| --- | --- | --- | |-------|-------|-------| | | | | | | | | | | | | FORWARD-LOOKING STATEMENTS Certain statements in this release are forwardlooking 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," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outl ...

Financial Data and Key Metrics Changes - Q2 net sales were $1.346 billion, a 7.6% decrease from $1.457 billion a year ago, driven by a comparable sales decrease of 9.2% [33] - Adjusted net loss for Q2 was $66 million compared to a net income of $38 million in Q2 of 2021, with adjusted diluted loss per share at $2.28 versus diluted EPS of $1.09 last year [36] - Gross margin rate for Q2 was 32.6%, down approximately 700 basis points from the previous year, impacted by higher markdowns and freight costs [36][40] - Adjusted operating margin for the quarter was negative 6.3%, compared to a profit of 3.7% in 2021 [39] Business Line Data and Key Metrics Changes - Seasonal comps grew strongly, up roughly 30% in Q2 on both a one-year and three-year comp basis [19] - The furniture category faced challenges, with consumers delaying or cutting back on higher ticket purchases [21] - E-commerce business was up 35% in Q2, representing 7% of total business, with same-day delivery growing over 80% [23] Market Data and Key Metrics Changes - Customer reactivations through the loyalty program increased by 16% [17] - The company noted that lower-income customers have been more affected by inflation, impacting discretionary purchases [7] Company Strategy and Development Direction - The company is focused on repositioning its assortment towards better bargains, closeouts, and lower price points while enhancing everyday essentials [5][8] - Plans to increase the proportion of bargains and closeouts to one-third of the business over time [14] - The company is enhancing its supply chain visibility and investing in new tools to improve efficiency [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment but expressed confidence in the company's ability to navigate it and improve results [9][29] - The company expects Q3 sales to remain uncertain, with one-year comps projected to be down in the low double-digit range [46] - Management is optimistic about Q4, expecting improved gross margins and sales momentum due to cleaner inventory levels [48][49] Other Important Information - The company opened 11 new stores and closed three, ending Q2 with 1,442 stores [41] - A quarterly cash dividend of $0.30 per common share was declared for Q2 [45] - The company is planning to sell approximately 25 underperforming stores and is evaluating sale leaseback proposals for remaining owned stores [43][96] Q&A Session Summary Question: How is the company preparing for the holiday season given current trends? - Management indicated a good holiday plan is in place, with tailored assortments and strong stock of necessities [61][62] Question: What is driving the growth in SG&A for Q3? - The increase is primarily due to transportation expenses and costs related to new forward distribution centers [63] Question: Can you provide insights on current trends and inventory management? - Trends are generally consistent with Q2, with a focus on managing seasonal inventory effectively [66][68] Question: What is the rationale behind the sale leaseback strategy? - The strategy involves selling underperforming stores and considering leaseback proposals for others to strengthen the balance sheet [95][96]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2022, including operations, balance sheets, equity, and cash flows with detailed notes [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=a)%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) The company reported a net loss of **$11.1 million** in Q1 2022, a significant decline from prior year's net income, driven by decreased sales and an operating loss Consolidated Statements of Operations (Q1 2022 vs Q1 2021) | Metric | Thirteen Weeks Ended April 30, 2022 (in thousands) | Thirteen Weeks Ended May 1, 2021 (in thousands) | | :--- | :--- | :--- | | Net sales | $1,374,714 | $1,625,552 | | Gross margin | $504,594 | $653,947 | | Operating (loss) profit | $(13,541) | $122,552 | | Net (loss) income | $(11,082) | $94,563 | | Diluted (loss) earnings per share | $(0.39) | $2.62 | [Consolidated Balance Sheets](index=5&type=section&id=b)%20Consolidated%20Balance%20Sheets) Total assets increased to **$4.05 billion** as of April 30, 2022, primarily due to higher inventories and long-term debt, while equity slightly decreased Consolidated Balance Sheet Highlights (Unaudited) | Metric (in thousands) | April 30, 2022 | January 29, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $61,707 | $53,722 | | Inventories | $1,338,737 | $1,237,797 | | Total assets | $4,051,757 | $3,927,253 | | **Liabilities & Equity** | | | | Accounts payable | $488,524 | $587,496 | | Long-term debt | $270,800 | $3,500 | | Total shareholders' equity | $980,328 | $1,007,363 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=c)%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased to **$980.3 million** by April 30, 2022, primarily due to net loss, dividends, and share repurchases - Total shareholders' equity decreased by **$27.0 million** during Q1 2022[7](index=7&type=chunk) - Key activities impacting equity included a comprehensive loss of **$11.1 million**, **$9.0 million** in dividends declared, and **$10.6 million** in common share purchases[7](index=7&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=d)%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$196.2 million** in Q1 2022, a reversal from prior year, offset by **$245.5 million** from financing activities Consolidated Cash Flow Summary (Q1 2022 vs Q1 2021) | Activity (in thousands) | Thirteen Weeks Ended April 30, 2022 | Thirteen Weeks Ended May 1, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(196,233) | $204,293 | | Net cash used in investing activities | $(41,241) | $(32,170) | | Net cash provided by (used in) financing activities | $245,459 | $(118,350) | | **Increase in cash and cash equivalents** | **$7,985** | **$53,773** | | **Cash and cash equivalents at end of period** | **$61,707** | **$613,329** | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=e)%20Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section details accounting policies, debt, equity, compensation, income tax, legal contingencies, and net sales breakdown by merchandise category - The company operated **1,434 stores** in 47 states and an e-commerce platform as of April 30, 2022[11](index=11&type=chunk) - The company had **$270.8 million** in outstanding borrowings under its **$600 million** unsecured credit facility as of April 30, 2022[21](index=21&type=chunk)[22](index=22&type=chunk) - A quarterly cash dividend of **$0.30 per common share** was declared and paid in Q1 2022[27](index=27&type=chunk) Net Sales by Merchandise Category (Q1 2022 vs Q1 2021) | Category (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Furniture | $390,386 | $481,431 | | Seasonal | $234,171 | $303,918 | | Food | $176,620 | $180,297 | | Soft Home | $166,295 | $223,854 | | Consumables | $155,310 | $162,388 | | Hard Home | $129,284 | $152,198 | | Apparel, Electronics, & Other | $122,648 | $121,466 | | **Total Net sales** | **$1,374,714** | **$1,625,552** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 sales decline, gross margin compression, and operating loss due to macroeconomic factors, withdrawing full-year guidance and outlining Q2 expectations [OVERVIEW](index=16&type=section&id=OVERVIEW) Q1 2022 saw significant declines in net sales (**15.4%**), comparable sales (**17.0%**), gross margin, and diluted EPS, with a shift to operating loss Key Performance Indicators (Q1 2022 vs Q1 2021) | Metric | Change | | :--- | :--- | | Net Sales | Decreased 15.4% | | Comparable Sales | Decreased 17.0% | | Gross Margin Rate | Decreased 350 bps to 36.7% | | Operating (Loss) Profit Rate | Decreased 850 bps to (1.0)% | | Diluted EPS | Decreased to $(0.39) from $2.62 | | Inventory | Increased 48.5% YoY | [RESULTS OF OPERATIONS](index=17&type=section&id=RESULTS%20OF%20OPERATIONS) Net sales decreased **15.4%** to **$1.37 billion** in Q1 2022 due to lower comparable sales and macroeconomic factors, leading to an operating loss - Net sales decreased by **$250.8 million** (**15.4%**), primarily due to a **17.0%** decrease in comparable sales[59](index=59&type=chunk) - The sales decline was caused by the absence of prior-year government stimulus payments and inflationary pressures impacting discretionary spending[60](index=60&type=chunk)[61](index=61&type=chunk) - Gross margin rate decreased by **350 basis points** to **36.7%**, driven by higher markdowns, increased inbound freight costs, and a higher shrink rate[64](index=64&type=chunk) - Selling and administrative expenses decreased by **$16.6 million**, primarily due to lower accrued bonus and share-based compensation, partially offset by a **$15.8 million** increase in distribution and transportation expenses[65](index=65&type=chunk) [Known Trends and 2022 Guidance](index=19&type=section&id=Known%20Trends%20and%202022%20Guidance) The company withdrew full-year 2022 guidance due to inflation and uncertainty, anticipating a Q2 net loss with mid-to-high single-digit comparable sales decrease - The company lacks sufficient visibility to provide full-year 2022 guidance due to the inflationary environment negatively impacting discretionary spending[72](index=72&type=chunk) Q2 2022 Outlook (as of May 27, 2022) | Metric | Expected Performance vs. Q2 2021 | | :--- | :--- | | Comparable Sales | Decrease in the mid-to-high single digits | | Gross Margin Rate | In the low 30s | | Selling & Admin Expenses | Slightly up | [Capital Resources and Liquidity](index=20&type=section&id=Capital%20Resources%20and%20Liquidity) Liquidity is primarily from operations and a **$600 million** credit facility, with **$270.8 million** drawn, and **$159.4 million** remaining for share repurchases - The company has a **$600 million** unsecured credit facility, with **$270.8 million** borrowed and **$324.2 million** available as of April 30, 2022[75](index=75&type=chunk)[76](index=76&type=chunk) - As of April 30, 2022, **$159.4 million** remained available for future repurchases under the **$250 million** authorization, with no shares repurchased in Q1 2022[78](index=78&type=chunk) - Cash used in operating activities was **$196.2 million** in Q1 2022, a **$400.5 million** decrease from Q1 2021, driven by lower earnings and increased inventory[82](index=82&type=chunk) - Cash provided by financing activities was **$245.5 million**, a reversal from **$118.4 million** used in Q1 2021, due to net proceeds from long-term debt and decreased share repurchases[84](index=84&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risk from variable interest rates and diesel fuel prices, with a **1%** rate increase potentially adding **$2.7 million** to annual interest expense - The company had **$270.8 million** in variable-rate borrowings; a **1%** interest rate increase would result in approximately **$2.7 million** in additional annual interest expense[89](index=89&type=chunk) - The company is exposed to market risk from diesel fuel price changes and had outstanding derivative collars covering **0.9 million gallons** at quarter-end[90](index=90&type=chunk) [Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of April 30, 2022, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the report period end[92](index=92&type=chunk) - No material changes occurred in internal control over financial reporting during the most recent fiscal quarter[93](index=93&type=chunk) [Part II. Other Information](index=22&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions, but their resolution is not expected to materially affect financial condition or results - The company does not expect ordinary course legal actions to materially affect its financials[43](index=43&type=chunk)[94](index=94&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K were reported - No material changes to the risk factors disclosed in the 2021 Form 10-K were reported during Q1 2022[95](index=95&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company acquired **280,000** common shares for tax withholdings on vested employee awards, with no repurchases under the **$159.4 million** remaining authorization - A total of **280,000** common shares were acquired to satisfy tax withholdings on vested employee share awards[98](index=98&type=chunk) - No shares were repurchased under the 2021 Repurchase Authorization during Q1, leaving **$159.4 million** available as of April 30, 2022[98](index=98&type=chunk) [Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information](index=23&type=section&id=Item%203,%204,%205) The company reported no defaults upon senior securities, no mine safety disclosures, and no other information under Item 5 - The company reported "None" for Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information[99](index=99&type=chunk) [Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and various XBRL documents[102](index=102&type=chunk)

| --- | --- | --- | |-------|-------|-------| | | | | | | | | | | | | FORWARD-LOOKING STATEMENTS Certain statements in this release 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," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "out ...

Financial Data and Key Metrics Changes - Q1 net sales were $1.375 billion, a 15.4% decrease compared to $1.626 billion a year ago, driven by a comparable sales decrease of 17% [28] - The first quarter net loss was $11.1 million compared to a net income of $94.6 million in Q1 of 2021, with a loss per share of $0.39 versus diluted EPS of $2.62 last year [28] - The gross margin rate for Q1 was 36.7%, down approximately 350 basis points from last year's rate, significantly underperforming guidance [28][29] - Total ending inventory cost was up 48.5% year-over-year at $1.339 billion, primarily due to inflationary increases and mix effects [31] Business Line Data and Key Metrics Changes - Seasonal, Furniture, and Soft Home categories drove 90% of the sales miss for the quarter, with significant softness in April [12][13] - Seasonal sales performed well in February and March, up 40% on a three-year comp basis, but April saw a decline [12] - The e-commerce business accounted for around 7% of total business, with same-day delivery growing 20% [22] Market Data and Key Metrics Changes - Consumer confidence is low, and real disposable income is declining, impacting discretionary purchases [6][13] - The Midwest region showed particular softness relative to plan, while the Southeast performed better [13] Company Strategy and Development Direction - The company is focused on correcting inventory levels and adjusting opening price points to drive traffic [19][21] - Plans to reduce capital expenditures from $230 million to around $175 million for the year, with a reduction in net store openings from 50-plus to 30-plus [18][37] - The company aims to leverage closeout opportunities and improve gross margin rates by Q4 [17][35] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging economic environment but remains confident in long-term growth opportunities [25][39] - The company expects to see significant opportunities in the second half of the year as corrective actions take effect [35][39] - Management emphasizes the importance of supporting lower-income customers during inflationary times [62] Other Important Information - The company declared a quarterly cash dividend of $0.30 per common share, payable on June 24, 2022 [33] - The company has incurred significant detention and demurrage charges, which are expected to decrease in the back half of the year [36] Q&A Session Summary Question: Confidence in returning to normal inventory levels by the end of Q2 - Management is aggressively focused on achieving desired inventory levels by the end of Q2, expecting a significant reduction in year-over-year increases [41][42] Question: Improvement in three-year comp in May - Management believes there has been a slight pickup in underlying trends, but promotional activity has also played a significant role [44] Question: Actions to lower opening price points - Management is working on reducing rich inventory and leveraging closeouts to improve opening price points [48][49] Question: Confidence in returning to last year's gross margin levels - Management cites several levers, including reduced detention and demurrage costs, improved inventory management, and a less promotional environment in the second half of the year [51][54] Question: Profitability variance among stores - A relatively small number of stores are unprofitable, with profitability varying by geography and other factors [75] Question: Increase in usage of Big Lots credit card and Easy Leasing - The increase is attributed to inflationary pressures, making these financing options more appealing to consumers [76]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-08897 BIG LOTS, INC. (Exact name of registrant as specified in its charter) Ohio 06-1119097 (State or oth ...

| --- | --- | --- | |-------|-------|-------| | | | | | | | | FORWARD-LOOKING STATEMENTS Certain statements in this release 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," "expect," "objective," "goal," "project," "intend," "plan," "believe," "will," "should," "may," "target," "forecast," "guidance," "outlook" an ...

Financial Data and Key Metrics Changes - Q4 net sales were $1.732 billion, a 0.3% decrease compared to $1.738 billion a year ago, but up 7.8% compared to Q4 2019 [43] - Adjusted earnings per share for the quarter was $1.75, down from $2.59 last year [43][54] - Gross margin rate for the quarter was 37.3%, down approximately 210 basis points from last year's rate [44] - Total ending inventory was up 32% to last year at $1.238 billion, ahead of guidance due to higher in-transit inventory [48] Business Line Data and Key Metrics Changes - Broyhill accounted for approximately $140 million in Q4 sales, up 7% over the same quarter in 2020 [16] - Real Living sales increased over 20% versus Q4 of last year [16] - Furniture sales experienced a drop due to inventory availability, but the company is now in a better inventory position for Broyhill upholstery and mattresses [37] Market Data and Key Metrics Changes - The company opened 16 new stores and closed nine stores, ending Q4 with 1,431 stores [48] - The company expects to meet or exceed 50 net new stores in 2022, targeting margin accretive stores with 10% EBITDA returns [20] Company Strategy and Development Direction - The company aims to grow top-line sales by several billion dollars through merchandising productivity, real estate growth, and e-commerce [8] - The focus is on enhancing the customer experience through improved inventory management and seasonal offerings [15][21] - The company is committed to operational excellence and shareholder value through strategic investments and growth initiatives [7][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential despite near-term challenges, targeting sales of $8 billion to $10 billion in the coming years [31][62] - The company anticipates a flat comparable sales growth for 2022, with net new stores contributing to overall growth [95][96] - Management acknowledged the impact of supply chain disruptions and inflation on costs and margins, with plans to address shrink issues [70][82] Other Important Information - The company returned approximately $460 million to shareholders in 2021 through dividends and share repurchases [51] - The average cost of the Project Refresh program is just over $100,000 per store, aimed at enhancing the in-store experience [27] Q&A Session Summary Question: Can you discuss the improved sales momentum in February and its impact on inventory planning? - Management noted a significant recovery in February compared to January, with plans to be heavier on seasonal and furniture inventory [65][66] Question: What drove the SG&A dollar growth and the expected improvement in gross margins? - Management indicated that the higher SG&A was due to structural changes and transitory issues, with expectations to reduce shrink rates over the year [69][70] Question: Can you explain the inventory and shrink situation? - Management detailed that the spike in shrink was influenced by external factors, particularly in California, and outlined steps to mitigate these issues [76][79] Question: What is the outlook for close-out sales and availability? - Management confirmed that close-outs are becoming a larger part of the business, with good availability in certain categories [85][86] Question: How is the furniture category performing and what are the expectations moving forward? - Management reported strong sales in furniture, particularly with the Broyhill brand, and expressed confidence in recovering inventory levels [90][91]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-08897 BIG LOTS, INC. (Exact name of registrant as specified in its charter) Ohio 06-1119097 (Stat ...

Financial Data and Key Metrics Changes - Net sales for Q3 were $1.336 billion, a 3.1% decrease compared to $1.378 billion a year ago, but up 14.4% compared to Q3 2019 [45] - The net loss for Q3 was $4.3 million compared to a net income of $29.9 million in Q3 2020, with EPS at a loss of $0.14 [46] - Gross margin rate for Q3 was 38.9%, down 160 basis points from last year's rate and 80 basis points below 2019 [47] - Total expenses for the quarter were $523 million, up from $515 million last year, driven by incremental investments in labor and forward distribution centers [48] Business Line Data and Key Metrics Changes - Comparable sales increased 12% on a two-year basis, while total sales increased over 14% versus 2019 [7] - Furniture delivered strong performance with two-year comps up low double-digits, while Seasonal comps were over 30% on a two-year basis [10] - Consumables experienced single-digit, two-year growth, with food down mid-single-digits due to strategic reduction in square footage [10][101] Market Data and Key Metrics Changes - The company opened 9 new stores and closed 3, ending Q3 with 1,424 stores and total selling square footage of 32.5 million [52] - Year-to-date e-commerce sales growth was around 300% compared to 2019, with expectations for e-commerce to become a billion-dollar business in the coming years [31] Company Strategy and Development Direction - The company is focused on three key drivers for growth: same-store sales growth, accelerated store footprint growth, and scaling e-commerce operations [19] - A new $250 million share repurchase program was authorized, reflecting confidence in the company's growth story [5] - The company plans to enhance its merchandise assortment and expand its seasonal offerings to drive sales [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter despite supply chain challenges, anticipating high sell-through of holiday merchandise [11] - The company expects to face negative comps in Q1 2022 due to the lapping of stimulus effects but anticipates overall sales growth for the year [18] - Management highlighted the importance of supply chain investments to improve product availability and efficiency [92] Other Important Information - The company declared a quarterly cash dividend of $0.30 per common share, payable on December 29, 2021 [56] - Capital expenditures for the quarter were $46 million, with full-year expectations between $170 and $180 million [66] Q&A Session Summary Question: Can you talk about the supply chain challenges and sales cadence in Q4? - Management noted ongoing supply chain difficulties, particularly in Asia, but emphasized successful mitigation efforts to ensure holiday inventory availability [71][73] Question: What are the return metrics targeted for new stores? - The company expects new stores to achieve a 10% or greater 4-wall EBITDA margin, with internal rates of return ideally in the mid-20s [78] Question: How is the Food and Consumables strategy evolving? - Management indicated a focus on refining the food assortment to enhance productivity, despite not seeing positive comps in the last quarter [100][104]