 101 of Regulation G (17 CFR Part 244) and Item 10 of Regulation S-K (17 CFR Part 229). These non-GAAP financial measures exclude from the most directly comparable
financial measures calculated and presented in accordance with GAAP store asset impairment charges of $68,396 ($51,657, net of tax) and a gain on sale of real estate and related expenses of $16,847 ($12,807, net of tax). The
depreciation expense included within the adjustment to exclude gain on sale of real estate and related expenses is the accelerated depreciation associated with the disposal of fixtures and equipment at each of the store
locations included in the sale.
Our management believes that the disclosure of these non-GAAP financial measures provides useful information to investors because the non-GAAP financial measures present an alternative and more relevant method for
measuring our operating performance, excluding special items included in the most directly comparable GAAP financial measures, that management believes is more indicative of our on-going operating results and financial
condition. Our management uses these non-GAAP financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance.
As Reported
(Recast)
Adjustment to exclude
store asset impairment
Adjustment to exclude
gain on sale of real
estate and related
expenses (Recast)
As Adjusted
(non-GAAP)
(Recast)
Selling and administrative expenses 2,040,334$ (68,396)$ -$ 1,971,938$
Selling and administrative expense rate 37.3% (1.3%) - 36.1%
Depreciation expense 154,859 - (1,734) 153,125
Depreciation expense rate 2.8% - (0.0%) 2.8%
Gain on sale of real estate (20,190) - 18,581 (1,609)
Gain on sale of real estate rate (0.4%) - 0.3% (0.0%)
Operating loss (261,500) 68,396 (16,847) (209,951)
Operating loss rate (4.8%) 1.3% (0.3%) (3.8%)
Income tax benefit (69,709) 16,739 (4,040) (57,010)
Effective income tax rate 24.9% 0.0% 0.0% 24.9%
Net loss (210,708) 51,657 (12,807) (171,858)
Diluted earnings (loss) per share (7.30)$ 1.79$ (0.44)$ (5.96)$
