Former BL Stores, Inc.

Q1 net sales were $1.01 billion, down 10.2% from $1.12 billion a year ago, driven by a 9.9% decline in comparable sales. Adjusted gross margin rate was 36.8%, up 190 basis points year over year; adjusted SG&A dollars were $491.8 million, down 3.6%; adjusted operating margin was negative 11.9%; adjusted net loss was $132.3 million; and adjusted diluted loss per share was $4.51. Cash and cash equivalents ended at $44 million, long-term debt was $573.8 million, inventory cost was down 12.7% year over year, and net liquidity was $289 million versus $254 million in Q4. For Q2, management expects comp sales to improve sequentially into the negative mid-to-high single-digit range, gross margin rate to improve year over year by at least 300 basis points, SG&A dollars to be down low-to-mid single digits, and interest expense to be about $15 million. Full-year CapEx is expected to be in line with or somewhat below 2023, depreciation about $130 million, and there are now expected to be three store openings in 2024, all in Q3.

Bruce Thorn said the quarter showed operational progress but still reflected a consumer that is under pressure, especially on high-ticket discretionary items like furniture and patio. He emphasized the company’s five key actions—own bargains, communicate unmistakable value, increase store relevance, win customers for life, and drive productivity—as the roadmap to a turnaround, and said the back half of the year should show more visible benefits. He was notably upbeat about extreme bargains, saying penetration is rising, the pipeline is strong, and the company is moving quickly to make Big Lots a stronger discount home store.

Jonathan Ramsden focused on the numbers and the company’s cost actions. He highlighted Q1 net sales of $1.01 billion, adjusted gross margin of 36.8%, adjusted SG&A of $491.8 million, and adjusted loss per share of $4.51, then said Q2 gross margin should improve by at least 300 basis points year over year and SG&A should be down low-to-mid single digits. He also pointed to liquidity of $289 million, the new $200 million FILO facility, lower inventory, and Project Springboard progress, including $25 million of benefits in Q1 and a raised cumulative savings target of $185 million by year-end.

Analysts asked about the performance gap between bargains, extreme bargains and the rest of the assortment; management said extreme bargains were 28% of Q1 sales and are targeted to reach 50% by year-end, with strong momentum in toys, grocery and other categories. They also asked about monetizable assets, and Jonathan said most of the previously discussed $200 million was now included in FILO collateral, leaving only a small number of owned stores worth about $20 million plus some equipment. On gross margin and positive comps later in the year, management said the forecast does not require macro improvement, just continued execution, higher extreme-bargain penetration, and easier comparisons versus last year’s promotions; on customer health, Bruce said lower-income consumers are still under pressure and pulling back on big-ticket items.