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adjacent, Alabama, Bargain, Barn, BBGO, began, beneficially, book, Carolina, center, composition, consideration, consulting, decision, deficiency, detail, detected, diligence, Director, disinflation, Event, exceed, family, FASB, fleet, forecast, foreign, Georgia, half, hand, hook, ineffective, integration, ITGC, Kentucky, led, legacy, maker, misstatement, newly, North, Ohio, owner, partnership, pertaining, pervasive, President, prevented, quantitative, rebuild, reconciling, redesign, regularly, remediation, Robert, Sheedy, single, southeastern, Southvest, spring, startup, Tennessee, user, VII, Virginia, visibility, volume, write
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agile, assortment, authorized, capitalized, compelling, creditor, criteria, deep, difficulty, discharged, enhance, enhanced, Eurodollar, experiencing, final, fourth, GOBP, guidance, MacGregor, prepaid, recast, reclassification, reclassified, retained, September, served, software, Specifically, strong, therewith, troubled, updated, utilize, vendor, Vice, vintage, worth, wrote
Financial report summary
?Competition
Big LotsRisks
- We depend on suppliers to consistently supply us with opportunistic products at attractive pricing, which is generally not in our control.
- We may not be able to successfully identify trends to meet consumer demand and maintain an appropriate level of opportunistic products.
- Our long-term success depends in part on our ability and the ability of the IOs to maintain or increase comparable store sales, and if we are unable to continue to achieve comparable store growth over the long-term, our profitability and performance could be materially adversely impacted.
- Significant disruption in our distribution network and our timely receipt of inventory has had in recent years, and could continue to have, an adverse impact on our operating performance.
- Because we are an extreme value retailer and compete to a substantial degree on price, changes affecting the market prices of the products we sell, many of which we cannot control, including due to inflation or deflation, competition, supplier increases in freight, supply or other operating costs, including energy prices, or worsening economic conditions, could materially adversely affect our financial condition and operating results.
- Our newly opened stores may negatively impact our financial results in the short-term and/or may not achieve sales and operating levels consistent with our more mature stores on a timely basis or at all.
- Our growth strategy is highly dependent on our ability to identify and open future store locations and relocate or remodel existing store locations in new and existing markets.
- Our success depends upon the successful implementation of our marketing, advertising and promotional efforts.
- If we fail to maintain our reputation and the value of our brand, including protection of our intellectual property rights, our sales and operating results may decline and the carrying value of our goodwill and other intangible assets may be impaired.
- We will require significant capital to fund our expanding business. If we are unable to maintain sufficient levels of cash flow from our operations, we may not be able to execute or sustain our growth strategy or we may require additional financing, which may not be available to us on satisfactory terms or at all.
- We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs.
- Although historically we have not consummated material acquisitions, we recently entered into an agreement to purchase United Grocery Outlet and we periodically consider acquisitions and other transactions as part of our long-term business and real estate strategy. If we consummate any such transaction, a failure to integrate such assets and business successfully, could have a material adverse effect on our business and financial statements.
- Natural or man-made disasters, climate change, power outages, major health epidemics, pandemics, terrorist acts, political events and other serious catastrophic events could disrupt our business, may expose us to unexpected costs and negatively affect our financial performance. The current concentration of our stores creates an exposure to local or regional impacts of such events and local economic downturns.
- We have very limited experience competing in the growing online retail marketplace.
- We may incur losses not covered by our insurance or claims may differ from our estimates.
- Labor relation difficulties could materially adversely affect our business.
- If we or our IOs are unable to attract, train and retain qualified employees, our financial performance may be negatively affected. Additionally, our success depends in part on our executive officers and other key personnel.
- Difficulties associated with the replacement of components of our enterprise resource planning system caused a material weakness our internal control over financial reporting. If we are unable to remediate the material weakness in our internal control over financial reporting or if we experience other material weaknesses, it may negatively impact our ability to meet our reporting obligations and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our common stock to decline.
- Economic conditions and other economic factors may materially adversely affect our financial performance and other aspects of our business by negatively impacting our customers' disposable income or discretionary spending, increasing our costs and expenses, affecting our ability to plan and execute our strategic initiatives, and materially adversely affecting our sales, results of operations and performance.
- Food retailers provide alternative options for consumers and compete aggressively to win those consumers; our failure to offer a compelling value proposition to consumers could limit our growth opportunities.
- If consumer trends move toward private label and away from name-brand products, our competitive position in the market may weaken. Additionally, our private label brands may not be successful and may increase certain risks that we face.
- If we are unable to attract and retain qualified IOs, our financial performance may be negatively affected.
- If the IOs are not successful in managing their business, our financial results and brand image could be negatively affected.
- Failure of the IOs to repay notes outstanding to us may materially adversely affect our financial performance.
- If the IOs are unable to avoid excess inventory shrink, our business and results of operations may be adversely affected.
- Our Operator Agreements may be terminated by either party and upon short notice, and any loss or changeover of an IO may cause material business disruptions.
- Legal proceedings initiated against the IOs could materially impact our business, reputation, financial condition, results of operations and cash flows.
- In the past, certain business models that use independent contractors to sell directly to customers have been subject to challenge under various laws, including laws relating to franchising, misclassification and joint employment. If our business model is determined to be a franchise, if IOs are found not to be independent contractors, but our employees, or if we are found to be a joint employer of an IO's employees, our business and operations could be materially adversely affected.
- Our success depends on our ability to maintain positive relationships with the IOs and any failure to maintain our relationships on positive terms could materially adversely affect our business, reputation, financial condition and results of operations.
- The IOs could take actions that could harm our business.
- Any material challenges or difficulties in maintaining or updating our existing technology, including developing or implementing new technology could have a material adverse effect on our business or results of operations.
- Any failure to maintain the security of information we hold relating to personal information or payment card data of our customers, employees and suppliers, whether as a result of cybersecurity attacks or otherwise, could subject us to litigation, government enforcement actions and costly response measures, and could materially disrupt our operations and harm our reputation and sales.
- Security breaches and other disruptions to our information technology networks and systems, including a disruption related to cybersecurity, could interfere with our operations and the operations of the IOs and our suppliers, any of which could have a material adverse effect on our business and financial performance.
- Real or perceived concerns that products we and the IOs sell could cause unexpected side effects, illness, injury or death could expose us to lawsuits and harm our reputation, which could result in unexpected costs.
- We are subject to laws and regulations generally applicable to retailers. Compliance with, failure to comply with, or changes to such laws and regulations could have a material adverse effect on our business and financial performance.
- Legal proceedings from customers, suppliers, employees, governments or competitors could materially impact our business, reputation, financial condition, results of operations and cash flows.
- Our substantial indebtedness could materially adversely affect our financial condition and our ability to operate our business, react to changes in the economy or industry or pay our debts and meet our obligations under our debt and could divert our cash flow from operations for debt payments.
- Restrictive covenants in our 2023 Credit Agreement may restrict our ability to pursue our business strategies, and failure to comply with any of these restrictions could result in acceleration of our debt.
- Tax matters, including changes in tax laws, our ability to use deferred tax assets, and the impact of tax audits, could have a material adverse effect on our business, financial condition and results of operations.
- Changes in accounting rules or interpretations thereof, changes to underlying legal agreements as well as other factors applicable to our analysis of the IO entities as variable interest entities could significantly impact our ability to issue our financial statements on a timely basis.
- Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors. The market price of our common stock has been volatile and may continue to fluctuate substantially, due to fluctuations in our operating results or otherwise, which could result in substantial losses for purchasers of our common stock.
- Future sales, or the perception of future sales, by us or our existing significant stockholders in the public market could cause the market price for our common stock to decline.
- Provisions in our organizational documents could delay or prevent a change of control.
- Our amended and restated bylaws provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America will be the sole and exclusive forums for certain stockholder litigation matters, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Management Discussion
- •Net sales increased 7.4% to $1.04 billion from $965.5 million in the first quarter of fiscal 2023.
- •Comparable store sales increased by 3.9%, driven by a 7.0% increase in the number of transactions, partially offset by a 2.9% decrease in average transaction size.
- •We opened six new stores, ending the first quarter of fiscal 2024 with 474 stores in nine states.