Big Lots (BIGGQ) 26 May 232023 Q1 Earnings call transcript

Good morning. This is Alvin Concepcion, Vice President of Investor Relations at Big Lots. Welcome to the Big Lots First Quarter Conference Call. Currently, all lines are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

me and Bruce President, Jonathan and Officer. with Chief President Chief call Administrative Officer; Executive Ramsden, the today Thorn, are and Financial On Executive Vice

from that we involve press call and release described the and harbor uncertainties those to filings to Before provisions on subject risks would that are and can company's today's statements made SEC forward-looking call, remind starting differ the actual company's you statements. the any that as forward-looking the in materially like in results safe stated

We commentary in would to adjusted Reconciliations out also non-GAAP like to press GAAP today's today non-GAAP point that of available on is focused are release. adjusted results results.

follow quarter related presentation and earnings available financial first @biglots.com/corporate/investors. release, prepared session the remarks. are The will information A question-and-answer

to call now will the turn I Bruce. over

and how see Good outlook and results for to start very you our I by but want joining situation. full-year about more will I we thank being morning, our on everyone, current talk QX in moment, a us. clear

First, confident major are results we will they a reflected we But for our and to will outlook. macroeconomic in are us, which do, significant have these and that our headwinds see abate when headwinds business. boost that challenges created

income has their lower higher interest banking hurt confidence by and by rates has inflation lower our Specifically, consumer failures. and tax been by refunds and been shaken

our incredible the pull past, higher to we business strong and drivers effects purchases ticket our in they furniture to assortment. the bring value that have of continue the during We forward and return been as being to to growth or soften to will newness and particular especially those cycle reverse for fully in pandemic. Further, expect we over continue seasonal that the time

are this Second, difficult are we very navigate while through aggressive our business. in how environment, managing being we we

four into of decision now include have internally all that SG&A centers distribution to to of the our and impact our $XXX for remove incorporated identified million over These structural forecast capacity. close reduce our costs are of savings We forward XXXX. excess

not done partner. any path from identified bottom do Importantly, million recently a however, benefit gross an and we external savings across $XXX over SG&A. opportunities margin have additional work these of to include line That project clear has with

of and transportation, realized both in XXXX, store XXXX. including optimization. most Specific charges, to meaningful operations, will of and include this promotions, benefit expect and assessorial allocation be We private general there inventory omni-channel be areas sourcing, brand but and expense, opportunity, national pricing administrative field in

opportunities in are the of the realizing. we All above inbound reduction are addition in freight rates significant to

much In managing are and addition, also inventory CapEx we lower.

That brings through me liquidity to which the challenges. ensuring we period have of of get is also that are on focused this macroeconomic plenty third point, we highly to

addition asset made and cost our this of to decision efforts, to Directors week and these Board further the expected In monetization and actions inventory our include reduction suspend by dividend.

Fourth, above exciting highly we to as of over subscribe heard laser and service. and to we reflect into most are our progress these both marketing encouraged by green shoots get turn we the importantly, back we Notably, are as and customers seek in business. merchandising work seeing past value assortment, a all incredible The quarters. the have and stores refreshed several key you've us is the them on to the actions key rediscover great five focus continued

significantly focus more period, them seizing want on reminder, clear find disciplined and and improving as bargains center the through home stronger pass and a am to marketing, underserved, omnichannel we leading that bringing to challenging take competitors, are with emerge confident making investment mix action in with rural who distressed currently and treasures know and As and from to making five that of town easier the a decisions small with this outperform. the Combined markets platform I accelerating particularly we where signage company. opportunities we productivity, them around customers, we a will key easier need, customers our

to back some we're excited and the things Turning driving about of that our optimism. are

to enhance newness over our vendors procuring retailers, of inventoried value it overseas. sourcing to significant retailers, partners and mass the assortment, are through by assortment opportunities finding and As relates distressed from we new and

For and we are example, fall. should from quality this at unlocking a value stores elevated great freshness which hit India,

merchandise pass bankruptcy the We out vendor, these at our we'll savings customers. also of procure discount on and our former Broyhill a of to significant

working with aided lower product through been and We prices have lower freight engineering by cost to our reductions also costs. vendors

April proportion bargain excellent Our being by value our efforts our doubled of the are on beginning net basis lead in featured increased customer hundred hundred by March, basis recognized to and provide and from price since more starting has of to items customers. of caps as be bargains the points our The the a graded the start couple year. from points score year. perception several Further,

our of the Seasonal decline by canceling taken actions lawn such in cycle garden including items have to we But end comp nearly to through contributed them as quarter. orders. the a aggressive QX, sales quarter of and

encouraged This campaign, new products phasing will to about marketing Broyhill be that. new collections in quality. We robust we thrilled our along see from our we're month, customer feedback phased about in Broyhill that the we In have a August, in have positive suppliers with started are begun very received new stabilization also so more furniture and business.

Our in inventory results. test by shown deflects increasing early the has in food encouraging stores those demand categories stronger assortment is consumables where and

food is margin We and and also benefits. incremental to optimize delivering continue consumables, pricing which

recent marketing to efforts bear Our also beginning are fruit.

XX% by new awareness XX% over radio impressions. bath TV Our loyalty and million and expired around XX increased with net It new customers campaign to drove also of sign-ups membership the with accepting brand in draw Big off coupons from the Lots. bed to dislocated redemptions beyond customers

lift existing a inventoried low-single-digit event. in best a to-date, Our our a out featuring increased efficient campaigns have sales drove well visits customers budget store more retailer, our been from campaigns trendy April booster to in as marketing performing close with over which as

to have improve lower to and our and with messaging the refine attractive doing cost customers effectiveness segmentation to customer of are focusing ways work better We a with acquire our found a marketing on by offering customer. best our most also we

have experience. we And improving been the customer

continue customer and very Our above has led of to beyond feedback. positive which for to call customers, the go duty our associates

have in a achieved prior net promoter We the up score mid-XXs industry. the which in is tier QX, and from top in year the

March improved improve experience,, the and navigation, more Our April, better online continue beginning score basis the curated also several through up of in promoter has both year, the a from as points site to net we journey hundred customer and eliminating friction. significantly

efforts and and better, bargains customers serve lapse in treasures, market reactivation our customers of X%. of strong well, result up introduce more a them QX, our As the to was

are encouraged what While of there's far. we're to do, work a so still about we seeing lot

I make to now comments would few about a QX, like quarter. disappointing was which a clearly

Broyhill factors ago, Furniture be sales shortages our to largest lawn closure vendor of while continued the especially I upholstery addition affected impacted referenced macroeconomic the adversely was Industries and product in our November, United weather. by unfavorable furniture seasonal a moment In to related to abrupt by garden

late that gross February, in liked we would and unfavorable. margins promotions As slightly QX we particularly what softer expected. saw and line mix of Therefore, but with in also than had March. in we than came more targeted levels were in improved have divisions a seasonal furniture lower quarter comp higher was in April, result, than Trends we sales in expected, we

QX quarter these inventory able addressing while more This decline with and By markdown won momentum, activity we'll with more a to of to we in and challenging, more the which quickly, the in and through sales promo will And remain in the also that line efforts our of business on strengthen expect head end light were a back and I'll has sales go gain increased significant orders challenges bit. environment, improvement quarter. this canceling down in the we half model, was year. into soft with our

should pronounced see a to benefits our more cost well more we of as structure, level as markdowns. normalized Also,

of SG&A over Jonathan significant in opportunities As be XX-months. moment. the we identified discuss bottom partner, we margin also will pursuing an have the in help mentioned, a will more I next that and line external this both gross with

helpful by Furniture impact the we Another QX. half back of will fully for disruption of United that end factor is the Supply the mitigate the

sourcing Real products Living to in vendors, assortment for particularly category, the are where compelling we journey improve the begins. and a which will confident of the online more value shopping impression are the Broyhill our We and often furniture quality

more the up slow better first quarter, quickly challenges We than heard add for difficult to and tightly inventory. managing back guidance. liquidity strengthening that reduced with balance and period. manage We moving Turning our in SG&A and our clean sales focused remain color our thanks costs discuss we the how our in and margin came to to sheet you a acted me through team Jonathan position Again, a moment. CapEx will outlook. Many on

declined category due QX the sells typically in part concerns lawn furniture, sales, specific higher this outdoor generally performance which as quarter, at well back ticket Looking affected to garden in in seasonal to of and customers XX% as economy. which unfavorable well pulling weather, comps on the time year, due about

through As a inventory category in result, are in it promotions better last and the we have the than with offered category year. and targeted selling coupons

margin. our impacted overall mix, impacted it Given unfavorably activity, the the margin promotional combined seasonal one highest categories, gross decline of and is unfavorably with sales our our

particularly hit great we the or In flow assortment in year in own season This off stores are opportunity half key QX our categories end markets the Northeast. Midwest start, back segments, our summer. the peak a starting fresh gazebos and through as of illustrates begins our the in are patio just to to dining sets to our and largest towards to the and of

environment, down in was hesitant hard refunds, and caution home, soft soft ticket QX furniture and this economic were tax Our by which were sales. to traditionally Consumers make drive higher double-digits. this exacerbated categories purchases home

demand sales halo other the Also also unfavorably assortments. It basis and about by shortages and soft points. houseware textiles earlier, product mentioned categories, due comp impact the on indirectly affected the home to furniture our furniture home in impacted has X,XXX furniture I

the exposure vendors, end We majority of sales sourcing by and will QX. are by through other the our which the fill mitigating inventory of gap

held roll assortments experienced. the at our more out traffic we value and challenges given expect summer, well the we consumables we in a throughout results trend relatively up great half on benefit. As back Food to the

discussed believe runway actions over that quarters. profitable to past see. have I'd of and now achieving that actions the path several long like I on us we We the earlier key these will the recap growth we put to mentioned five the

to price vendors limited with to retailers great across excess well as it continue deals off bargains, mass are and the as competitors, as items we relates close bankrupt time First, categories from deals, source out which inventory. brands and

home great consumables, furniture Recently, categories. the and in purchases we made

penetration to is good rate of This progress making penetration our seen Our I've being to our bargains our assortment. we're one-third level of highest so since XX%, now grow the towards goal is CEO. nearly

to freight strategy. continuing We increase with we store our relevance better aided outperform. our action think flowing We're bargains working to know reductions to unmistakable more more there's customers, lower rural currently a engineering markets a leads to in which long-term is all the second who product cost third vendors by these This marketing costs. leveraging with deals town effective where With particularly and and to bargains lower our opportunity realizing great prices action, small strengths, key underserved. and value bring communicate our on our into to stores, through clearer and by we are is

profitable by win way. experience a more a will providing we with Next, better omnichannel customer in

action goods is Last and key but of CapEx. productivity not our least, inventory drive across to SG&A fifth cost

in are from better remain emerge and stronger five this position We great making of will all as these than period. these to us confident highly ever we strides actions that emerge challenging areas. We key

the lightly, given earlier, of our should decision financial we week board a mentioned the but the and be decision performance, priority. the not to and suspend dividend. took current I course, That near-term, in As our made highest believe the protecting our environment, liquidity difficult this enhancing was, board

moments closing that tough pass and is to comments to return questions. companies few make it do. your in will taking now tough. Jonathan, On note, times damn over I Lots some will tough I don't And Big last, before a

focused A are good and us a out tough goes remaining Thanks, that I'm thank dynamic for stronger, company. morning. special a better, those Lots their track emerge Bruce, on in to Bruce, work team for confident the efforts Like more a all and to broader putting you environment. of Big hard and

I Bruce I our want will his that details moment, start referenced addressing two in go but by results in comments. on QX through a points to

First, Bruce after are as going productivity we our and cost noted, gains aggressively savings business. across

referenced remove of ceased on driven by savings this OpEx identified the closure in decision of accelerate centers, distribution million the $XX structural to and Our reduce earnings cost last is internal efforts capacity. The will our excess have our four which $XXX This month. now increase up million our over forward part we from operations call.

freight will gross savings which We our margin. also realize significant XXXX, inbound in benefits

have now to around million previously. we million addition, reduced In CapEx $XXX $XX from XXXX a over

in we These to balance efforts, opportunities identified most XXXX. more have firm realize a during or of across have with those expect an $XXX in ago. Beyond referenced an the some of partnership identified additional savings the Bruce reflect and multiple past gross across engaged bottom moment been external and we million we OpEx which XXXX areas quarter with of margin, in as opportunities line

current economic liquidity are Second, we to and focused to the navigate positioned on ensure our we through challenges. prepared are intently managing

aggressive our liquidity will management. also by from as above, strengthened well position As the be referenced reductions inventory cost benefiting

working targeting an that and inventory at we of least over are next a time. over in towards change at the turns, step manage least improvement XX% We how year, double

of have lending terms facility. we In asset maintain and our liquidity, availability excess based under overall to expect

also and just the to in being include we advanced a asset of our Bruce are our opportunity liquidity. the pursuing These of suspension other further further dividend, monetization However, bolster stages which referenced. measures

considering Regarding asset intent most our letter a of sale Valley, million the be value our for distribution remaining million leaseback Apple we equating million D.C. is lease and The in entered on corporate Columbus, net $XXX the after on of around our into monetization, this transaction building synthetic a Ohio in center, of headquarters balance stores. proceeds expected and week, owned our California $XXX remaining to California, of the $XXX to

of our to lending pay We expect proceeds facility. plan sale assets minimal. debt asset down taxes the on to under the gain use net to the to be the on Due we available based NOLs,

agreement The early conditions. We are closing is and or definitive QX. customary targeting to with closing a due purchase transaction in and sale of late diligence QX subject execution standard

that, of go I costs, we'll charges, contract an and on our distributions excluding adjusted address would which on termination into again asset costs, QX I more the like store results, With and discuss own to then forward exit leased sale on detail will basis, our our under outlook. impairment synthetic stores,

decrease, were sales ago. The XXXX First can decrease which summary net nine quarterly $X.XX billion, by an be compared a of on to driven quarter our found QX $X.XX page of billion versus sales was our results comparable was XX.X%, year guidance XX.X% presentation. a decline below range.

weakness Going high weak sales into to inflation, the quarter, as Bruce mentioned, the we lower in demand for ticket and expected environment, refunds. overall high items due tax

and overall that of to shortages to Industries basis With Furniture an impacts impact United XXX soft attachment points, adverse also We excluding knew impact would estimated related in our categories. comps product home other sales. approximately

impacted a of of and level banking and seasonal unfavorable increased fears However, garden. crisis the weather caution lawn

were QX comm As softer anticipated. in than sales a result, we

our in decline. sales acted we inventory, to with which Importantly, down was quickly clear line

loss rate million $XX.X primarily the points was margin loss net a for quarter the and gross higher XX.X%, quarter the rate, adjusted late year's quarter per was quarter categories. was last for down softer $X.XX. was basis that furniture of XXX to the and first levels The seasonal promotions share targeted from Our first adjusted which due diluted

favorability our better items slightly guidance adjusted for than expenses including better million SG&A, aggressively. last to of to depreciation as expenses multiple saw the we were million year and across We total $XXX.X versus the continue $XXX.X than line manage XXXX. Turning quarter up

higher million, quarter million of for quarter $X.X for amounts due Adjusted last to the was in year, the XX.X%. drawn negative from rate billion. last and operating cost the Interest XX.X% was quarter Total $X.X in quarter XX.X%. up margin facility the expense higher The adjusted down $X.XX credit was rates at first year-over-year. income inventory to was year ending our tax interest on

the $XX.X expense of stores million During million cash long-term We and million to $XX.X the square total down same one was first last expenditures million with ended stores first Capital XX We quarter, $XX.X the depreciation and the quarter period with we cash to new in debt. of ended $XX.X quarter and for and million, $XXX.X X,XXX opened were last equivalents million. three compared year. $X.X store. selling footage million, of closed quarter Adjusted year. the QX

we We cash of and million the $XX.X XXXX, million. have cash a At of did during XXXX not long-term QX of under had any equivalents end that remaining December authorization. $XXX.X repurchase share million $XXX and debt execute our available QX

especially of our as gain not in actions are should Sales we of outlook, comparisons, guidance the comps less light costs, and year the the freight. by shutdown. improve activity easier United formal in uncertainties. full-year improve back in we over QX past also margin driven of marketing key to move in Furniture Turning year should we full and sequentially effects traction, the merchandising significant Gross prior lap as half lower providing particularly the and the markdown

see specifics and more continuing expect ticket Further, basis around we our QX, to shortages of furniture points. particularly Turning a from more are items. on to significant impact continued we discretionary in environment, in higher the in XXX product market pressure to adverse comps

result, we down add comps and about high a be versus QX XX stores XXXX. range. similar QX Net in As basis to expect to in will growth of be points the teens new to

prior caused to to year, we in spring, buying the Despite significantly inventory. be seasonal gross as again, moving our slightly and plan inventoried seasonal improve expect on Bruce us rate second lagged slow remain significant markdowns margin, down earlier. due have but the sales low-XXs, this regard versus With quarters over noted for to in the to

chain mentioned I centers, earlier, payroll our reductions. expect offset the QX, across the by slightly primarily saving XXXX, impacts inflationary headcount down in versus wages to be will line dollars and items. SG&A and be largely of distribution other In supply This our closure efforts cost including we forward to due

With to year to for to as level continue earlier, opportunities I reduce around lower the CapEx, of now look $XX we a for regard mentioned expect and million further. this

We store We of already concentrated all new we expect continuing closure. improve back. stabilized. performance to were in are at XX an the we we for openings or to a while as number underperforming of to year. affect performance restart plan otherwise stores the XXXX our can openings has store business Most spent do be In paused we incurred determine if early XX with meantime, commitments the the that expected around evaluate new can been or above until their has to closures to if end CapEx stores not

expect We including approximately $XXX QX. in million, full-year of million depreciation around $XX

We expect a share for count of $XX.X approximately million QX.

QX total expect and down inventory year. to again sales managing through are with be of balance in levels being the aggressive inventory in line the We

as on QX potential one-time costs, charges impact as reduction commentary cost on well our on including partner expenses, our exit and asset work, of All external related impairment gains excludes of to sales. fees, FTC the

as our our areas to finding significantly turns, Bruce company ways and Overall, We efficiency across remain focused CapEx to profitability. and improving one and dollars the operations structural in and make key driving further. reducing on of is referenced, of returning beyond. our is inventory improved costs, This productivity key focus to five XXXX go growth

over the will I Bruce. turn call now to back

Jonathan. you, Thank

very environment, meantime, our to again to will. up, we optimistic and manage and our their in half So associates liquidity call like of the even remain managing confident we all focused beyond. expenses are will year the environment our the In are to it five the efforts. I'd for thanking and key as the improve, sum will best our eventually when improve we're is our to tightly by end actions it low that difficult through and though improving back visibility business on well doing a

over call the the your back that Thank can begin turn address questions. to we so now moderator, you. I'll to

Thank you.

conducting We be [Operator question-and-answer will you. session. now our Instructions] Thank

with question comes from your proceed Our with Katai Krisztina line of first the Bank. Deutsche Please question.

and I is changes? us give you progress This as just morning. on trends your could question. Krisztina. for seeing how taking Thanks was business wondering for on Taylor if the any weather Jessica Good quarter-to-date details you're our

We're our that's our is we through on what half helping garden Yes, by that Hi, see to line the up closure guidance is sell as Jessica. with seeing heavy continue get expect patio we heavy we is we and the promotions, heavy UFI and in But we the disrupted QX our seeing inventory tough back the improve quarter-to-date. we through some year cycle back and promotions Bruce. last through in Broyhill weather getting from so that's of as a year. lawn cycle have quarter the seasonal This furniture, and enter through. we're assortment last as those better better been still

what much pretty our is line we're So seeing with in guidance.

think comp. job in as you wondering follow-up, Thank the with would how of But are about break would think how I feel great like feel just just the you that? you it when you. about a your you sure And composition, and inventory, is that about want have just like you what your composition making Do things of inventory? the that kind you line

I'll Jessica, Hey, it's that in one. jump Jonathan,

heavy the out seasonal, Difficulty] significant behind in on still seeing we're even pretty seasonal, where expect that pick -- work through think to QX. is we QX we of which you're up, well why margin as side coming is were [Technical we though I gross in

and committed at expect a to of to year. margin back positioned that seasonal and QX So gross we on so more that QX, we're the we're from inventory we stronger to be half in of much continue through be the the promotional to needed end clean being perspective

you. Thank

you. Thank

you. Thank

the question Markets. with your Our next KeyBanc comes proceed of Brad with Thomas Please from line Capital question.

what you Bruce, I forward for I about you some of categories more the talk hope some we some bit improvement we close of going food a those bright little see and the just on wanted spots of maybe about some the a pulling different know the little here? out we've the some categories, the bit consumables But was that in have of can to goods talk and about gives hearing discretionary you you could broadly down, been hoping back among the can morning. talk spend. and and performance consumer initiatives good are numbers, Hi, but

Brad. Hi, Yes.

a First the that continue. Obviously, areas. We off, see some being in boost yes, of little we'll believe and tough. QX furniture, seasonal they rich and home headwinds our categories But as a first back we're foremost, it’s ability been sell our getting first our for quite shopping things almost into Broyhill all obviously online and or Broyhill. quarter Broyhill, is and start quarter abate, we're good was furniture doing margin decor market to That full that online. frankly the without impacts conditions journey

cycle quarter So day while the have this through back line. half, in as this we actually in back Broyhill back second Broyhill the in of we'll weekend phase the We're coming memorial in. first

we're good that's excited us news for So about it. and

in collections, see. Broyhill, got coming priced trend really right, forward We've new to seven collections exciting right, things new fashion modern

Giannantonio sourced we're FOMO team's very are sourcing be create Missing to been things new a out, and Out of are prices new Margarita these in the year. Our half with Of will We're fashion out products All and stone. back close natural Vietnam, real that getting out price coming and product been Fear marble, wood, team's to that exciting. India in point forward, that the will are opportunities

about So that. we're excited all

our where we're and and a California to upholstery last style. just to assortment on also continue in where seeing With excited we're those respect XXX we periods. And we to will results our going our where I we continue the consumables grow third could XXX assortment that great about. hit customers prices in high-end that of think the flex honing to flex the fleet high-single-digit flex from to we stores marketplaces across plus good stuff our want consumables, These prior assortments quarter, in, and going that is seeing year results energy be stores, up, food upholstery see food that's results. brought to to the learned We've plus coming the in assortment by lot the pricing got we're really the we improvement to SKUs,

in to the flexing Midwest continue and and other flexing we'll with assortment Northeast Northwest. that that do extended and We've Pac markets in pricing along the to that

That learning and when this be items dealing with and now. consumer ready the So right all customers. and it abate, of it we're we're our we'll We're together, for on will coming does back lot. pulling for the larger categories known eventually that improve ticket a for margin our rich will

talk of that XXXX Great. with maybe opportunity where to any this up? the and be line that new of might maybe can respect sight Thanks. And about those hitting to in you here highlighted morning, you just $XXX million showing

Hey, opportunity Brad. of in XXXX. there's Yes, I'll that some some think morning, one. on that jump realize Good to in we do

$XXX expect recognize in our XXXX. million potentially cost a heard from million could new earlier you on, in that of target million. we benefit to already $XXX upped for we've million think identified with most As internally We million this realized savings $XX there's $XX ’XX get we over in that to then bit $XX-plus initiative, maybe little more and

there say And a the would is range by I way, there. that also

there we're also is project. upside as We million how today. That's seeing we broadly believe $XXX the number to get deeper into that it

you. Thank Great.

Brad. Thanks,

Brad. Thanks,

you. Thank

proceed of Our your Feldman question. next question from Group. comes Advisory Telsey with Please Joe with the line

the taking for thanks question. guys, Hey

be? I should pretty a should better not it sell? that clear You areas Are like you how be where XX% like almost little healthy? feel that would Is it like you know, being inventory down furniture be clear there XX%. it to inventory like is are mean, to that clean with you'd -- conversely, do or to still you'd there other I made guess access the or regard is have you pockets it that some where

is Hey, Bruce. Joe. little will I'll This a start, I know add Jonathan bit.

just weather sell there set as was see we and didn't the earlier, mentioned pullback. fast, patio Jonathan QX, the as tough foremost, and First garden and lawn was

that Now a more. we back just from the the buy, but consumer little seasonal on pullback bit cut was still

that. which down it and we through that QX. moving through brought but we're through that and weather, So And good started margins, seeing with now promotion at better get a promoting in QX, in targeted started to cycle results continue we'll

abrupt to sudden not year Broyhill, furniture of some rate them are sets a -- little more we wanted like harder that they're late closure, not bit last mitigation pieces, there to but in UFI selling, closure, we because online, What's sell. complete brought the different with they're at market the product, it's the so

So we QX. those juice promotions to that continuing target and a bit we promotions with are through

new great make we're room results sets already seeing coming Broyhill the we which in, So in. for

focused feel and those think two other all So decently. but we're always our two dealing performing everywhere with have areas I like across else. all healthy inventory I'd are say increasing and are the we're those are that areas inventory, the shape spots good turns We're in on

upper color XX% Should you. No, thinking is area, Got mid-XX% you might better maybe talked my being call, it guess, last you more Jonathan, be the then If I earnings that's for maybe second-half the gross margin as table? follow-up correctly could helpful? great. second-half. And off look like about or the the margin I if share in it. for we guess Thank the on any that in recall quick maybe was Thanks. the would be what gross I

well Bruce's end in during seasonal goes of question, prior be that place QX year-over-year Yes. to be now high a the at but significantly one right you the being what's QX, it's our down seasonal. working projected will category in our through inventory pulling in the that Joe. we're with of margin what category, back very into operating be on and right get to seasonal, That's as Part response below we're is the the seasonal on QX QX. it up the we'll Sure, know, where aggressively why gross accomplish in rate margin low we driver as traditionally to traditionally major margin

that to and conservatively year, getting acceleration so we're expect benefit of drag, basis. We're a in seeing more but year-over-year for and don't QX bought in QX, much to significant we expect even we also seasonal the benefits. back freight that half in a an greater of on have We've the QX, QX be

project opportunities. an yes, into new do further to referenced work be margin doing, So some with we significant those we're The to the impacts, high-XXs. we've get gross external partner with back identified able this expect has working

earlier in this questions. that getting So year would some to part just as I we of the referenced latter hope of in start

of the year, confidence we things us this in into latter part those back give high-XXs be will that particularly the up in of QX. All getting

and Joe mentioned got at stock closeout points add also That well. or gives with the forward, significantly best from new year. we it's us will see those just in be I'll margin keep And grown in XX%, to as through I as accretive foot Broyhill accretion we'll sales collections mind, grow bargain back continue significant -- from earlier. penetration that we've that fully our --

guys. That's with Good helpful. quarter. you Thank luck this Thanks.

Joe. Thanks,

you. Thank

you. Thank

proceed Our with question. of with line Jason your the comes next Please from question Haas of America. Bank

morning good for questions. my and thanks Hey, taking

Jonathan, So math of you available XQ. was us of curious as the if how walk could on through the end revolver on I is much the

letters against I availability. if But million of there's on I'm don't know it. million tripped I And think of $XXX $XXX not think any reduced, then believe credit I then then it. there's I if count base, So I that have may total that covenant saw sure gets because drawn was and $XXX you the million the borrowing

So through think if math, would Thanks. that just walk could helpful. be the you I

liquidity limitations, does reduce have play million of to The also size yes but into at available overall $XXX to the that's at do that taking into The facility is $XXX too, Yes. times letters cash we -- QX on of of into available come of liquidity account credit covenant QX the the on end are some end Hey the available account net we referenced us. at the the volume hand. takes base happy is so and so that Jason, that. in million, to

expect to As million down. but will be transaction synthetic there's the end $XXX $XXX about on Apple lease value new sale them overall proceeds that transaction, this we with distributions on the of from million we to the outstanding boost million, of leaseback need pay the $XXX will of referenced, Valley

million, million the liquidity. $XXX our So to goal We've available is you into to million $XXX referenced of $XXX gets being million. at high plus $XXX historically million be $XXX

zone that completed leaseback as So once sale expect in we the right be we've a monetization. to back

sense you. look rent have then incremental follow-up, on helpful. yet Thank what leaseback. And it. sale would the as Got you do a like the That's a proposed

Yes.

actual at high-Xs. cap borrowing looking the under the in we're look interest amounts. ABL two between at somewhere from narrow the mid-Xs, at spread currently those expense So the is in sort of, when be But sort relatively what overall, will the you we're rate of an standpoint,

expense the interest But there and be So geography overall, be some a there's little so around of will then rent relatively impact will incremental and on. bit versus net P&L modest.

Got it. Thank you.

Thank you.

next Please Short line with proceed Credit Karen of Suisse. Our the question your comes from with question.

thank you. Hi,

a clarify think, rent with How P&L what would you incremental respect expense X cap that that? Sorry, at said. be to can So I rate, times just is neutral? the you

be the cap high-Xs. the leaseback on rate sale So will in the

under in We are the the currently mid-XXs. ABL borrowing

the And down mid-XXs We So will rest $XXX will million, actually higher in cap at proceeds then synthetic interest at which come rate. of that of rate. is used be which the paid has lease the pay proceeds those the X% high down the a to ABL, rate.

a with for of you dollars impact whole. the net P&L a overall, few transaction So end up as million

neutral. Okay. But debt-to-EBITDA not

your what like? be would So pro forma to looking EBITDA debt

still the So P&L in cap that. proceeds. rent that. sale leases rate We're be response still there would out as expense, down and Go what applied finalizing ago. -- question was currently some net in booked the some be aspects yes, Karen. then to typically results ahead, high-Xs expense And rent lay I impact EBITDA we're that. synthetic moment as interest then But we'll We're -- to finalizing booked the so a is typically Jason's geography, so expense. the referencing which can But leaseback as paying and ABL, of the

No, ahead. go

Yes.

more expected lay and all So all moving a out we'll parts those of in so in detail gain execute that terms when on. on we sale PSA,

Okay.

I outer said, cash the actual mean, potentially later generally ‘XX, So million should But the as we million. capturing you how let's flow it's as $XXX years, looks of $XXX like in think call more to $XX ‘XX, it like start you ‘XX? free sounds what about to by look and million then

things by impact that. depletion the a that's obviously, on by on at have equal, income significant influenced in other guidance be interest -- Well, be modest this this expense line. on we are operating But reduction heavily again EBITDA, where to going we're Yes. all sales the clearly, transaction but not and being offset a giving would point, And below margin.

as coverage covenant-wise? concern it to relates Okay. ratios And charge there's like no fixed

Yes.

into So taken is our springing referencing, strong. ratio we available terms we're of already $XXX assumption -- have fixed what of liquidity account today covenant is the That's in the fixed into already which we position ABL, million net in charge that in liquidity referencing. have covenant covenant the a baked springing we've we're

you. Thank great. Okay,

assuming which And providing. total be the availability on all that we we're gross outlook we're trigger that clear, does, covenant, to of we the the just it have in liquidity again, reduces ABL if

Okay, that you. make sense. Thank

Karen. Thanks,

Thank you.

the of Please with Kate question. with from comes McShane question next your Sachs. proceed Our line Goldman

Good sales terms from the one shift from environment specifically Hi, that? thank in And was just a maybe if I little bankruptcy be QX could the talk that of through you. any in that baking maybe in gain what morning. of any wondered influenced lift bit more competitors? and you from half of can the of how will influenced or quarter you your about you kind back just the are

Kate. Hi

opportunity customers for of overlap store there's First & think Beyond bankruptcy. XX big within bring with miles. We've off, us Bath good in to Bed dislocated some the stores their footprint from got we a a

and in XX rates resulted was that redemption to impressions, in million success recent that. customers radio Our a to terms more great of us attracting campaign from loyalty sign honor allowed up their TV and good that XX% discount

continue. to they're their now, that of expect the liquidating and in process products. We their Right stores

an finalize they focus out as we'll customers gone on as more expect companies influx And it, well of to have that, that unfortunately other get we and as of business.

to used continue dislocated customers, areas that Conquest are and All marketing do that. to we'll of their attract we've those

that also our and improve more high-quality, be work on better forward, price marketing and to angle we at out positioned customers fashion think fear right, well into more products, good take missing more as I of assortment brands, going So sell margins. we're to

like and up been They've has struggling. has ability right to now, The said environment consumer, of income returns the they is had make debt lower to debt weakened. year. their And purchases in QX tax especially down some incurred. that been Now pretty we prior the low consumer Their than they're that have is are pay the large tough. household using QX

think in back very improvement well those to and conditions and of we'll the and ‘XX. So the time, abate year are half we into be positioned over going start seeing

And little think a call don't as late. -- in dialed store I more apologize thoughts didn't the of around I store result terms your this I much I And heard then openings environment? I the and into openings. second question, a of bit But difficult

happy that be I'll Kate, one. in on jump Yes. to

So We've openings XX% to XX we for XX%. that previously around the taken referenced to down year.

for We even period a lease We of point. commitments have paused not new longer ago, made new any now time. this probably months executions significant several all essentially at

already that in which signed So we the We're leases. the the construction, we're some open still under stores we're pipeline already opened. expecting ones where to have were of already that had already --

But until a the at stabilization leases this point, new we leases, business. restart we're executing see not to in approving new planning

there to But right successful about. markets significant particularly until rural time, where small town are is all locations there pausing and but activity many over continue opportunity talked stores, open the improve. believe we to of and stabilizes a in that We the there we're we've business now, starts could

at time committed this just you ‘XX? in are in point for all any is ‘XX? through it And Or

a ‘XX. We're at the CapEx move committed There not point. ‘XX. could anything We're into that in on to trying can commitments of out stores all we to this is to couple potentially extent hold

stores XXXX. could but ‘XX, So of new move not we're any that a stores adding couple in into there's other

you. Thank

Thank you.

with from of the your question. comes Capital Loop Our proceed question with next Markets. Please Anthony Chukumba line

Good morning. question. Thanks my for taking

terms guess sort said I seeing bargain, now terms sort a to had sell-through goal talked you items your adding and of are your relative of I merchandise. merchandising in -- is more, that expectations? of, question, What assortment, actual of, you get on those of So the you to changes And about in to your it's treasury-type one-third. XX%

sell-through and the deals times least is customers of an Hey Anthony, now, at the very points. looking for during accretive the coming XXX these Bruce right tough with here. We're sell-through. with basis margin are Obviously, pleased

product it's penetration. in I and high and to We're of continue trend So that said, so we buying with of the are out and so the product. priced really an to grow accessories move product. in right, is progress off-price it's we're quality, said in assortment. that about one-third team making much XX%, bargain depth, screen at outstanding value. Margarita we're least feel going Like our the we adding to not assortment to office The can fashion just it's good that I breadth, bringing

there's we're high as of the really good distressed lot of Vietnam and as think some India, out is The be a well retailers is getting product just stuff of to quality, going I excitement. product.

we One the from of single-digit to the stores. big closeouts our retailer mass lift got high-end added has low

and we really forward. we're able that, it's all good in, going that our Broyhill We've going get nice stuff literally got once shop seeing this be to to back ability styles have and traction So do us in -- continue some be expect very place to the exciting to to with coming really and and online we customer and that. good get

well. and sell-through the The resonating is doing we're definitely like with customer. good feel I So

Got on that to Broyhill then follow-up segues question. nicely my And it.

I to wanted So understanding. better get a just

to make you from that that. sure Broyhill understood So United to you're buy just want said I going some closeout I merchandise better furniture.

basically in Anthony, price. they and Lots. the closeout trucks at November finished around down And access goods this immediately And sizable that took result to Big pretty and was was back last year, over some all -- roughly it's a then quarter. we closed could product a a product inventory turn where banks things made produced UFI finally when level, and exclusively Yes, shut the for amount that of that, of we're work receiving that was some of at in Broyhill that the out as point they the Broyhill

and we'll I very base, quality, helpful, vendors got with very great that, the pleased now help we quality. high very and vendor to differentiated through Broyhill, as transition the that that will sell we've be pretty will think, So quickly producing us that new several

far some fact, loving from they're customers the of as In so we've seen the responses product.

it up out, worked our mixing we as assortment residual So that the we the that held into inventory and banks just have that it was closeout closure just at good after and of the we're got prices, is speak.

of luck Thanks. it. this Got the Good for year. remainder

Anthony. Thanks,

you. Thank

from comes Piper line with Keith Please the of question Sandler. next your proceed with Peter question. Our

be to savings Hi, to external identified buckets, might just everyone. help you thank maybe $XXX a little initiatives by the high-level bit be million additional bit some could were Good morning, but wanted of highlighted you of some I deeper that you dig you. the more of a taking into us partner the opportunity? understand granular kind in the

to a to Peter, good be that. the on hey first morning, little happy own I'll color guess, talked give I identified out more million-plus in Yes, aware SG&A we've long a come I of our through on we've we've all, that another taken component, XXXX then think already already costs a of way, and that $XXX efforts prior we've lot about XXXX. you're

we've So I on a several job years. good that the past done over think

decent there. though and ops, is number there that and opportunity in think store we is administrative a there's and fairly chain supply that where spend we've more field So some identified SG&A general across

pricing think earlier, are piece help And inventory as there optimization. in is there's which allocation, promo, some referenced margin, opportunity we brands significant across think with then in would bigger I COGS, the say though other drive omnichannel areas of could and savings to both private there. meaningfully gross where and Bruce national we terms

price series go of streams so think and of most realize whole going million the end is million, of the the in $XXX overall a we that that run the on XXXX. to activating. a $XXX but basis think next well actually that of above can be work after we Again, by there's we're rate size XX-months or we So

you be margin would there Okay. running And what Is lift back obviously, gross the Ocean freight that half. will the to any costs way lower by? think quantify in

said. out I couldn't Peter, make what you Hey just

us? half? Could Oh, in back the benefit Ocean you that for quantify freight

Yes.

we're back rates rates been and a come of to the the we've meaningful continued year-over-year in getting but in spring, down, So half have XXXX. benefit lapping high pretty

in have back on come very We're to-date. a certainly So rates the relative that, Ocean to to we expect in back accelerate down, seeing and been get and largely front year the we've and public seeing we're we've the rate the how than of we the benefit of the to container seeing expect half those in data greater that really where you've that been correlate numbers meaningful seen year, impact half with half.

a on we gross margin? number way put of can to that, confidence just little Yes. Is more get to there a trajectory any the so

on. rates, Yes. XX% Hopefully, bit. and the we're I at like were helps year-over-year, terms a XX% I in including probably that loaded looking reduction of rates, the we all in overall charges year-over-year, a little a then and so freight probably reduction fully accessorial spring, looking more the mean guess

Okay. me, more And just payables. on for then the lastly account

So you that down got conjunction with inventory payables XX%, a look we is particularly as down we it XX%. inventory, about QX? were nicely, down coming And for level to in down similar to how should think that

down moving a Yes. in calculation. QX, I quarter, at had get so fundamentally mean, a time. than anything the sort and less impact quarter different did would over the the normalized work there. had to more probably of say, at in payables lot parts as ever, that piece of on looking We rate inventory the more end not it probably inventory be, that of later end on doing to payables on the itself. there's of inventory impact to We're We're aggressively I

timing more a So it's just impact.

what think of QX. I the seeing end you're at

very Okay, thank you much.

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