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Big Lots (BIG) Enhances Liquidity, Adds $200M Borrowing Capacity

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Big Lots, Inc. (BIG - Free Report) , the renowned Discount Home Store in America, has taken a significant step aimed at fortifying its financial position. The company announced the initiation of a "first in, last out" term loan facility, boosting its borrowing capacity by up to $200 million. This new endeavor facilitated through 1903P Loan Agent, LLC, marks a strategic maneuver to augment the company's liquidity reserves, complementing its existing $900 million asset-based revolving loan facility.

Jonathan Ramsden, Big Lots' chief financial and administrative officer, underscored the company's unwavering dedication to revitalizing its performance and restoring prosperity. Ramsden emphasized the newfound financial flexibility as instrumental in sustaining the company’s commitment to offering unparalleled bargains and value to customers. With a robust strategy in place, Big Lots is poised for decent sales and gross margin improvement in the forthcoming quarters.

Big Lots has outlined a comprehensive plan comprising five pivotal actions to reclaim its legacy as the go-to destination for bargains. This includes an intensified focus on procuring bargains and closeouts, as well as effectively communicating unmistakable value to customers. By prioritizing extreme value sourcing and expanding bargain offerings, the company aims to solidify its position as a premier partner for closeouts and liquidations, with the goal of bargain sales constituting 75% of total sales.

By sourcing products directly and minimizing intermediaries, Big Lots is enhancing its value proposition and customer experience. The acquisition of Hearthsong Toy inventory exemplifies Big Lots’ commitment to offering high-quality products at extreme bargain prices.

Furthermore, Big Lots continues its diligent efforts in capital and expense management, with a target to realize a minimum of $200 million in profitability enhancements as part of its Project Springboard initiative. This strategic endeavor encompasses a multifaceted approach focused on unlocking bottom-line opportunities, enhancing operational efficiency and fostering innovation across key areas of the business.

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Wrapping Up

Big Lots' strategic move to bolster liquidity and enhance borrowing capacity signals a proactive stance in navigating dynamic market conditions. Shares of this Zacks Rank #4 (Sell) company have witnessed a significant decline of 24.5% in the past six months against the industry’s rise of 24.3%. This downward trend is largely attributed to the company's underwhelming performance in recent quarters.

Nonetheless, management remains optimistic about the prospects. Big Lots anticipates quarterly improvements in the gross margin and foresees a gradual path toward achieving positive comparable sales as 2024 proceeds.

Initiatives such as introducing more newness and trend-right products, optimizing space with more productive SKUs and enhancing visual merchandising are aimed at improving the in-store experience and driving customer frequency. Big Lots is focused on enhancing its omnichannel platform to attract, retain and grow customer shopping frequency. This includes launching a mobile app, expanding online product offerings and enabling in-store ordering for a seamless shopping experience.

3 Stocks Looking Hot

Here, we have highlighted some better-ranked stocks, namely Burlington Stores (BURL - Free Report) , Abercrombie & Fitch (ANF - Free Report) and Tractor Supply Company (TSCO - Free Report) .

Burlington Stores is a nationally recognized off-price retailer of high-quality, branded apparel, footwear, accessories and merchandise for the home at everyday low prices. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Burlington Stores’ current fiscal sales and EPS suggests growth of 10.2% and 22.3%, respectively, from the year-ago reported figure. BURL has a trailing four-quarter earnings surprise of 10.1%, on average.

Abercrombie & Fitch, a leading, global, omnichannel specialty retailer of apparel and accessories for men, women and kids, sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 715.6%, on average.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 5.6% and 19.1%, respectively, from the year-ago reported figure.

Tractor Supply Company, the largest rural lifestyle retailer in the United States, carries a Zacks Rank #2 (Buy). TSCO has a trailing four-quarter earnings surprise of 0.2%, on average.

The Zacks Consensus Estimate for Tractor Supply Company’s current fiscal sales and EPS indicates growth of 3.1% and 1%, respectively, from the year-ago reported figure.

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