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 AugustMay 1, 20202021
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, INCINC.
(Exact name of registrant as specified in its charter)
Ohio 06-1119097
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
4900 E. Dublin-Granville Road, Columbus, Ohio 43081
(Address of Principal Executive Offices) (Zip Code)
(614) 278-6800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common shares | BIG | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | þ☑ | Accelerated filer o☐ | Non-accelerated filer o☐ | Smaller reporting companyo | ☐ | Emerging growth company | o☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ Noþ
The number of the registrant’s common shares, $0.01 par value, outstanding as of SeptemberJune 4, 2020,2021, was 39,257,039.34,639,480.
BIG LOTS, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED AUGUSTMAY 1, 20202021
TABLE OF CONTENTS
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Item 1. | | |
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a) | | |
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b) | | |
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c) | | |
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d) | | |
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e) | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 5. | | |
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Item 6. | | |
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Part I. Financial Information
Item 1. Financial Statements
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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In thousands, except per share amounts) |
| | | Thirteen Weeks Ended | | | Twenty-Six Weeks Ended | | | Thirteen Weeks Ended |
| | August 1, 2020 | August 3, 2019 | | August 1, 2020 | August 3, 2019 | | May 1, 2021 | May 2, 2020 |
Net sales | Net sales | $ | 1,644,197 | | $ | 1,252,414 | | | $ | 3,083,346 | | $ | 2,548,210 | | Net sales | $ | 1,625,552 | | $ | 1,439,149 | |
Cost of sales (exclusive of depreciation expense shown separately below) | Cost of sales (exclusive of depreciation expense shown separately below) | 960,633 | | 754,184 | | | 1,829,026 | | 1,530,933 | | Cost of sales (exclusive of depreciation expense shown separately below) | 971,605 | | 868,393 | |
Gross margin | Gross margin | 683,564 | | 498,230 | | | 1,254,320 | | 1,017,277 | | Gross margin | 653,947 | | 570,756 | |
Selling and administrative expenses | Selling and administrative expenses | 504,000 | | 455,026 | | | 962,631 | | 915,631 | | Selling and administrative expenses | 497,418 | | 458,631 | |
Depreciation expense | Depreciation expense | 33,974 | | 30,023 | | | 71,664 | | 62,820 | | Depreciation expense | 33,977 | | 37,690 | |
Gain on sale of distribution centers | (463,053) | | 0 | | | (463,053) | | 0 | | |
Operating profit | Operating profit | 608,643 | | 13,181 | | | 683,078 | | 38,826 | | Operating profit | 122,552 | | 74,435 | |
Interest expense | Interest expense | (2,548) | | (4,565) | | | (5,870) | | (8,298) | | Interest expense | (2,568) | | (3,322) | |
Other income (expense) | Other income (expense) | 1,357 | | (789) | | | (1,960) | | 121 | | Other income (expense) | 960 | | (3,317) | |
Income before income taxes | Income before income taxes | 607,452 | | 7,827 | | | 675,248 | | 30,649 | | Income before income taxes | 120,944 | | 67,796 | |
Income tax expense | Income tax expense | 155,480 | | 1,649 | | | 173,953 | | 8,931 | | Income tax expense | 26,381 | | 18,473 | |
Net income and comprehensive income | Net income and comprehensive income | $ | 451,972 | | $ | 6,178 | | | $ | 501,295 | | $ | 21,718 | | Net income and comprehensive income | $ | 94,563 | | $ | 49,323 | |
| Earnings per common share | Earnings per common share | | | | Earnings per common share | |
Basic | Basic | $ | 11.52 | | $ | 0.16 | | | $ | 12.79 | | $ | 0.55 | | Basic | $ | 2.68 | | $ | 1.26 | |
Diluted | Diluted | $ | 11.29 | | $ | 0.16 | | | $ | 12.66 | | $ | 0.55 | | Diluted | $ | 2.62 | | $ | 1.26 | |
| Weighted-average common shares outstanding | Weighted-average common shares outstanding | | | | Weighted-average common shares outstanding | |
Basic | Basic | 39,239 | | 39,000 | | | 39,184 | | 39,461 | | Basic | 35,349 | | 39,129 | |
Dilutive effect of share-based awards | Dilutive effect of share-based awards | 801 | | 77 | | | 419 | | 83 | | Dilutive effect of share-based awards | 693 | | 111 | |
Diluted | Diluted | 40,040 | | 39,077 | | | 39,603 | | 39,544 | | Diluted | 36,042 | | 39,240 | |
| Cash dividends declared per common share | Cash dividends declared per common share | $ | 0.30 | | $ | 0.30 | | | $ | 0.60 | | $ | 0.60 | | Cash dividends declared per common share | $ | 0.30 | | $ | 0.30 | |
The accompanying notes are an integral part of these consolidated financial statements.
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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (In thousands, except par value) |
| | | August 1, 2020 | | February 1, 2020 | | May 1, 2021 | | January 30, 2021 |
ASSETS | ASSETS | | | | ASSETS | | | |
Current assets: | Current assets: | | | | Current assets: | | | |
Cash and cash equivalents | Cash and cash equivalents | $ | 898,560 | | | $ | 52,721 | | Cash and cash equivalents | $ | 613,329 | | | $ | 559,556 | |
Inventories | Inventories | 713,504 | | | 921,266 | | Inventories | 901,482 | | | 940,294 | |
Other current assets | Other current assets | 83,956 | | | 89,962 | | Other current assets | 114,001 | | | 85,939 | |
Total current assets | Total current assets | 1,696,020 | | | 1,063,949 | | Total current assets | 1,628,812 | | | 1,585,789 | |
Operating lease right-of-use assets | Operating lease right-of-use assets | 1,663,020 | | | 1,202,252 | | Operating lease right-of-use assets | 1,631,817 | | | 1,649,009 | |
Property and equipment - net | Property and equipment - net | 727,091 | | | 849,147 | | Property and equipment - net | 723,158 | | | 717,216 | |
Deferred income taxes | Deferred income taxes | 16,597 | | | 4,762 | | Deferred income taxes | 17,741 | | | 16,329 | |
Other assets | Other assets | 66,762 | | | 69,171 | | Other assets | 36,008 | | | 68,914 | |
Total assets | Total assets | $ | 4,169,490 | | | $ | 3,189,281 | | Total assets | $ | 4,037,536 | | | $ | 4,037,257 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Current liabilities: | Current liabilities: | | | | Current liabilities: | | | |
Accounts payable | Accounts payable | $ | 379,409 | | | $ | 378,241 | | Accounts payable | $ | 380,942 | | | $ | 398,433 | |
Current operating lease liabilities | Current operating lease liabilities | 206,088 | | | 212,144 | | Current operating lease liabilities | 219,367 | | | 226,075 | |
Property, payroll, and other taxes | Property, payroll, and other taxes | 93,829 | | | 82,109 | | Property, payroll, and other taxes | 112,532 | | | 109,694 | |
Accrued operating expenses | Accrued operating expenses | 137,428 | | | 118,973 | | Accrued operating expenses | 158,136 | | | 138,331 | |
Insurance reserves | Insurance reserves | 35,360 | | | 36,131 | | Insurance reserves | 34,803 | | | 34,660 | |
Accrued salaries and wages | Accrued salaries and wages | 44,755 | | | 39,292 | | Accrued salaries and wages | 73,799 | | | 49,830 | |
Income taxes payable | Income taxes payable | 179,821 | | | 3,930 | | Income taxes payable | 70,340 | | | 43,601 | |
Total current liabilities | Total current liabilities | 1,076,690 | | | 870,820 | | Total current liabilities | 1,049,919 | | | 1,000,624 | |
Long-term debt | Long-term debt | 43,074 | | | 279,464 | | Long-term debt | 32,063 | | | 35,764 | |
Noncurrent operating lease liabilities | Noncurrent operating lease liabilities | 1,472,307 | | | 1,035,377 | | Noncurrent operating lease liabilities | 1,466,090 | | | 1,465,433 | |
Deferred income taxes | Deferred income taxes | 4,639 | | | 48,610 | | Deferred income taxes | 3,805 | | | 7,762 | |
Insurance reserves | Insurance reserves | 56,333 | | | 57,567 | | Insurance reserves | 59,379 | | | 57,452 | |
Unrecognized tax benefits | Unrecognized tax benefits | 10,442 | | | 10,722 | | Unrecognized tax benefits | 10,601 | | | 11,304 | |
Other liabilities | Other liabilities | 177,845 | | | 41,257 | | Other liabilities | 147,177 | | | 181,187 | |
Shareholders’ equity: | Shareholders’ equity: | | | | Shareholders’ equity: | | | |
Preferred shares - authorized 2,000 shares; $0.01 par value; none issued | 0 | | | 0 | | |
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 39,251 shares and 39,037 shares, respectively | 1,175 | | | 1,175 | | |
Treasury shares - 78,244 shares and 78,458 shares, respectively, at cost | (2,537,359) | | | (2,546,232) | | |
Preferred shares - authorized 2,000 shares; $0.01 par value; NaN issued | | Preferred shares - authorized 2,000 shares; $0.01 par value; NaN issued | 0 | | | 0 | |
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 34,920 shares and 35,535, respectively | | Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 34,920 shares and 35,535, respectively | 1,175 | | | 1,175 | |
Treasury shares - 82,575 shares and 81,960 shares, respectively, at cost | | Treasury shares - 82,575 shares and 81,960 shares, respectively, at cost | (2,782,987) | | | (2,709,259) | |
Additional paid-in capital | Additional paid-in capital | 617,496 | | | 620,728 | | Additional paid-in capital | 615,955 | | | 634,813 | |
Retained earnings | Retained earnings | 3,246,848 | | | 2,769,793 | | Retained earnings | 3,434,359 | | | 3,351,002 | |
Total shareholders' equity | 1,328,160 | | | 845,464 | | |
Total liabilities and shareholders' equity | $ | 4,169,490 | | | $ | 3,189,281 | | |
Total shareholders’ equity | | Total shareholders’ equity | 1,268,502 | | | 1,277,731 | |
Total liabilities and shareholders’ equity | | Total liabilities and shareholders’ equity | $ | 4,037,536 | | | $ | 4,037,257 | |
The accompanying notes are an integral part of these consolidated financial statements.
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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Shareholders’ Equity (Unaudited) (In thousands) |
| | | Common | | Treasury | | Additional Paid-In Capital | Retained Earnings | | | Common | Treasury | Additional Paid-In Capital | Retained Earnings | |
| | Shares | Amount | Shares | Amount | | Total | | Shares | Amount | Shares | Amount | Total |
Thirteen Weeks Ended August 3, 2019 | | |
Balance - May 4, 2019 | 39,042 | | $ | 1,175 | | 78,453 | | $ | (2,545,967) | | $ | 614,174 | | $ | 2,578,949 | | $ | 648,331 | | |
Thirteen Weeks Ended May 2, 2020 | | Thirteen Weeks Ended May 2, 2020 |
Balance - February 1, 2020 | | Balance - February 1, 2020 | 39,037 | | $ | 1,175 | | 78,458 | | $ | (2,546,232) | | $ | 620,728 | | $ | 2,769,793 | | $ | 845,464 | |
Comprehensive income | Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 6,178 | | 6,178 | | Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 49,323 | | 49,323 | |
Dividends declared ($0.30 per share) | Dividends declared ($0.30 per share) | — | | 0 | | — | | 0 | | 0 | | (12,196) | | (12,196) | | Dividends declared ($0.30 per share) | — | | 0 | | — | | 0 | | 0 | | (11,905) | | (11,905) | |
Purchases of common shares | Purchases of common shares | (53) | | 0 | | 53 | | (1,994) | | 0 | | 0 | | (1,994) | | Purchases of common shares | (119) | | 0 | | 119 | | (1,940) | | 0 | | 0 | | (1,940) | |
Exercise of stock options | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | |
Restricted shares vested | Restricted shares vested | 12 | | 0 | | (12) | | 406 | | (406) | | 0 | | 0 | | Restricted shares vested | 240 | | 0 | | (240) | | 7,782 | | (7,782) | | 0 | | 0 | |
Performance shares vested | Performance shares vested | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Performance shares vested | 65 | | 0 | | (65) | | 2,107 | | (2,107) | | 0 | | 0 | |
Other | Other | 0 | | 0 | | 0 | | (1) | | 0 | | 0 | | (1) | | Other | 0 | | 0 | | 0 | | 7 | | (1) | | 0 | | 6 | |
Share-based employee compensation expense | Share-based employee compensation expense | — | | 0 | | — | | 0 | | 4,225 | | 0 | | 4,225 | | Share-based employee compensation expense | — | | 0 | | — | | 0 | | 2,985 | | 0 | | 2,985 | |
Balance - August 3, 2019 | 39,001 | | $ | 1,175 | | 78,494 | | $ | (2,547,556) | | $ | 617,993 | | $ | 2,572,931 | | $ | 644,543 | | |
| Twenty-Six Weeks Ended August 3, 2019 | | |
Balance - February 2, 2019 | 40,042 | | $ | 1,175 | | 77,453 | | $ | (2,506,086) | | $ | 622,685 | | $ | 2,575,267 | | $ | 693,041 | | |
Balance - May 2, 2020 | | Balance - May 2, 2020 | 39,223 | | $ | 1,175 | | 78,272 | | $ | (2,538,276) | | $ | 613,823 | | $ | 2,807,211 | | $ | 883,933 | |
Thirteen Weeks Ended May 1, 2021 | | Thirteen Weeks Ended May 1, 2021 |
Balance - January 30, 2021 | | Balance - January 30, 2021 | 35,535 | | 1,175 | | 81,960 | | (2,709,259) | | 634,813 | | 3,351,002 | | 1,277,731 | |
Comprehensive income | Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 21,718 | | 21,718 | | Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 94,563 | | 94,563 | |
Dividends declared ($0.60 per share) | — | | 0 | | — | | 0 | | 0 | | (24,402) | | (24,402) | | |
Adjustment for ASU 2016-02 | — | | — | | — | | — | | — | | 348 | | 348 | | |
Dividends declared ($0.30 per share) | | Dividends declared ($0.30 per share) | — | | 0 | | — | | 0 | | 0 | | (11,206) | | (11,206) | |
Purchases of common shares | Purchases of common shares | (1,456) | | 0 | | 1,456 | | (54,919) | | 0 | | 0 | | (54,919) | | Purchases of common shares | (1,538) | | 0 | | 1,538 | | (104,491) | | 0 | | 0 | | (104,491) | |
Exercise of stock options | 6 | | 0 | | (6) | | 202 | | (2) | | 0 | | 200 | | |
Restricted shares vested | Restricted shares vested | 154 | | 0 | | (154) | | 4,995 | | (4,995) | | 0 | | 0 | | Restricted shares vested | 390 | | 0 | | (390) | | 12,995 | | (12,995) | | 0 | | 0 | |
Performance shares vested | Performance shares vested | 255 | | 0 | | (255) | | 8,255 | | (8,255) | | 0 | | 0 | | Performance shares vested | 533 | | 0 | | (533) | | 17,770 | | (17,770) | | 0 | | 0 | |
Other | Other | 0 | | 0 | | 0 | | (3) | | 0 | | 0 | | (3) | | Other | 0 | | 0 | | 0 | | (2) | | 0 | | 0 | | (2) | |
Share-based employee compensation expense | Share-based employee compensation expense | — | | 0 | | — | | 0 | | 8,560 | | 0 | | 8,560 | | Share-based employee compensation expense | — | | 0 | | — | | 0 | | 11,907 | | 0 | | 11,907 | |
Balance - August 3, 2019 | 39,001 | | $ | 1,175 | | 78,494 | | $ | (2,547,556) | | $ | 617,993 | | $ | 2,572,931 | | $ | 644,543 | | |
| Thirteen Weeks Ended August 1, 2020 | | |
Balance - May 2, 2020 | 39,223 | | $ | 1,175 | | 78,272 | | $ | (2,538,276) | | $ | 613,823 | | $ | 2,807,211 | | $ | 883,933 | | |
Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 451,972 | | 451,972 | | |
Dividends declared ($0.30 per share) | — | | 0 | | — | | 0 | | 0 | | (12,335) | | (12,335) | | |
Purchases of common shares | 0 | | 0 | | 0 | | (11) | | 0 | | 0 | | (11) | | |
Exercise of stock options | 3 | | 0 | | (3) | | 91 | | 7 | | 0 | | 98 | | |
Restricted shares vested | 24 | | 0 | | (24) | | 795 | | (795) | | 0 | | 0 | | |
Performance shares vested | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | |
Other | 1 | | 0 | | (1) | | 42 | | 8 | | 0 | | 50 | | |
Share-based employee compensation expense | — | | 0 | | — | | 0 | | 4,453 | | 0 | | 4,453 | | |
Balance - August 1, 2020 | 39,251 | | $ | 1,175 | | 78,244 | | $ | (2,537,359) | | $ | 617,496 | | $ | 3,246,848 | | $ | 1,328,160 | | |
| Twenty-Six Weeks Ended August 1, 2020 | | |
Balance - February 1, 2020 | 39,037 | | $ | 1,175 | | 78,458 | | $ | (2,546,232) | | $ | 620,728 | | $ | 2,769,793 | | $ | 845,464 | | |
Comprehensive income | — | | 0 | | — | | 0 | | 0 | | 501,295 | | 501,295 | | |
Dividends declared ($0.60 per share) | — | | 0 | | — | | 0 | | 0 | | (24,240) | | (24,240) | | |
Purchases of common shares | (119) | | 0 | | 119 | | (1,951) | | 0 | | 0 | | (1,951) | | |
Exercise of stock options | 3 | | 0 | | (3) | | 91 | | 7 | | 0 | | 98 | | |
Restricted shares vested | 264 | | 0 | | (264) | | 8,577 | | (8,577) | | 0 | | 0 | | |
Performance shares vested | 65 | | 0 | | (65) | | 2,107 | | (2,107) | | 0 | | 0 | | |
Other | 1 | | 0 | | (1) | | 49 | | 7 | | 0 | | 56 | | |
Share-based employee compensation expense | — | | 0 | | — | | 0 | | 7,438 | | 0 | | 7,438 | | |
Balance - August 1, 2020 | 39,251 | | $ | 1,175 | | 78,244 | | $ | (2,537,359) | | $ | 617,496 | | $ | 3,246,848 | | $ | 1,328,160 | | |
Balance - May 1, 2021 | | Balance - May 1, 2021 | 34,920 | | 1,175 | | 82,575 | | (2,782,987) | | 615,955 | | 3,434,359 | | 1,268,502 | |
The accompanying notes are an integral part of these consolidated financial statements.
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BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands) |
| | | Twenty-Six Weeks Ended | | | Thirteen Weeks Ended |
| | August 1, 2020 | August 3, 2019 | | May 1, 2021 | May 2, 2020 |
Operating activities: | Operating activities: | | Operating activities: | |
Net income | Net income | $ | 501,295 | | $ | 21,718 | | Net income | $ | 94,563 | | $ | 49,323 | |
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | | | Adjustments to reconcile net income to net cash provided by operating activities: | | |
Depreciation and amortization expense | Depreciation and amortization expense | 71,924 | | 63,259 | | Depreciation and amortization expense | 34,116 | | 37,819 | |
Non-cash lease amortization expense | 118,170 | | 114,348 | | |
Non-cash lease expense | | Non-cash lease expense | 64,457 | | 57,766 | |
Deferred income taxes | Deferred income taxes | (55,806) | | (7,551) | | Deferred income taxes | (5,369) | | (8,838) | |
Non-cash impairment charge | Non-cash impairment charge | 658 | | 2,914 | | Non-cash impairment charge | 194 | | 362 | |
(Gain) loss on disposition of property and equipment | (462,744) | | 130 | | |
Loss on disposition of equipment | | Loss on disposition of equipment | 780 | | 129 | |
Non-cash share-based compensation expense | Non-cash share-based compensation expense | 7,438 | | 8,560 | | Non-cash share-based compensation expense | 11,907 | | 2,985 | |
Unrealized loss (gain) on fuel derivatives | 1,438 | | (152) | | |
Unrealized (gain) loss on fuel derivatives | | Unrealized (gain) loss on fuel derivatives | (1,005) | | 3,144 | |
Change in assets and liabilities: | Change in assets and liabilities: | | Change in assets and liabilities: | |
Inventories | Inventories | 207,762 | | 95,504 | | Inventories | 38,813 | | 114,707 | |
Accounts payable | Accounts payable | 1,168 | | (51,548) | | Accounts payable | (17,492) | | (102,779) | |
Operating lease liabilities | Operating lease liabilities | (148,722) | | (93,364) | | Operating lease liabilities | (53,511) | | (54,919) | |
Current income taxes | Current income taxes | 191,488 | | (10,944) | | Current income taxes | 29,435 | | 27,077 | |
Other current assets | Other current assets | (9,768) | | (23,597) | | Other current assets | 1,294 | | (486) | |
Other current liabilities | Other current liabilities | 28,938 | | 43,344 | | Other current liabilities | 2,703 | | 16,315 | |
Other assets | Other assets | 2,512 | | (2,578) | | Other assets | 389 | | 4,395 | |
Other liabilities | Other liabilities | 12,633 | | (1,758) | | Other liabilities | 3,019 | | (879) | |
Net cash provided by operating activities | Net cash provided by operating activities | 468,384 | | 158,285 | | Net cash provided by operating activities | 204,293 | | 146,121 | |
Investing activities: | Investing activities: | | Investing activities: | |
Capital expenditures | Capital expenditures | (69,402) | | (162,840) | | Capital expenditures | (32,160) | | (28,928) | |
Cash proceeds from sale of property and equipment | Cash proceeds from sale of property and equipment | 587,010 | | 127 | | Cash proceeds from sale of property and equipment | 7 | | 26 | |
Other | Other | (22) | | (18) | | Other | (17) | | (11) | |
Net cash provided by (used in) investing activities | 517,586 | | (162,731) | | |
Net cash used in investing activities | | Net cash used in investing activities | (32,170) | | (28,913) | |
Financing activities: | Financing activities: | | Financing activities: | |
Net (repayments of) proceeds from long-term debt | Net (repayments of) proceeds from long-term debt | (236,155) | | 93,700 | | Net (repayments of) proceeds from long-term debt | (3,580) | | 157,337 | |
Net financing proceeds from sale and leaseback | 124,074 | | 0 | | |
Payment of finance lease obligations | Payment of finance lease obligations | (1,968) | | (1,946) | | Payment of finance lease obligations | (1,293) | | (982) | |
Dividends paid | Dividends paid | (24,285) | | (24,915) | | Dividends paid | (12,460) | | (12,478) | |
Proceeds from the exercise of stock options | 98 | | 200 | | |
Payment for treasury shares acquired | Payment for treasury shares acquired | (1,951) | | (54,919) | | Payment for treasury shares acquired | (101,016) | | (1,940) | |
Other | Other | 56 | | (3) | | Other | (1) | | 6 | |
Net cash (used in) provided by financing activities | Net cash (used in) provided by financing activities | (140,131) | | 12,117 | | Net cash (used in) provided by financing activities | (118,350) | | 141,943 | |
Increase in cash and cash equivalents | Increase in cash and cash equivalents | 845,839 | | 7,671 | | Increase in cash and cash equivalents | 53,773 | | 259,151 | |
Cash and cash equivalents: | Cash and cash equivalents: | | Cash and cash equivalents: | |
Beginning of period | Beginning of period | 52,721 | | 46,034 | | Beginning of period | 559,556 | | 52,721 | |
End of period | End of period | $ | 898,560 | | $ | 53,705 | | End of period | $ | 613,329 | | $ | 311,872 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
BIG LOTS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) |
NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All references in this report to “we,” “us,” or “our” are to Big Lots, Inc. and its subsidiaries. We are a neighborhood discount retailer operating in the United States (“U.S.”). At AugustMay 1, 2020,2021, we operated 1,4041,413 stores in 47 states and an e-commerce platform. We make available, free of charge, through the “Investor Relations” section of our website (www.biglots.com) under the “SEC Filings” caption, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). The contents of our websitewebsites are not incorporated into or otherwise part of this report.
The accompanying consolidated financial statements and these notes have been prepared in accordance with the rules and regulations of the SEC for interim financial information. The consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly our financial condition, results of operations, and cash flows for all periods presented. The consolidated financial statements, however, do not include all information necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Interim results may not necessarily be indicative of results that may be expected for, or actually result during, any other interim period or for the year as a whole, including as a result of the COVID-19 coronavirus pandemic, which has disrupted and may continue to disrupt our business. We have historically experienced seasonal fluctuations, with a larger percentage of our net sales and operating profit realized in our fourth fiscal quarter. However, due to demand volatility we have experienced during the COVID-19 coronavirus pandemic, the seasonality of our 20202021 results may differ from our historical experience. The accompanying consolidated financial statements and these notes should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, January 30, 2021 (“2020 (“2019 Form 10-K”).
Fiscal Periods
Our fiscal year ends on the Saturday nearest to January 31, which results in fiscal years consisting of 52 or 53 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years. Fiscal year 2021 (“2021”) is comprised of the 52 weeks that began on January 31, 2021 and will end on January 29, 2022. Fiscal year 2020 (“2020”) iswas comprised of the 52 weeks that began on February 2, 2020 and will endended on January 30, 2021. Fiscal year 2019 (“2019”) was comprised of the 52 weeks that began on February 3, 2019 and ended on February 1, 2020. The fiscal quarters ended AugustMay 1, 20202021 (“secondfirst quarter of 2020”2021”) and August 3, 2019May 2, 2020 (“secondfirst quarter of 2019”2020”) were both comprised of 13 weeks. The year-to-date periods ended August 1, 2020 (“year-to-date 2020") and August 3, 2019 (“year-to-date 2019”) were both comprised of 26 weeks.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of amounts on deposit with financial institutions, outstanding checks, credit and debit card receivables, and highly liquid investments, including money market funds and commercial paper, which are unrestricted to withdrawal or use and which have an original maturity of three months or less. We review cash and cash equivalent balances on a bank by bank basis in order to identify book overdrafts. Book overdrafts occur when the aggregate amount of outstanding checks and electronic fund transfers exceed the cash deposited at a given bank. We reclassify book overdrafts, if any, to accounts payable on our consolidated balance sheets.
Selling and Administrative Expenses
Selling and administrative expenses include store expenses (such as payroll and occupancy costs) and costs related to warehousing (which includes rent), distribution, outbound transportation to our stores, advertising, purchasing, insurance, non-income taxes, accepting credit/debit cards, and overhead. Our selling and administrative expense rates may not be comparable to those of other retailers that include warehousing, distribution, and outbound transportation costs in cost of sales. Warehousing, distribution, and outbound transportation costs included in selling and administrative expenses were $59.7$66.2 million and $43.2$52.3 million for the secondfirst quarter of 2021 and the first quarter of 2020, and the second quarter of 2019, respectively, and $112.0 million and $88.3 million for the year-to-date 2020 and the year-to-date 2019, respectively.
Advertising Expense
Advertising costs, which are expensed as incurred, consist primarily of television and print advertising, digital, social media, internet and e-mail marketing and advertising, and in-store point-of-purchase signage and presentations. Advertising expenses are included in selling and administrative expenses. Advertising expenses were $21.9$21.8 million and $17.3$23.0 million for the secondfirst quarter of 20202021 and the secondfirst quarter of 2019, respectively, and $44.8 million and $39.7 million for the year-to-date 2020, and the year-to-date 2019, respectively.
Derivative Instruments
We use derivative instruments to mitigate the risk of market fluctuations in the price of diesel fuel that we expect to consume to support our outbound transportation of inventory to our stores. We do not enter into derivative instruments for speculative purposes. Our derivative instruments may consist of collar or swap contracts. Our current derivative instruments do not meet the requirements for cash flow hedge accounting. Instead, our derivative instruments are marked-to-market to determine their fair value and any gains or losses are recognized currently in other income (expense) on our consolidated statements of operations and comprehensive income.
Supplemental Cash Flow Disclosures
The following table provides supplemental cash flow information for the year-to-date 2020first quarter of 2021 and the year-to-date 2019:first quarter of 2020:
| | | Twenty-Six Weeks Ended | | | Thirteen Weeks Ended |
(In thousands) | (In thousands) | August 1, 2020 | | August 3, 2019 | (In thousands) | May 1, 2021 | | May 2, 2020 |
Supplemental disclosure of cash flow information: | Supplemental disclosure of cash flow information: | | | | Supplemental disclosure of cash flow information: | | | |
Cash paid for interest | Cash paid for interest | $ | 5,338 | | | $ | 8,662 | | Cash paid for interest | $ | 468 | | | $ | 3,211 | |
Cash paid for income taxes, excluding impact of refunds | Cash paid for income taxes, excluding impact of refunds | 38,356 | | | 27,779 | | Cash paid for income taxes, excluding impact of refunds | 2,303 | | | 122 | |
Gross proceeds from long-term debt | Gross proceeds from long-term debt | 514,500 | | | 866,500 | | Gross proceeds from long-term debt | 0 | | | 514,500 | |
Gross payments of long-term debt | Gross payments of long-term debt | 750,655 | | | 772,800 | | Gross payments of long-term debt | 3,580 | | | 357,163 | |
Gross financing proceeds from sale and leaseback | 133,999 | | | 0 | | |
Gross repayments of financing from sale and leaseback | 9,925 | | | 0 | | |
Cash paid for operating lease liabilities | Cash paid for operating lease liabilities | 189,263 | | | 144,318 | | Cash paid for operating lease liabilities | 76,727 | | | 75,317 | |
Non-cash activity: | Non-cash activity: | | | | Non-cash activity: | | | |
Assets acquired under finance leases | 0 | | | 70,831 | | |
Share repurchases payable | | Share repurchases payable | 3,476 | | | 0 | |
Accrued property and equipment | Accrued property and equipment | 22,057 | | | 44,458 | | Accrued property and equipment | 26,306 | | | 27,213 | |
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 572,949 | | | $ | 1,383,557 | | Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 47,661 | | | 62,641 | |
ReclassificationReclassifications
In the first quarter of Merchandise Categories
We periodically assess,2021, we realigned select merchandise categories to be consistent with the initial realignment of our merchandising team and make minor adjustmentschanges to our product hierarchy, which can impact the roll-upmanagement reporting. We eliminated our Electronics, Toys, & Accessories category by absorbing its former merchandise departments into three of our existing merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales byWe moved our apparel, jewelry, and hosiery departments into our Soft Home merchandise category, for all periods presented. Therefore, there may be minor reclassifications of net sales byour toys department into our Seasonal merchandise category, compared to previously reported amounts.and our electronics department into our Hard Home merchandise category.
Recently Adopted Accounting Standards
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15 Intangibles - GoodwillOur six merchandise categories, which match our internal management and Other - Internal-Use Software. This update evaluates the accounting for costs paid by a customer to implement a cloud computing arrangement.reporting of merchandise net sales are now as follows: Food; Consumables; Soft Home; Hard Home; Furniture; and Seasonal. The new guidance aligns cloud computing arrangement implementation cost accounting with the capitalization requirements for internal-use software development, while leaving the accounting for service elements unchanged. On February 2, 2020, we adopted ASU 2018-15 on a prospective basis.Food category includes our beverage & grocery; candy & snacks; and specialty foods departments. The impact of the adoption was immaterial to the consolidated financial statements.Consumables category includes our health, beauty and cosmetics; plastics; paper; chemical; and pet departments. The Soft Home category includes our home décor; frames; fashion bedding; utility bedding; bath; window; decorative textile; home organization; area rugs; apparel; hosiery; and jewelry departments. The Hard Home category includes our small appliances; table top; food preparation; stationery; home maintenance; and electronics departments. The Furniture category includes our upholstery; mattress; ready-to-assemble; and case goods departments. The Seasonal category includes our lawn & garden; summer; Christmas; toys; and other holiday departments.
In order to provide comparative information, we have reclassified our results into the new alignment for both periods presented.
Recent Accounting Pronouncements
There are currently no new accounting pronouncements with a future effective date that are of significance, or potential significance, to us.
NOTE 2 – DEBT
Bank Credit Facility
On August 31, 2018, we entered into a $700 million five-year unsecured credit facility (“2018 Credit Agreement”). The 2018 Credit Agreement expires on August 31, 2023. In connection with our entry into the 2018 Credit Agreement, we paid bank fees and other expenses in the aggregate amount of $1.5 million, which are being amortized over the term of the 2018 Credit Agreement.
Borrowings under the 2018 Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness. The 2018 Credit Agreement includes a $30 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The interest rates, pricing and fees under the 2018 Credit Agreement fluctuate based on our debt rating. The 2018 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options. The interest rate options are generally derived from the prime rate or LIBOR. We may prepay revolving loans made under the 2018 Credit Agreement. The 2018 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. The covenants of the 2018 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are subject to cross-default provisions associated with the synthetic lease for our distribution center in Apple Valley, California.CA. A violation of any of the covenants could result in a default under the 2018 Credit Agreement that would permit the lenders to restrict our ability to further access the 2018 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2018 Credit Agreement. At AugustMay 1, 2020,2021, we had 0 borrowings outstanding under the 2018 Credit Agreement, while $11.4$5.8 million was committed to outstanding letters of credit, leaving $688.6$694.2 million available under the 2018 Credit Agreement.
Secured Equipment Term Note
On August 7, 2019, we entered into a $70$70.0 million term note agreement (“2019 Term Note”), which is secured by the equipment at our Apple Valley, CaliforniaCA distribution center. The 2019 Term Note will expire on May 7, 2024. We are required to make monthly payments over the term of the 2019 Term Note and are permitted to prepay, subject to penalties, at any time. The interest rate on the 2019 Term Note is 3.3%. In connection with our entry into the 2019 Term Note, we paid debt issuance costs of $0.2 million. In light of our strong liquidity and current market conditions, on June 7, 2021, we prepaid the remaining $44.3 million principal balance under the 2019 Term Note. In connection with the prepayment, we incurred a $0.4 million prepayment fee and recognized a $0.5 million loss on debt extinguishment in the second quarter of 2021. The interest rate on the 2019 Term Note was 3.3%.
Debt was recorded in our consolidated balance sheets as follows:
| | | | | | | | | | | | | | |
Instrument (In thousands) | | August 1, 2020 | | February 1, 2020 |
2019 Term Note | | $ | 57,336 | | | $ | 64,291 | |
2018 Credit Agreement | | 0 | | | 229,200 | |
Total debt | | $ | 57,336 | | | $ | 293,491 | |
Less current portion of long-term debt (included in Accrued operating expenses) | | $ | (14,262) | | | $ | (14,027) | |
Long-term debt | | $ | 43,074 | | | $ | 279,464 | |
| | | | | | | | | | | | | | |
Instrument (In thousands) | | May 1, 2021 | | January 30, 2021 |
2019 Term Note | | $ | 46,684 | | | $ | 50,264 | |
Credit Agreement | | 0 | | | 0 | |
Total debt | | $ | 46,684 | | | $ | 50,264 | |
Less current portion of long-term debt (included in Accrued operating expenses) | | $ | (14,621) | | | $ | (14,500) | |
Long-term debt | | $ | 32,063 | | | $ | 35,764 | |
NOTE 3 – FAIR VALUE MEASUREMENTS
In the second quarter of 2020,At May 1, 2021 and January 30, 2021, we invested a portion of the proceeds from the sale and leaseback of four distribution centers (see note 9 for additional information on the sale and leaseback transactions)held investments in money market fund investments and commercial paper investments. These highly liquid investmentsfunds, which were recorded in cash and cash equivalents in our consolidated balance sheets at their fair value. The fair values of the money market fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market. The fair values of the commercial paper investments were Level 2 valuations under the fair value hierarchy because the instruments’ market values were determined based on quoted market prices in active markets.
InAt May 1, 2021 and January 30, 2021, in connection with our nonqualified deferred compensation plan, we had mutual fund investments, which were classified as trading securities and were recorded at their fair value. The fair values of mutual fund investments were Level 1 valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market.
As of AugustMay 1, 2020,2021, the fair value of our investments were recorded in our consolidated balance sheets as follows:
| (In thousands) | (In thousands) | Balance Sheet Location | August 1, 2020 | Level 1 | Level 2 | (In thousands) | Balance Sheet Location | May 1, 2021 | Level 1 |
Assets: | Assets: | | Assets: | |
Money market funds | Money market funds | Cash and cash equivalents | $ | 280,008 | | $ | 280,008 | | $ | 0 | | Money market funds | Cash and cash equivalents | $ | 175,135 | | $ | 175,135 | |
Commercial paper | Cash and cash equivalents | 299,907 | | 0 | | 299,907 | | |
Mutual funds - deferred compensation plan | Mutual funds - deferred compensation plan | Other Assets | $ | 30,626 | | $ | 30,626 | | $ | 0 | | Mutual funds - deferred compensation plan | Other current assets | $ | 29,988 | | $ | 29,988 | |
As of February 1, 2020,January 30, 2021, the fair value of our investments were recorded in our consolidated balance sheets as follows:
| | | | | | | | | | | | | | |
(In thousands) | Balance Sheet Location | February 1, 2020 | Level 1 | Level 2 |
Assets: | | | | |
Money market funds | Cash and cash equivalents | $ | 0 | | $ | 0 | | $ | 0 | |
Commercial paper | Cash and cash equivalents | 0 | | 0 | | 0 | |
Mutual funds - deferred compensation plan | Other Assets | $ | 33,715 | | $ | 33,715 | | $ | 0 | |
The fair values of our long-term obligations under the 2018 Credit Agreement are estimated based on quoted market prices for the same or similar issues and the current interest rates offered for similar instruments. These fair value measurements are classified as Level 2 within the fair value hierarchy. The carrying value of these instruments was $0 as of August 1, 2020. | | | | | | | | | | | |
(In thousands) | Balance Sheet Location | January 30, 2021 | Level 1 |
Assets: | | | |
Money market funds | Cash and cash equivalents | $ | 175,113 | | $ | 175,113 | |
Mutual funds - deferred compensation plan | Other assets | $ | 32,484 | | $ | 32,484 | |
The fair value of our long-term obligations under the 2019 Term Note are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. The carrying value of the instrument approximates its fair value.
The carrying value of accounts receivable and accounts payable approximates fair value because of the relatively short maturity of these items.
NOTE 4 – SHAREHOLDERS’ EQUITY
Earnings per Share
There were no0 adjustments required to be made to the weighted-average common shares outstanding for purposes of computing basic and diluted earnings per share. At August 1,May 2, 2020, and August 3, 2019, we excluded performance restricted share units (“PRSUs”) from the securities outstanding for the computation of earnings per share antidilutive stock options, restricted stock units, and performance share units, for whichbecause the minimum applicable performance conditions had not been attained as of Augustattained. At May 1, 2020 and August 3, 2019, respectively. For the second quarter of 2020, it was determined that an immaterial amount of stock options2021, all outstanding awards were antidilutive and excluded from theincluded in our computation of diluted earnings per share and forbecause the second quarter of 2019, there were 0.2 million stock options outstanding that were antidilutive.minimum applicable performance conditions had been attained. Antidilutive stock options for the year-to-date 2020 and the year-to-date 2019 were immaterial and 0.2 million, respectively. Antidilutive stock options generally consist of outstanding stock options where the exercise price per share is greater than the weighted-average market price per share for our common shares for each period. Antidilutive stock options, restricted stock units, and performance share units (“PSUs”), and PRSUs, are excluded from the calculation because they decrease the number of diluted shares outstanding under the treasury stock method. The restricted stock units, PSUs, and performancePRSUs that were antidilutive, as determined under the treasury stock method, were 0.1 million and 0.3 million for the first quarter of 2021 and the first quarter of 2020, respectively.
share units that were antidilutive, as determinedShare Repurchase Programs
On August 27, 2020, our Board of Directors authorized the repurchase of up to $500 million of our common shares (“2020 Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we may repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2020 Repurchase Authorization will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2020 Repurchase Authorization has no scheduled termination date.
During the first quarter of 2021, we acquired approximately 1.1 million of our outstanding common shares for $77.5 million under the treasury stock method, were immaterial and 0.52020 Repurchase Authorization. As of May 1, 2021, we had $249.6 million available for future repurchases under the second quarter2020 Repurchase Authorization.
In addition to shares repurchased under the 2020 Repurchase Authorization, purchases of 2020 andcommon shares reported in the second quarterconsolidated statements of 2019, respectively, and 0.3 million and 0.4 million forshareholders’ equity include shares acquired to satisfy income tax withholdings associated with the year-to-date 2020 and the year-to-date 2019, respectively.vesting of share-based awards.
Dividends
The CompanyWe declared and paid cash dividends per common share during the quarterly periods presentedfirst quarter of 2021 as follows:
| | | Dividends Per Share | | Amount Declared | | Amount Paid | | Dividends Per Share | | Amount Declared | | Amount Paid |
2020: | | | (In thousands) | | (In thousands) | |
2021: | | 2021: | | | (In thousands) | | (In thousands) |
First quarter | First quarter | $ | 0.30 | | | $ | 11,905 | | | $ | 12,478 | | First quarter | $ | 0.30 | | | $ | 11,206 | | | $ | 12,460 | |
Second quarter | 0.30 | | | 12,335 | | | 11,807 | | |
| Total | Total | $ | 0.60 | | | $ | 24,240 | | | $ | 24,285 | | Total | $ | 0.30 | | | $ | 11,206 | | | $ | 12,460 | |
|
The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock units, PSUs, and performance share units, which accrue dividend equivalent rights that are paid when the award vests.PRSUs. The payment of future dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by our Board of Directors.
NOTE 5 – SHARE-BASED PLANS
We have issued nonqualified stock options, restricted stock units, PSUs, and performance share unitsPRSUs under our shareholder-approved equity compensation plans. At August 1, 2020, the number of nonqualified stock options outstanding was immaterial. Our restricted stock units and performance share units, as described below, are expensed and reported as non-vested shares. We recognized share-based compensation expense of $4.5$11.9 million and $4.2$3.0 million in the secondfirst quarter of 20202021 and the secondfirst quarter of 2019, respectively, and $7.4 million and $8.6 million for the year-to-date 2020, and the year-to-date 2019, respectively.
Non-vested Restricted Stock Units
The following table summarizes the non-vested restricted stock units activity for the year-to-date2020:first quarter of 2021:
| | | Number of Shares | Weighted Average Grant-Date Fair Value Per Share | | Number of Shares | Weighted Average Grant-Date Fair Value Per Share |
Outstanding non-vested restricted stock units at February 1, 2020 | 648,510 | | $ | 38.52 | | |
Outstanding non-vested restricted stock units at January 30, 2021 | | Outstanding non-vested restricted stock units at January 30, 2021 | 1,214,212 | | $ | 22.71 | |
Granted | Granted | 921,309 | | 15.82 | | Granted | 206,685 | | 70.77 | |
Vested | Vested | (239,856) | | 43.07 | | Vested | (390,116) | | 22.74 | |
Forfeited | Forfeited | (1,511) | | 38.06 | | Forfeited | (31,181) | | 25.26 | |
Outstanding non-vested restricted stock units at May 2, 2020 | 1,328,452 | | $ | 21.95 | | |
Granted | 74,244 | | 33.20 | | |
Vested | (24,498) | | 27.99 | | |
Forfeited | (41,074) | | 25.26 | | |
Outstanding non-vested restricted stock units at August 1, 2020 | 1,337,124 | | $ | 22.35 | | |
| Outstanding non-vested restricted stock units at May 1, 2021 | | Outstanding non-vested restricted stock units at May 1, 2021 | 999,600 | | $ | 32.56 | |
The non-vested restricted stock units granted in the year-to-date2020first quarter of 2021 generally vest and are expensed on a ratable basis over three years from the grant date of the award, if a threshold financial performance objective is achieved and the grantee remains employed by us through the vesting dates.
Non-vested Restricted Stock Units Granted to Non-Employee Directors
In the second quarter of 2020, 44,229 common shares underlying the restricted stock units granted in 2019 to the non-employee members of our Board vested on the trading day immediately preceding our 2020 Annual Meeting of Shareholders (“2020 Annual Meeting”). These units were part of the annual compensation of the non-employee directors of the Board. Additionally, in the second quarter of 2020, the chairman of our Board received an annual restricted stock unit grant having a grant date fair value of approximately $210,000. The remaining non-employees elected to our Board at our 2020 Annual Meeting each received an annual restricted stock unit grant having a grant date fair value of approximately $145,000. The 2020 restricted stock units will vest on the earlier of (1) the trading day immediately preceding our 2021 Annual Meeting of Shareholders, or (2) the non-employee director's death or disability. However, the non-employee directors will forfeit their restricted stock units if their service on the Board terminates before either vesting event occurs.
Performance Share Units
In the first quarter of 2020,, we awarded performance share units with a restriction feature (“RPSUs”)PRSUs to certain members of senior management, which vest based on the achievement of share price performance goals and a minimum service requirement of one year. The RPSUsPRSUs have a contractual term of three years. We use a Monte Carlo simulation to estimate the fair value of the RPSUs on the grant date and recognize expense over the derived service period. If the share price performance goals applicable to the RPSUs are not achieved prior to expiration, the unvested portion of the awards will be forfeited. Shares issued in connection with vested RPSUsPRSUs are generally restricted from sale, transfer, or other
disposition prior to the third anniversary of the grant date except under certain circumstances, including death, disability, or change in control. The majority of PRSUs awarded in 2020 vested in the first quarter of 2021. At May 1, 2021, the share price performance goals applicable to the remaining 3,223 outstanding PRSUs had been attained and we expect the PRSUs outstanding at May 1, 2021 to vest in the second quarter of 2021.
Prior to 2020 and in the first quarter of 2021, we issued performance share units (“PSUs”)PSUs to certain members of management, which will vest if certain financial performance objectives are achieved over a three-yearthree-year performance period and the grantee remains employed by us during the performance period. Typically, theThe financial performance objectives for each fiscal year within the three-year performance period will be approved by the Compensation Committee of our Board of Directors during the first quarter of the respective fiscal year. In 2020, due to the lack of business visibility resulting from the COVID-19 pandemic, the Compensation Committee chose to defer the establishment of the 2020 performance objectives until later in the fiscal year.
As a result of the process used to establish the financial performance objectives, we will only meet the requirements for establishing a grant date for the PSUs when we communicate the financial performance objectives for the third fiscal year of the award to the award recipients, which will then trigger the service inception date, the fair value of the awards, and the associated expense recognition period. If we meet the applicable threshold financial performance objectives over the three-year performance period and the grantee remains employed by us through the end of the performance period, the PSUs will vest on the first trading day after we file our Annual Report on Form 10-K for the last fiscal year in the performance period.
As a result of the Compensation Committee’s decision to defer establishment of the 2020 performance objectives for PSUs, the financial performance objectives for the third fiscal year of the PSUs issued in 2018 were not established prior to the end of the second quarter of 2020 and the grant date for the 2018 PSUs was not established as of the end of the second quarter of 2020.
Subsequent to the end of the second quarter of 2020, in August 2020, the Compensation Committee established the financial performance objectives for the third fiscal year of PSUs issued in 2018; therefore, the 2018 PSUs were deemed granted in August 2020.
We have begun or expect to begin recognizing expense related to PSUs and RPSUsPRSUs as follows:
| Issue Year | Issue Year | Outstanding PSUs and RPSUs at August 1, 2020 | Actual Grant Date | Expected Valuation (Grant) Date | Actual or Expected Expense Period | Issue Year | Outstanding PSUs and PRSUs at May 1, 2021 | Actual Grant Date | Expected Valuation (Grant) Date | Actual or Expected Expense Period |
2018 | 170,612 | | August 2020 | | Fiscal 2020 | |
2019 | 2019 | 309,705 | | | March 2021 | Fiscal 2021 | 2019 | 255,487 | | March 2021 | | Fiscal 2021 |
2020 | 2020 | 400,572 | | April 2020 | | Fiscal 2020 - 2021 | 2020 | 3,223 | | April 2020 | | Fiscal 2020-2021 |
2021 | | 2021 | 166,055 | | | March 2023 | Fiscal 2023 |
Total | Total | 880,889 | | | Total | 424,765 | | |
The number of shares to be distributed upon vesting of the PSUs depends on the average performance attained during the three-year performance period compared to the performance targets established by the Compensation Committee, and may result in the distribution of an amount of shares that is greater or less than the number of PSUs granted, as defined in the related award agreement. WeDuring the first quarter of 2021, the PSUs issued in 2018 vested with an average performance attainment higher than the targets established. During the first quarters of 2021 and 2020, we recognized $1.2$8.6 million and $1.0$0.4 million in the second quarter of 2020 and 2019, respectively, and $1.6 million and $2.2 million in the year-to-date 2020 and 2019 respectively, of share-based compensation expense related to PSUs.PSUs and PRSUs, respectively.
The following table summarizes the activity related to PSUs and RPSUsPRSUs for the year-to-date2020:first quarter of 2021:
| | | Number of Units | Weighted Average Grant-Date Fair Value Per Share | | Number of Units | Weighted Average Grant-Date Fair Value Per Share |
Outstanding PSUs and RPSUs at February 1, 2020 | 181,922 | | $ | 31.89 | | |
Outstanding PSUs and PRSUs at January 30, 2021 | | Outstanding PSUs and PRSUs at January 30, 2021 | 474,031 | | $ | 24.31 | |
Granted | Granted | 408,340 | | 11.70 | | Granted | 263,787 | | 70.24 | |
Vested | Vested | (181,062) | | 31.89 | | Vested | (470,808) | | 24.27 | |
Forfeited | Forfeited | (860) | | 31.89 | | Forfeited | (8,300) | | 70.24 | |
Outstanding PSUs and RPSUs at May 2, 2020 | 408,340 | | $ | 11.70 | | |
Granted | 4,682 | | 29.44 | | |
Vested | 0 | | 0 | | |
Forfeited | (12,450) | | 11.70 | | |
Outstanding PSUs and RPSUs at August 1, 2020 | 400,572 | | $ | 11.90 | | |
| Outstanding PSUs and PRSUs at May 1, 2021 | | Outstanding PSUs and PRSUs at May 1, 2021 | 258,710 | | $ | 69.74 | |
The following activity occurred under our share-based plans during the respective periods shown:
| | | Second Quarter | | | Year-to-Date | | | First Quarter |
(In thousands) | (In thousands) | 2020 | 2019 | | 2020 | 2019 | (In thousands) | 2021 | | 2020 |
Total intrinsic value of stock options exercised | $ | 12 | | $ | 0 | | | $ | 12 | | $ | 42 | | |
Total fair value of restricted stock vested | Total fair value of restricted stock vested | 849 | | 341 | | | 4,890 | | 5,383 | | Total fair value of restricted stock vested | $ | 26,901 | | | $ | 4,040 | |
Total fair value of performance shares vested | Total fair value of performance shares vested | $ | 0 | | $ | 0 | | | $ | 924 | | $ | 9,706 | | Total fair value of performance shares vested | $ | 37,168 | | | $ | 924 | |
The total unearned compensation cost related to all share-based awards outstanding, excluding PSUs issued in 2018 and 2019,2021, at AugustMay 1, 20202021 was approximately $26.6$46.2 million. This compensation cost is expected to be recognized through July 2023April 2024 based on existing vesting terms with the weighted-average remaining expense recognition period being approximately 2.01.7 years from AugustMay 1, 2020.2021.
NOTE 6 – INCOME TAXES
We have estimated the reasonably possible expected net change in unrecognized tax benefits through August 1, 2020,April 30, 2022, based on (1) expected cash and noncash settlements or payments of uncertain tax positions, and (2) lapses of the applicable statutes of limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is approximately $5.0$4.0 million. Actual results may differ materially from this estimate.
NOTE 7 – CONTINGENCIES
California Wage and Hour Matters
We currently are defending several purported wage and hour class actions in California. The cases were brought by various current and/or former California associates alleging various violations of California wage and hour laws. During the first quarter of 2019, upon consideration of these matters, including outcomes of cases against other retailers, we determined a loss from these matters was probable and we increased our accrual for litigation by recording a $7.3 million charge as our best estimate for these matters in aggregate. We intend to defend ourselves vigorously against the allegations levied in the remaining lawsuits.
Other MattersLegal Proceedings
We are involved in other legal actions and claims arising in the ordinary course of business. We currently believe that each such action and claim will be resolved without a material effect on our financial condition, results of operations, or liquidity. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims to have a material effect on our financial condition, results of operations, and liquidity.
NOTE 8 – BUSINESS SEGMENT DATA
We use the following sevensix merchandise categories, which matchare consistent with our internal management and reporting of merchandise net sales: Food, Consumables,Food; Consumables; Soft Home,Home; Hard Home, Furniture, Seasonal,Home; Furniture; and Electronics, Toys, & Accessories.Seasonal. The Food category includes our beverage & grocery,grocery; candy & snacks,snacks; and specialty foods departments. The Consumables category includes our health, beauty and cosmetics, plastics, paper, chemical,cosmetics; plastics; paper; chemical; and pet departments. The Soft Home category includes theour home décor, frames,cor; frames; fashion bedding,bedding; utility bedding, bath, window,bedding; bath; window; decorative textile,textile; home organizationorganization; area rugs; jewelry; apparel; and area rugshosiery departments. The Hard Home category includes our small appliances,appliances; table top,top; food preparation, stationery, greeting cards,preparation; stationery; home maintenance; and home maintenanceelectronics departments. The Furniture category includes our upholstery, mattress, ready-to-assemble,upholstery; mattress; ready-to-assemble; and case goods departments. The Seasonal category includes our lawn & garden, summer, Christmas,garden; summer; Christmas; toys; and other holiday departments. The
In the first quarter of 2021, we realigned our merchandise categories and eliminated our Electronics, Toys, & Accessories category includes our electronics, jewelry, hosiery, apparel, and toys departments.
We periodically assess, and make minor adjustments to, our product hierarchy, which can impact the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category,
for all periods presented. Therefore, there may be minor reclassificationswhich comprised $75.1 million of net sales
by merchandise category comparedreported in the first quarter of 2020. See the reclassifications section of note 1 to previously reported amounts.the consolidated financial statements for further discussion.
The following table presents net sales data by merchandise category:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Second Quarter | | | | Year-to-Date | | |
(In thousands) | | 2020 | | 2019 | | 2020 | | 2019 |
Furniture | | $ | 439,737 | | | $ | 303,358 | | | $ | 855,438 | | | $ | 687,255 | |
Seasonal | | 299,700 | | | 246,106 | | | 496,021 | | | 429,597 | |
Soft Home | | 286,556 | | | 190,767 | | | 516,378 | | | 399,904 | |
Consumables | | 225,251 | | | 196,955 | | | 462,492 | | | 383,457 | |
Food | | 185,011 | | | 169,157 | | | 388,830 | | | 350,282 | |
Hard Home | | 110,610 | | | 81,891 | | | 191,777 | | | 163,751 | |
Electronics, Toys, & Accessories | | 97,332 | | | 64,180 | | | 172,410 | | | 133,964 | |
Net sales | | $ | 1,644,197 | | | $ | 1,252,414 | | | $ | 3,083,346 | | | $ | 2,548,210 | |
NOTE 9 – GAIN ON SALE OF DISTRIBUTION CENTERS
On June 12, 2020, we completed sale and leaseback transactions for our distribution centers located in Columbus, OH; Durant, OK; Montgomery, AL; and Tremont, PA. The aggregate sale price for the transactions was $725.0 million. Due to sale-leaseback accounting requirements, the proceeds received in the transactions were allocated between proceeds on the sale of the distribution centers and financing proceeds. Accordingly, aggregate net proceeds, before income taxes, on the sales of the distribution centers were $586.9 million and the aggregate gain on the sales was $463.1 million. Additionally, we incurred $4.0 million of additional selling and administrative expenses in connection with the transaction, which primarily consisted of consulting services. The remainder of consideration received was financing liability proceeds of $134.0 million. The current portion of the financing liability was recorded in accrued operating expenses in our consolidated balance sheets. The noncurrent portion of the financing liability was recorded in other liabilities in our consolidated balance sheets. Interest expense will be recognized on the financing liability using the effective interest method and the financing liability will be accreted over the duration of the lease agreements. Future payments to the buyer-lessor will be allocated between the financing liability and the lease liabilities.
The leases for the Columbus, OH and Montgomery, AL distribution centers each have an initial term of 15 years and multiple five-year extension options. The leases for the Durant, OK and Tremont, PA distribution centers each have an initial term of 20 years and multiple five-year extension options. At commencement of the leases, we recorded aggregate operating lease liabilities of $466.1 million and aggregate operating lease right-of-use assets of $466.1 million. The weighted average discount rate for the leases was 6.2%. All of the leases are absolute net. Additionally, all of the leases include a right of first refusal beginning after the fifth year of the initial term which allows us to purchase the leased property if the buyer-lessor receives a bona fide purchase offer from a third-party. In connection with our entrance into the sale and leaseback transactions, we agreed to repay all borrowings outstanding under the 2018 Credit Agreement and restrict our borrowings under the 2018 Credit Agreement for 90 days following closing of the transactions. | | | | | | | | | | | | | | |
| | First Quarter |
(In thousands) | | 2021 | | 2020 |
Furniture | | $ | 481,431 | | | $ | 415,700 | |
Seasonal | | 328,794 | | | 215,302 | |
Soft Home | | 303,981 | | | 248,743 | |
Consumables | | 204,015 | | | 237,241 | |
Food | | 175,131 | | | 203,819 | |
Hard Home | | 132,200 | | | 118,344 | |
Net sales | | $ | 1,625,552 | | | $ | 1,439,149 | |
Aggregate initial annual cash payments to the buyer-lessor, including payments of the financing liability and lease payments, are approximately $50 million and the payments escalate two percent annually. Aggregate annual straight-line rent expense for the four leases is approximately $46 million. Aggregate initial annual interest expense on the financing liability, which will decrease over the term, is approximately $8 million.
NOTE 10 – SUBSEQUENT EVENT
On August 27, 2020, our Board of Directors authorized the repurchase of up to $500.0 million of our common shares (“2020 Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we may repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2020 Repurchase Authorization will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2020 Repurchase Authorization has no scheduled termination date.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 (“Act”) provides a safe harbor for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. We wish to take advantage of the “safe harbor” provisions of the Act.
Certain statements in this report are forward-looking statements within the meaning of the Act, and such statements are intended to qualify for the protection of the safe harbor provided by the Act. The words “anticipate,” “estimate,” “approximate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” “believe,” “will,” “should,” “may,” “target,” “forecast,” “guidance,” “outlook,” and similar expressions generally identify forward-looking statements. Similarly, descriptions of our objectives, strategies, plans, goals or targets are also forward-looking statements. Forward-looking statements relate to the expectations of management as to future occurrences and trends, including statements expressing optimism or pessimism about future operating results or events and projected sales, earnings, capital expenditures and business strategy. Forward-looking statements are based upon a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Forward-looking statements are and will be based upon management’s then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. Although we believe the expectations expressed in forward-looking statements are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, any one or a combination of which could materially affect our business, financial condition, results of operations or liquidity.
Forward-looking statements that we make herein and in other reports and releases are not guarantees of future performance and actual results may differ materially from those discussed in such forward-looking statements as a result of various factors, including, but not limited to, developments related to the COVID-19 coronavirus pandemic, the current economic and credit conditions, the cost of goods, our inability to successfully execute strategic initiatives, competitive pressures, economic pressures on our customers and us, the availability of brand name closeout merchandise, trade restrictions, freight costs, the risks discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, and other factors discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. This report should be read in conjunction with such filings, and you should consider all of these risks, uncertainties and other factors carefully in evaluating forward-looking statements.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements whether as a result of new information, future events or otherwise. Readers are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.
OVERVIEW
The discussion and analysis presented below should be read in conjunction with the accompanying consolidated financial statements and related notes. Each term defined in the notes to the accompanying consolidated financial statements has the same meaning in this item and the balance of this report.
The following are the results from the secondfirst quarter of 20202021 that we believe are key indicators of our operating performance when compared to our operating performance from the secondfirst quarter of 2019:2020:
•Net sales increased $391.8$186.4 million, or 31.3%13.0%.
•Comparable sales for stores open at least fifteen months, plus our e-commerce operations, increased $371.5$159.3 million, or 31.3%11.3%.
•Gross margin dollars increased $185.3$83.2 million, while gross margin rate increased 18050 basis points to 41.6%40.2% of net sales.
•Selling and administrative expenses increased $49.0$38.8 million. As a percentage of net sales, selling and administrative expenses decreased 560130 basis points to 30.7%30.6% of net sales.
•We recognized a pre-tax gain on sale of distribution centers of $463.1 million relatedOperating profit rate increased 230 basis points to the sale and leaseback of our four owned distribution centers. Additionally, we recognized consulting and other expenses associated with the sale and leaseback transactions of $4.0 million. The combined gain on sale of distribution centers and associated consulting and other expenses increased our operating profit by $459.1 million and increased our diluted earnings per share by approximately $8.54 per share.7.5%.
•Diluted earnings per share increased to $11.29$2.62 per share from $0.16$1.26 per share.
•Inventory decreasedCash and cash equivalents increased by 18.4%, or $160.6$301.5 million to $713.5$613.3 million from the secondfirst quarter of 2019.2020.
•Inventory increased by 11.8% or $94.9 million to $901.5 million from the first quarter of 2020.
•We declared and paid a quarterly cash dividend in the amount of $0.30 per common share in the secondfirst quarter of 20202021, which was consistent with the quarterly cash dividend of $0.30 per common share paid in the secondfirst quarter of 2019.2020.
•We acquired 1.1 million of our outstanding common shares for $77.5 million under the 2020 Repurchase Authorization (as defined below).
See the discussion and analysis below for additional details regarding our operating results.
STORES
The following table presents stores opened and closed during the year-to-date 2020first quarter of 2021 and the year-to-date 2019:first quarter of 2020:
| | | | 2020 | 2019 | | | 2021 | 2020 |
Stores open at the beginning of the fiscal year | Stores open at the beginning of the fiscal year | | 1,404 | | 1,401 | | Stores open at the beginning of the fiscal year | 1,408 | | 1,404 | |
Stores opened during the period | Stores opened during the period | | 11 | | 29 | | Stores opened during the period | 13 | | 6 | |
Stores closed during the period | Stores closed during the period | | (11) | | (19) | | Stores closed during the period | (8) | | (6) | |
| | Stores open at the end of the period | 1,404 | | 1,411 | | | Stores open at the end of the period | 1,413 | | 1,404 | |
We expect our store count at the end of 20202021 to beincrease by approximately in line with20 stores compared to our store count at the end of 2019.2020.
RESULTS OF OPERATIONS
The following table compares components of our consolidated statements of operations and comprehensive income as a percentage of net sales at the end of each period:
| | | Second Quarter | | Year-to-Date | | | First Quarter |
| | 2020 | 2019 | 2020 | 2019 | | 2021 | 2020 |
Net sales | Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | Net sales | 100.0 | % | 100.0 | % |
Cost of sales (exclusive of depreciation expense shown separately below) | Cost of sales (exclusive of depreciation expense shown separately below) | 58.4 | | 60.2 | | 59.3 | | 60.1 | | Cost of sales (exclusive of depreciation expense shown separately below) | 59.8 | | 60.3 | |
Gross margin | Gross margin | 41.6 | | 39.8 | | 40.7 | | 39.9 | | Gross margin | 40.2 | | 39.7 | |
Selling and administrative expenses | Selling and administrative expenses | 30.7 | | 36.3 | | 31.2 | | 35.9 | | Selling and administrative expenses | 30.6 | | 31.9 | |
Depreciation expense | Depreciation expense | 2.1 | | 2.4 | | 2.3 | | 2.5 | | Depreciation expense | 2.1 | | 2.6 | |
Gain on sale of distribution center | (28.2) | | 0.0 | | (15.0) | | 0.0 | | |
Operating profit | Operating profit | 37.0 | | 1.1 | | 22.2 | | 1.5 | | Operating profit | 7.5 | | 5.2 | |
Interest expense | Interest expense | (0.2) | | (0.4) | | (0.2) | | (0.3) | | Interest expense | (0.2) | | (0.2) | |
Other income (expense) | Other income (expense) | 0.1 | | (0.1) | | (0.1) | | 0.0 | | Other income (expense) | 0.1 | | (0.2) | |
Income before income taxes | Income before income taxes | 36.9 | | 0.6 | | 21.9 | | 1.2 | | Income before income taxes | 7.4 | | 4.7 | |
Income tax expense | Income tax expense | 9.5 | | 0.1 | | 5.6 | | 0.4 | | Income tax expense | 1.6 | | 1.3 | |
Net income | Net income | 27.5 | % | 0.5 | % | 16.3 | % | 0.9 | % | Net income | 5.8 | % | 3.4 | % |
SECONDFIRST QUARTER OF 20202021 COMPARED TO SECONDFIRST QUARTER OF 20192020
Net Sales
Net sales by merchandise category (in dollars and as a percentage of total net sales), net sales change (in dollars and percentage), and comparable sales (“comp” or “comps”) in the secondfirst quarter of 2021 compared to the first quarter of 2020 comparedwere as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First Quarter | | |
($ in thousands) | 2021 | | 2020 | | Change | | Comps |
Furniture | $ | 481,431 | | 29.6 | % | | $ | 415,700 | | 28.9 | % | | $ | 65,731 | | 15.8 | % | | 13.7 | % |
Seasonal | 328,794 | | 20.2 | | | 215,302 | | 15.0 | | | 113,492 | | 52.7 | | | 51.0 | |
Soft Home | 303,981 | | 18.7 | | | 248,743 | | 17.2 | | | 55,238 | | 22.2 | | | 20.6 | |
Consumables | 204,015 | | 12.6 | | | 237,241 | | 16.5 | | | (33,226) | | (14.0) | | | (14.7) | |
Food | 175,131 | | 10.8 | | | 203,819 | | 14.2 | | | (28,688) | | (14.1) | | | (15.1) | |
Hard Home | 132,200 | | 8.1 | | | 118,344 | | 8.2 | | | 13,856 | | 11.7 | | | 9.3 | |
Net sales | $ | 1,625,552 | | 100.0 | % | | $ | 1,439,149 | | 100.0 | % | | $ | 186,403 | | 13.0 | % | | 11.3 | % |
In the first quarter of 2021, we realigned our merchandise categories and eliminated our Electronics, Toys, & Accessories merchandise category. See the reclassifications discussion in note 1 to the second quarter of 2019 were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Second Quarter | | | | | | | | | | |
($ in thousands) | 2020 | | | 2019 | | | Change | | | Comps |
Furniture | $ | 439,737 | | 26.8 | % | | $ | 303,358 | | 24.2 | % | | $ | 136,379 | | 45.0 | % | | 43.5 | % |
Seasonal | 299,700 | | 18.2 | | | 246,106 | | 19.7 | | | 53,594 | | 21.8 | | | 22.2 | |
Soft Home | 286,556 | | 17.4 | | | 190,767 | | 15.2 | | | 95,789 | | 50.2 | | | 50.8 | |
Consumables | 225,251 | | 13.7 | | | 196,955 | | 15.7 | | | 28,296 | | 14.4 | | | 15.1 | |
Food | 185,011 | | 11.3 | | | 169,157 | | 13.6 | | | 15,854 | | 9.4 | | | 10.0 | |
Hard Home | 110,610 | | 6.7 | | | 81,891 | | 6.5 | | | 28,719 | | 35.1 | | | 36.3 | |
Electronics, Toys, & Accessories | 97,332 | | 5.9 | | | 64,180 | | 5.1 | | | 33,152 | | 51.7 | | | 52.6 | |
Net sales | $ | 1,644,197 | | 100.0 | % | | $ | 1,252,414 | | 100.0 | % | | $ | 391,783 | | 31.3 | % | | 31.3 | % |
We periodically assess, and make minor adjustmentsconsolidated financial statements for additional information. In order to provide comparative information, we have reclassified our product hierarchy, which can impactresults into the roll-up of our merchandise categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales bynew merchandise category alignment for allboth periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts.
Net sales increased $391.8$186.4 million, or 31.3%13.0%, to $1,644.2$1,625.6 million in the secondfirst quarter of 2020,2021, compared to $1,252.4$1,439.1 million in the secondfirst quarter of 2019.2020. The increase in net sales was primarily driven by a 31.3%an 11.3% increase in our comps, which increased net sales by $371.5$159.3 million. Additionally, our non-comparable sales increased net sales by $20.3$27.1 million, driven by increased sales inof our new and relocated stores compared to closed stores. Our comps are calculated based on the results of all stores that were open at least fifteen months plus the results of our e-commerce net sales.
We experienced a favorable impact toOur net sales during the secondfirst quarter of 2020 driven by2021 benefited from government sponsored relief packages related to COVID-19, which included stimulus payments and enhanced unemployment benefits, the majority of which were released in January 2021 and March 2021. Additionally, we continued to experience increased demand for our home products in the first quarter of 2021, which includes our Furniture, Seasonal, Soft Home, and Hard Home merchandise categories,categories. We believe this increased demand was the result of the continuation of nesting trends we experienced in 2020 due to customers spendinginvesting more time atand
discretionary funds in their homeshome as a resultbyproduct of the ongoing COVID-19 coronavirus pandemic, combined with government stimulus and enhanced unemployment funds, and our position as an “essential retailer.” Additionally, we believe our net sales in the second quarter of 2020 were favorably impacted by a strong alignment of our product assortment with current customer demand and a decrease in competition compared to the second quarter of 2019, as certain of our competitors were closed for a portion of the quarter due to the COVID-19 coronavirus pandemic. In the secondfirst quarter of 2020, we made the decision to cancel our Friends2021, nesting trends shifted toward patio furniture and Family promotion to address social distancing concerns related to the COVID-19 coronavirus pandemic. In response, we implemented a “Your Deal, Your Day” promotion to offset the sales decrease caused by cancellation of the July 2020 Friends and Family promotion.
Throughout the COVID-19 coronavirus pandemic, our stores have remained open and operating, with the exception of a small number of temporary closures for cleaning. At August 1, 2020, five of our stores were operating with shortened store hours due to local curfews, safety concerns, and/or adjusted shopping center hours. At August 1, 2020, none of our stores were subject to selling restrictions that limited our sales to “essential products.” We believe the impact of shortened operating hours and selling restrictions due to the COVID-19 coronavirus pandemic was immaterial to our results for the second quarter of 2020 and that the impact of shortened operating hours and selling restrictions due to the COVID-19 coronavirus pandemic will be immaterial to our results for the remainder of 2020.
In the second quarter of 2020, protests and civil unrest caused us to temporarily shorten operating hours at several of our stores. The impact of protests and civil unrest on our results of operations was immaterial for the second quarter of 2020.
In the second quarter of 2020, we introduced The Lot and the Queue Line in a substantial number of stores,other outdoor products, which contributed todrove the increased net sales and positive comps in our Seasonal merchandise category compared to the secondfirst quarter of 2019.2020. While our business in the first quarter of 2021 benefited from COVID-19-related factors, such as government stimulus, we believe the strength of our trend-right home offerings provided a strong foundation for net sales growth compared to the first quarter of 2020. Additionally, we believe that our strategic initiatives - including The Lot, Queue Line, Broyhill®, and Pantry Optimization - continued to contribute to our increased net sales in the first quarter of 2021. The Lot is a cross-category presentation solution with a curated assortment to promote life's occasions, such as fall camping. Thelife’s occasions. Queue Line offers our customers a streamlined checkout experience with a new and expanded convenience assortment and a smaller footprint. The Broyhill® brand, which we launched in 2019, continues to grow as we have expanded our assortment. Pantry Optimization reallocated square footage from our Food category to Consumables category. Our customers have responded positively to each of these strategic initiatives and we believe that our product assortment is aligned with customer demand. At the end of the first quarter of 2021, The Lot and Queue Line have been rolled out to approximately 1,050 and 1,200 stores, respectively.
All ofPartially offsetting our success in home offerings was a decline in net sales in our Food and Consumables merchandise categories generated increased net sales and positive comps induring the secondfirst quarter of 20202021 due to a decrease in demand for essential products, which we define as food, consumables, health products, and pet supplies, compared to the secondfirst quarter of 2019:
•Our Furniture category experienced increased net sales and positive comps during the second quarter of 2020, driven by continued demand following the release of government stimulus and unemployment funds beginning in mid-April 2020. Additionally, our customers have chosen to invest in home furnishings due to spending more time at their homes as a result of the ongoing COVID-19 coronavirus pandemic and have continued to respond positively to our brand-name mattress assortment and our new Broyhill® furniture assortment.
•The Soft Home category experienced increased net sales and comps during the second quarter of 2020, driven by an increase in demand as our customers chose to invest more in their home environment due to spending more time at their homes as a result of the ongoing COVID-19 coronavirus pandemic. Additionally, our Soft Home category benefited from a favorable response to our new Broyhill® offerings.
•The Seasonal category experienced increased net sales and comps during the second quarter of 2020, driven by our summer and lawn & garden departments. Given our customers are spending more time at their homes as a result of the ongoing COVID-19 coronavirus pandemic, they have chosen to invest in our outdoor furniture and lawn care maintenance offerings, fueled by government stimulus. Our customers continue to respond well to our Broyhill® patio assortment introducedDemand for essential products surged in the first quarter of 2020.
•The increased net sales and positive comps in our Electronics, Toys, & Accessories category was driven by our toys, apparel, and accessories departments. The increase was primarily driven by the introduction of2020 as customers stocked up on these products into The Lot andat the Queue Line in manyonset of our stores. Additionally, the increased sales and comps in apparel were driven by graphic tees, which were introduced to our stores late in the fourth quarter of 2019.
•The Hard Home category experienced increased net sales and comps during the second quarter of 2020, driven by increased net sales in our small appliances, table top, and food preparation departments. As a result of various state-wide closings of dine-in restaurants, our customer has focusedCOVID-19 pandemic. Our customers did not stock up on her home and has chosen to invest in our offerings from these departments to improve her in-home dining experience.
•Our Consumables and Food categories experienced increased demand comparedproducts to the second quarter of 2019. However, we observed a deceleration in demand for essential products, such as Consumables and Food, in the second quarter of 2020 following the surge in demand we experiencedsame extent in the first quarter of 2020. We believe that2021. Despite the decline in net sales in the first quarter of 2021 in our customers stocked up on essential products duringFood and Consumables categories compared to the first quarter of 2020, which reduced the needperformance of our Food and Consumables categories was consistent with our expectations, and we believe that our Pantry Optimization initiative has been successful to replenish these products during the second quarter of 2020.date.
Gross Margin
Gross margin dollars increased $185.3$83.2 million, or 37.2%14.6%, to $683.6$653.9 million for the secondfirst quarter of 2020,2021, compared to $498.2$570.8 million for the secondfirst quarter of 2019.2020. The increase in gross margin dollars was primarily due to an increase in net sales, which increased gross margin dollars by $155.9$73.9 million. Gross margin as a percentage of net sales increased 18050 basis points to 41.6%40.2% in the secondfirst quarter of 2020 as2021 compared to 39.8%39.7% in the secondfirst quarter of 2019.2020. The gross margin rate increase was primarily a result of a significantlydue to lower markdown ratemarkdowns and favorable product mix resulting from increased sales in higher compsaverage gross margin items, particularly in our higherSeasonal category, in the first quarter of 2021 compared to lower average gross margin merchandise categories,items in the first quarter of 2020, partially offset by higher shrinkinbound freight costs. Freight costs increased primarily due to detention and lower initial markupdemurrage charges resulting from delayed receipt of products, as our receipts have skewed toward domestic purchases, which carry a slightly lower average initial markup.inventory related to supply chain constraints, high transportation rates, and increasing fuel costs.
Selling and Administrative Expenses
Selling and administrative expenses were $504.0$497.4 million for the secondfirst quarter of 2020,2021, compared to $455.0$458.6 million for the secondfirst quarter of 2019.2020. The increase of $49.0$38.8 million in selling and administrative expenses was comprised of increasesdriven by an increase in store-related payroll of $25.5 million, distribution and transportation costsexpense of $16.5$13.9 million, accrued bonus expense of $11.0$8.9 million, advertisingshare-based compensation expense of $4.6$8.9 million, sale$2.1 million of store occupancy costs, and leaseback related expensesstore-related payroll expense of $4.0 million, transaction fees of $3.6 million, and store supplies expenses of $2.1$1.9 million, partially offset by the absence of $19.5 million in costsproxy contest related to our transformational restructuring initiative announced in the second quarter of 2019, which consisted of consulting expenses and employee separation costs incurred during the second quarter of 2019, and a decrease in health benefit costs of $2.9 million due to a lower amount of benefits claims during the second quarter of 2020.$3.7 million. The increase in store-related payrolldistribution and transportation expenses was due to additional payroll hours to support the increased sales duringdriven by rent on our leased distribution centers, four of which were sold and leased back in the second quarter of 2020, and implementation during the first quarter of 2020 of a temporary $2 per hour wage increase for most of our non-exempt workforce during the COVID-19 coronavirus pandemic. The temporary $2 per hour wage increase was continued through early July 2020. The increase inhigher outbound transportation volume and higher distribution and transportation costs was driven by rent expense for our distribution centers, all of which are now leased following the completion of the sale and leaseback transactions completed in the second quarter of 2020, higher inbound and outbound shipment volume to support theour increased sales, and the aforementioned temporary $2 per hour wage increase.net sales. The increase in accrued bonus expense was driven bydue to increased performance in the secondfirst quarter of 20202021 relative to our quarterly and annual operating plans as compared to our performance in the secondfirst quarter of 2019 relative to our quarterly2020 and annual operating plans, andaccrual of a one-time discretionary bonus to recognizefor most of our non-exempt associates in the first quarter of 2021. Our share-based compensation expense increased primarily due to the timing of establishing the grant date of our 2019 PSUs, for which the grant date was established in the first quarter of 2021, compared to our 2018 PSUs, for which the grant date was established in the third quarter of 2020. Our store occupancy costs increased as a result of new stores opened in the first quarter of 2021, which have higher rents than the stores closed, normal rent increases resulting from lease renewals, and distribution centers. The increase in advertising expense was driven by increased investments in digital and social media engagement, and video media to promote The Lot and our Storea higher store count at the end of the Future concept. The increase in sale and leaseback related expenses was duefirst quarter of 2021 compared to consulting costs incurred in the completion of the sale and leaseback transaction for our four distribution centers in the secondfirst quarter of 2020. The increase in transaction fees, which includes credit card fees, debit card fees, and other transaction-driven costs,store-related payroll was driven by the higherprimarily due to additional payroll hours to support our increased net sales in the secondfirst quarter of 2020 compared2021. The proxy contest related costs were comprised of legal, public relations, and advisory fees, and settlement costs incurred to resolve a proxy contest in the secondfirst quarter of 2019. The increase in store supplies expense was due to safety and cleaning supplies, such as personal protective equipment, hand sanitizer, and disinfectants, distributed to our stores during the second quarter of 2020 to ensure a safe environment for our customers and associates during the COVID-19 coronavirus pandemic.2020.
As a percentage of net sales, selling and administrative expenses decreased 560130 basis points to 30.7%30.6% for the secondfirst quarter of 20202021 compared to 36.3%31.9% for the secondfirst quarter of 2019.
Depreciation Expense
Depreciation expense increased $4.0 million to $34.0 million in the second quarter of 2020, compared to $30.0 million for the second quarter of 2019. The increase in expense was driven by our 2019 investments in our Apple Valley, California distribution center, new store build-outs, and Store of the Future remodels, and the acquisition of our corporate headquarters facility in the third quarter of 2019, partially offset by a decrease in depreciation due to the sale and leaseback of our four distribution centers in Durant, OK; Tremont, PA; Montgomery, AL; and Columbus, OH.
Depreciation expense as a percentage of sales decreased 30 basis points compared to the second quarter of 2019.
Gain on Sale of Distribution Centers
The gain on sale of distribution centers in the second quarter of 2020 was $463.1 million which was attributable to the completion of sale and leaseback transactions for our four distribution centers located in Durant, OK; Tremont, PA; Montgomery, AL; and Columbus, OH.
2020.
Depreciation Expense
Depreciation expense decreased $3.7 million to $34.0 million in the first quarter of 2021, compared to $37.7 million for the first quarter of 2020. Depreciation expense as a percentage of sales decreased 50 basis points compared to the first quarter of 2020. The decrease was driven by the sale of four distribution centers in second quarter of 2020 and the disposition of other store assets since the first quarter of 2020.
Interest Expense
Interest expense was $2.5$2.6 million in the secondfirst quarter of 2020,2021, compared to $4.6$3.3 million in the secondfirst quarter of 2019.2020. The decrease in interest expense was driven by a decrease in total average borrowings. We had total average borrowings (including finance leases and the financing liability related to the sale and leaseback financing liability)transactions for four of $249.4 millionour distribution centers in the second quarter of 20202020) of $180.7 million in the first quarter of 2021 compared to total average borrowings of $482.1$452.8 million in the secondfirst quarter of 2019.2020. The decrease in total average borrowings (including finance leases and the sale and leaseback financing liability) was driven by our repayment of all outstanding borrowings under the 2018 Credit Agreement as a condition of the closing of the sale and leaseback transactions. Our entry into the 2019 Term Note increased our total average borrowings (including finance leases and the sale and leaseback financing liability)transactions in the second quarter of 2020, partially offset by $58.5 million. Additionally, our completionthe establishment of the financing liability in connection with the sale and leaseback transactions for our distribution centerstransactions. The decrease in the second quarter of 2020 gave rise to a financing liability which increased total average borrowings (including finance leases andwas partially offset by a higher average interest rate on the sale and leaseback financing liability) by $82.5 million.liability.
Other Income (Expense)
Other income (expense) was $1.4$1.0 million of income in the secondfirst quarter of 2020,2021, compared to $(0.8)$(3.3) million of expense in the secondfirst quarter of 2019.2020. The change was primarily driven by unrealized gains on our diesel fuel derivatives due to a slightan increase in current and forward diesel fuel pricing prices in the secondfirst quarter of 20202021 as compared to losses on diesel fuel derivatives duringa sharp decline in prices in the secondfirst quarter of 2019.2020.
Income Taxes
The effective income tax rate for the secondfirst quarter of 2020 was an expense rate of 25.6% compared to 21.1% in the second quarter of 2019. The increase in the effective income tax rate was primarily attributable to the distribution centers sale2021 and leaseback transactions. The effective tax rate on the distribution center sale and leaseback transactions was consistent with the overall effective tax rate for the second quarter of 2020. Therefore, the impact of discrete items was not significant to the rate in the quarter. In the second quarter of 2019, income before income taxes was substantially smaller and the benefit of discrete items was more impactful on the rate.
YEAR-TO-DATE 2020 COMPARED TO YEAR-TO-DATE 2019
Net Sales
Net sales by merchandise category (in dollars and as a percentage of total net sales) in the year-to-date 2020 and the year-to-date 2019, and the change in net sales (in dollars and percentage) and the change in comps (in percentage) from the year-to-date 2020 compared to the year-to-date 2019 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year-to-Date | | | | | | | | | | |
($ in thousands) | 2020 | | | 2019 | | | Change | | | Comps |
Furniture | $ | 855,438 | | 27.7 | % | | $ | 687,255 | | 27.0 | % | | $ | 168,183 | | 24.5 | % | | 22.6 | % |
Soft Home | 516,378 | | 16.8 | | | 399,904 | | 15.7 | | | 116,474 | | 29.1 | | | 28.9 | |
Seasonal | 496,021 | | 16.1 | | | 429,597 | | 16.9 | | | 66,424 | | 15.5 | | | 15.6 | |
Consumables | 462,492 | | 15.0 | | | 383,457 | | 15.0 | | | 79,035 | | 20.6 | | | 21.2 | |
Food | 388,830 | | 12.6 | | | 350,282 | | 13.7 | | | 38,548 | | 11.0 | | | 11.2 | |
Hard Home | 191,777 | | 6.2 | | | 163,751 | | 6.4 | | | 28,026 | | 17.1 | | | 17.6 | |
Electronics, Toys, & Accessories | 172,410 | | 5.6 | | | 133,964 | | 5.3 | | | 38,446 | | 28.7 | | | 29.9 | |
Net sales | $ | 3,083,346 | | 100.0 | % | | $ | 2,548,210 | | 100.0 | % | | $ | 535,136 | | 21.0 | % | | 20.6 | % |
Net sales increased $535.1 million, or 21.0%, to $3,083.3 million in the year-to-date 2020, compared to $2,548.2 million in the year-to-date 2019. The increase in net sales was driven by comp increases in each of our merchandise categories, with an overall comp increase of 20.6%, which increased net sales by $497.8 million. Additionally, our non-comparable sales increased net sales by $37.3 million, driven by increased sales of our new and relocated stores compared to closed stores.
Overall, we experienced a favorable impact to net sales during the year-to-date 2020 due to our position as an “essential retailer” during the COVID-19 coronavirus pandemic and the increased demand for our home products while customers are spending more time at home. In the first quarter of 2020 we experienced a significant increase in demand for “essential products,” which we define as food, consumables, health products,was 21.8% and pet supplies, with the primary impact in our Food and Consumables merchandise categories, as concern over the COVID-19 coronavirus grew and customers began stocking up on essential products. Beginning in mid-April, we experienced a surge in demand for products in our Furniture, Seasonal, Soft Home and Hard Home categories driven by the release of government stimulus and unemployment funds. This demand continued through the second quarter of 2020 as customers have chosen to invest more in their homes as a result of spending more time at home.
In the year-to-date 2020, we introduced The Lot and the Queue Line in a substantial number of our stores, which contributed to the increased net sales and positive comps compared to the year-to-date 2019.
All of our merchandise categories generated increased net sales and positive comps in the year-to-date 2020 compared to the year-to-date 2019:
•Our Furniture category experienced increased net sales and positive comps during the year-to-date 2020, driven by a surge in demand following the release of government stimulus and unemployment funds during the year-to-date 2020. Our customers have responded positively to our brand-name mattress assortment and Broyhill® furniture offerings in the year-to-date 2020. Additionally, our customers have chosen to invest in home furnishings as a result of spending more time at home during the COVID-19 coronavirus pandemic.
•Our Food and Consumables categories experienced increased sales and positive comps driven by high demand for “essential products” during the COVID-19 coronavirus pandemic.
•The positive comps and increased net sales in our Soft Home category were primarily driven by an increase in demand following the release of government stimulus and unemployment funds and our customers' decision to invest more in their homes as a result of spending more time at home. Additionally, our Soft Home category benefited from a favorable response to our new Broyhill® assortment.
•We experienced increased net sales and positive comps in our Seasonal category, specifically in the summer and lawn & garden departments, driven by sales of high-ticket items such as patio furniture following the release of government stimulus and unemployment funds in mid-April 2020. Our customers have chosen to invest in our outdoor furniture and lawn maintenance assortments as a result of spending more time at home. Additionally, our customers continue to respond well to our new Broyhill® assortment of patio furniture.
•The increased net sales and positive comps in Hard Home was driven by an increase in small appliances, table top, and food preparation departments. Despite space reductions and the exit from our greeting card offering, we experienced high demand for products that improve our customers' at-home dining experience.
•Our Electronics, Toys, & Accessories category experienced increased net sales and positive comps driven by our toys, apparel, and accessories departments. The increased sales and comps were driven by the introduction of these products into the Queue Line and The Lot in the year-to-date 2020.
Gross Margin
Gross margin dollars increased $237.0 million, or 23.3%, to $1,254.3 million for the year-to-date 2020, compared to $1,017.3 million for the year-to-date 2019. The increase in gross margin dollars was principally due to an increase in net sales, which increased gross margin dollars by $213.6 million. Gross margin as a percentage of net sales increased 80 basis points to 40.7% in the year-to-date 2020, compared to 39.9% in the year-to-date 2019. This gross margin rate increase was primarily due to a lower markdown rate, and the absence of a $6.0 million impairment of inventory in our greeting cards department, which we chose to exit in the first quarter of 2019, partially offset by higher shrink costs and a lower initial mark-up compared to the year-to-date 2019, as our receipts have skewed toward domestic purchases, which carry a slightly lower average initial markup.
Selling and Administrative Expenses
Selling and administrative expenses were $962.6 million for the year-to-date 2020, compared to $915.6 million for the year-to-date 2019. The increase of $47.0 million in selling and administrative expenses was attributable to increases in store-related payroll of $29.5 million, distribution and transportation costs of $23.7 million, accrued bonus expense of $12.5 million, advertising expense of $5.1 million, store occupancy costs of $4.7 million, $4.2 million of transaction fees, $4.0 million of sale and leaseback related expenses, employee retirement and separation costs of $3.9 million, proxy contest-related costs of $3.7 million, and $3.4 million in store supplies, partially offset by the absence of $34.8 million in costs incurred for our transformational restructuring initiative, the absence of a $7.3 million loss contingency recorded in the year-to-date 2019, and a decrease in health benefits costs of $5.1 million. The increase in store-related payroll was driven by additional payroll hours allocated to stores to support the increased net sales during the year-to-date 2020 and a temporary $2 per hour wage increase, which began in March 2020 and continued through early July 2020, for most of our non-exempt workforce during the COVID-19 coronavirus pandemic. The increase in distribution and transportation expenses was due to the transition from our Rancho Cucamonga, California distribution center to our new Apple Valley, California distribution center, rent expense on our leased distribution centers, higher inbound and outbound volume to support the increased year-to-date net sales, and the aforementioned temporary $2 per hour wage increase. The increase in accrued bonus expense was driven by increased performance in the year-to-date 2020 relative to our quarterly and annual operating plans as compared to our performance in the year-to-date 2019 relative to our quarterly and annual operating plans, and a one-time discretionary bonus to recognize our non-exempt associates in our stores and distribution centers. Advertising expense increased due to increased investments in digital and social media engagement, and video media to promote The Lot and our Store of the Future concept to customers. Store-related occupancy costs increased due to new stores opened since the year-to-date 2019, which have higher rents than the stores closed, and normal rent increases resulting from lease renewals. The increase in transaction fees, which includes credit card fees, debit card fees, and other transaction-driven costs, was primarily due to the increased net sales in the year-to-date 2020 compared to the year-to-date 2019. The increase in sale and leaseback related expenses was due to consulting costs incurred in the completion of the sale and leaseback transaction for our four distribution centers in the second quarter of 2020. The increase in employee retirement and separation costs was primarily driven by the retirement and separation of senior executives in the year-to-date 2020. The proxy contest-related costs were comprised of legal, public relations, and advisory fees, and settlement costs incurred to resolve a proxy contest in the first quarter of 2020. The store supplies expense increase was driven by safety and cleaning supplies, such as personal protective equipment, hand sanitizer, and disinfectants, distributed to our stores in the year-to-date 2020 to ensure a safe environment for our customers and associates during the COVID-19 coronavirus pandemic. The costs incurred for our transformational restructuring initiative consisted of consulting expenses and employee separation costs recognized in the year-to-date 2019. The loss contingency recorded in the year-to-date 2019 was associated with wage and hour claims in the State of California. The decrease in health benefits costs was primarily due to lower benefits claim volume in the year-to-date 2020 as many medical care providers suspended non-emergency care and procedures during the year-to-date 2020 due to the COVID-19 coronavirus pandemic.
As a percentage of net sales, selling and administrative expenses decreased 470 basis points to 31.2% for the year-to-date 2020 compared to 35.9% for the year-to-date 2019.
Depreciation Expense
Depreciation expense increased $8.9 million to $71.7 million in the year-to-date 2020, compared to $62.8 million for the year-to-date 2019. The increase was driven primarily by investments in our Apple Valley, California distribution center, new store build-outs, and Store of the Future remodels, and the acquisition of our corporate headquarters facility in the third quarter of 2019, partially offset by a decrease due to the sale and leaseback of our four distribution centers in the second quarter of 2020.
Depreciation expense as a percentage of sales decreased by 20 basis points compared to the year-to-date 2019.
Gain on Sale of Distribution Centers
The gain on sale of distribution centers in the year-to-date 2020 was $463.1 million, which was attributable to the sale and leaseback of our distribution centers in Durant, OK; Tremont, PA; Montgomery, AL; and Columbus, OH during the second quarter of 2020.
Interest Expense
Interest expense was $5.9 million in the year-to-date 2020, compared to $8.3 million in the year-to-date 2019. The decrease in interest expense was driven by lower total average borrowings (including finance leases and the sale and leaseback financing liability) and a lower average interest rate on our revolving debt. We had total average borrowings (including finance leases and the sale and leaseback financing liability) of $351.1 million in the year-to-date 2020 compared to total average borrowings (including finance leases and the sale and leaseback financing liability) of $455.5 million in the year-to-date 2019. The decrease in total average borrowings (including finance leases and the sale and leaseback financing liability) was driven by our repayment of all outstanding debt under the 2018 Credit Agreement following the sale and leaseback transaction completed in the second quarter of 2020. This decrease was partially offset by our entry into the 2019 Term Note, which increased our total average borrowings (including finance leases and the sale and leaseback financing liability) in the year-to-date 2020 by $60.2 million. Additionally, our completion of the sale and leaseback transactions for our distribution centers in the second quarter of 2020 gave rise to a financing liability which increased total average borrowings (including finance leases and the sale and leaseback financing liability) by $41.3 million in the year-to-date 2020. The average interest rate on our revolving debt, which is variable based on LIBOR and our credit rating, decreased due to a significant decline in the LIBOR rate in the year-to-date 2020 as a result of the COVID-19 coronavirus pandemic, partially offset by the impact of a decrease in our credit rating during the first quarter of 2020.
Other Income (Expense)
Other income (expense) was $(2.0) million in the year-to-date 2020, compared to $0.1 million in the year-to-date 2019. The change was primarily driven by unrealized losses on our diesel fuel derivatives due to a sharp decline in current and forward diesel fuel prices in the first quarter of 2020 as a result of the COVID-19 coronavirus pandemic.
Income Taxes
The effective income tax rate for the year-to-date 2020 and the year-to-date 2019 were 25.8% and 29.1%27.2%, respectively. The decrease in the effective income tax rate was primarily attributable to the relative impact of net tax deficiencies associated with settlement of share-based payment awards. The impact of the net tax deficienciesbenefit associated with settlement of share-based payment awards was similar in value induring the year-to-date 2020 and the year-to-date 2019, but its impact on the tax rate was significantly curtailed in the year-to-date 2020 by the significant growth in taxable income in the year-to-date 2020 as compared to the year-to-date 2019.first quarter of 2021.
20202021 Guidance
In March 2020, the World Health Organization declared the COVID-19 coronavirus a pandemic. The rapid spreadeffects of the disease throughoutvirus, the U.S. has negativelyrelated government response, and the impact on consumer spending behaviors have significantly impacted the U.S. economy, which has caused significant volatility in our business and reduced our visibility to future financial results. Therefore, in March 2020, the Company withdrew its full year guidance for 2020. At this time, the Company still does not believe it has sufficient visibility to reinstateprovide full year guidance. Weguidance for 2021.
As of May 28, 2021, and excluding consideration of potential share repurchase activity, we expect to provide a business update at the end of September 2020 when we have greater visibility to expected results forfollowing in the thirdsecond quarter of 2020.
2021:
•Comparable sales decrease in the low double digits as the second quarter of 2020 benefited significantly from a government sponsored relief package;
•Gross margin rate below last year in consideration of macro-economic headwinds in freight cost;
•Selling and administrative expenses slightly below last year; and
•Diluted earnings per share in the range of $1.00 to $1.15.
Capital Resources and Liquidity
On August 31, 2018, we entered into the 2018 Credit Agreement, which provides for a $700 million five-year unsecured credit facility. The 2018 Credit Agreement expires on August 31, 2023. Borrowings under the 2018 Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness. The 2018 Credit Agreement includes a $30 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit. The interest rates, pricing and fees under the 2018 Credit Agreement fluctuate based on our debt rating. The 2018 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options. The interest rate options are generally derived from the prime rate or LIBOR. We may prepay revolving loans made under the 2018 Credit Agreement without penalty. The 2018 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. The covenants of the 2018 Credit Agreement do not restrict our ability to pay dividends. Additionally, we are subject to cross-default provisions associated with the synthetic lease for our distribution center in Apple Valley, California.CA. A violation of any of the covenants could result in a default under the 2018 Credit Agreement that would permit the lenders to restrict our ability to further access the 2018 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2018 Credit Agreement. At AugustMay 1, 2020,2021, we were in compliance with the covenants of the 2018 Credit Agreement. At May 1, 2021, we had no borrowings under the Credit Agreement, and the borrowings available under the Credit Agreement were $694.2 million, after taking into account the reduction in availability resulting from outstanding letters of credit totaling $5.8 million.
On August 7, 2019, we entered into the 2019 Term Note, a $70 million term note agreement, which iswas secured by the equipment at our new California distribution center. The 2019 Term Note will expire on May 7, 2024. We are required to make monthly payments over the term of the 2019 Term Note and are permitted to prepay the note, subject to penalties, at any time. The interest rate on the note iswas fixed at 3.3%. In light of our strong liquidity and current market conditions, on June 7, 2021, we prepaid the remaining $44.3 million principal balance under the 2019 Term Note. In connection with the prepayment, we incurred a $0.4 million prepayment fee and recognized a $0.5 million loss on debt extinguishment in the second quarter of 2021.
The primary source of our liquidity is cash flows from operations and borrowings under the 2018 Credit Agreement, as necessary. Our net income and, consequently, our cash provided by operations are impacted by net sales volume, seasonal sales patterns, and operating profit margins. Our net sales are typically highest during the nine-week Christmas selling season in our fourth fiscal quarter. However, due to demand volatility weWe have experienced during the COVID-19 coronavirus pandemic, the seasonality of our 2020 results may differ from our historical experience. Generally,historically funded our working capital requirements peak late in our third fiscal quarter or early in our fourth fiscal quarter. We have typically funded those requirements with borrowings under our credit facility. At August 1, 2020, we had no borrowings under the 2018 Credit Agreement,However, based on our current cash and the borrowings available under the 2018 Credit Agreement were $688.6 million, after taking into account the reduction in availability resulting from outstanding letters of credit totaling $11.4 million. We believe that cash on hand, cash equivalents position and projected cash availableflows from future operations, and our 2018 Credit Agreement will provide us with sufficient liquiditywe intend to fund our operationsworking capital requirements, along with capital expenditures, share repurchases, and other contractual commitments, for at least the next twelve months.upcoming quarter without borrowing under the Credit Agreement. Cash requirements include among other things, capital expenditures, working capital needs, interest payments, and other contractual commitments.
As a measure to secure additional liquidity during a period of economic uncertainty caused by the COVID-19 coronavirus pandemic, on June 12, 2020, we completed the sale and leaseback transactions relating to our distribution centers located in Columbus, OH; Durant, OK; Montgomery, AL; and Tremont, PA for an aggregate selling price of $725 million. Due to sale-leaseback accounting requirements, the proceeds received in the transactions were allocated between proceeds on the sale of the distribution centers and financing proceeds. Accordingly, aggregate net proceeds on the sales of the distribution centers was $586.9 million and the aggregate gain on the sales was $463.1 million. The remainder of consideration received was financing liability proceeds of $134.0 million.
In the second quarter of 2020, we invested a portion of the proceeds from the sale and leaseback of our four distribution centers in money market fund investments and commercial paper investments. These highly liquid investments were recorded in cash and cash equivalents in our consolidated balance sheets. Our aggregate money market fund and commercial paper investments were $579.9 million and $0 at August 1, 2020 and February 1, 2020, respectively.
As a result of the sale and leaseback transactions and our strong cash flow from operations during the year-to-date 2020, our cash and cash equivalents increased $844.9 million to $898.6 million from the second quarter of 2019.
On August 27, 2020, our Board of Directors authorized the 2020 Repurchase Authorization, which provides for the repurchase of up to $500 million of our common shares.shares (“2020 Repurchase Authorization”). Pursuant to the 2020 Repurchase Authorization, we are authorized to repurchase shares in the open market and/or in privately negotiated transactions at our discretion, subject to market conditions and other factors. Common shares acquired through the 2020 Repurchase Authorization will be available to meet obligations under our equity compensation plans and for general corporate purposes. The 2020 Repurchase Authorization has no scheduled termination date and we intend to fund repurchases under the authorization with cash and cash equivalents on hand and cash generated from operations going forward. During the first quarter of 2021, we purchased 1.1 million of our common shares for $77.5 million under the 2020 Repurchase Authorization, at an average price of $67.45. At May 1, 2021, we had $249.6 million available for future repurchases under the 2020 Repurchase Authorization.
23In February 2021, our Board of Directors declared a quarterly cash dividend of $0.30 per common share payable on April 2, 2021 to shareholders of record as of the close of business on March 19, 2021. The cash dividend of $0.30 per common share is consistent with our quarterly dividends declared in 2020. In the first quarter of 2021, we paid approximately $12.5 million in dividends, consistent with the dividends paid of $12.5 million in the first quarter of 2020.
In May 2020,2021, our Board of Directors declared a quarterly cash dividend of $0.30 per common share payable on June 26, 202025, 2021 to shareholders of record as of the close of business on June 12, 2020. The cash dividend of $0.30 per common share is consistent with our quarterly dividends declared in 2019. In the year-to-date of 2020, we paid approximately $24.3 million in dividends compared to $24.9 million in the year-to-date of 2019.11, 2021.
In August 2020, our Board
Contents
The following table compares the primary components of our cash flows from the year-to-date 2020first quarter 2021 compared to the year-to-date 2019:first quarter 2020:
| (In thousands) | (In thousands) | 2020 | | 2019 | | Change | (In thousands) | 2021 | | 2020 | | Change |
Net cash provided by operating activities | Net cash provided by operating activities | $ | 468,384 | | | $ | 158,285 | | | $ | 310,099 | | Net cash provided by operating activities | $ | 204,293 | | | $ | 146,121 | | | $ | 58,172 | |
Net cash provided by (used in) investing activities | 517,586 | | | (162,731) | | | 680,317 | | |
Net cash used in investing activities | | Net cash used in investing activities | (32,170) | | | (28,913) | | | (3,257) | |
Net cash (used in) provided by financing activities | Net cash (used in) provided by financing activities | $ | (140,131) | | | $ | 12,117 | | | $ | (152,248) | | Net cash (used in) provided by financing activities | $ | (118,350) | | | $ | 141,943 | | | $ | (260,293) | |
Cash provided by operating activities increased $310.1by $58.2 million to $468.4$204.3 million in the year-to-date 2020first quarter of 2021 compared to $158.3$146.1 million in the year-to-date 2019. The primary drivers of the increase were an increase of $479.6 million in net income, a $202.4 million increase in current income taxes, a $112.3 million increase in cash inflows from inventories, and a $52.7 million increase in cash inflows from accounts payable, partially offset by an increase in the add-back for gain on disposition of equipment and property of $462.8 million, a $55.3 million increase in cash outflows from operating lease liabilities, and an increase in the add-back for deferred taxes of $48.2 million. The increase in net income was due to the gain on sale of distribution centers in the second quarter of 2020 and a $535.1 million increase in net sales in the year-to-date 2020. Similarly, the increase in current income taxes was due to the higher income before income taxes, which resulted from the gain on sale of distribution centers and increased net sales. The increase in cash inflows from inventories was primarily driven by the increase in net sales during the year-to-date 2020 as compared to the year-to-date 2019, and an 18.4% decrease in inventory at the end of the secondfirst quarter of 2020. The increase in the change in accounts payable was primarily the result of a decrease in the book overdraft for the year-to-date 2020, which increased the change in accounts payable by approximately $55 million. The increase in the add-back for gain on disposition of equipment and property was principally due to the gain on sale of distribution centers in the second quarter of 2020. The increase in outflowsdriven by our higher net income after adjusting for operatingnon-cash activities such as non-cash share-based compensation expense and non-cash lease liabilities was primarily due to the prepayment of the first year of rent for our four distribution centers sold and leased back in the second quarter of 2020. The increase in the add-back for deferred taxes was primarily due to the deferred gain on the sale of our Rancho Cucamonga, California distribution center in the third quarter of 2019.expense.
Cash provided by (used in)used in investing activities increased by $680.3$3.3 million to cash provided by investing activities of $517.6$32.2 million in the year-to-date 2020first quarter of 2021 compared to cash used in investing activities of $162.7$28.9 million in the year-to-date 2019.first quarter of 2020. The increase was principally due to an increase of $586.9 million in cash proceeds from sale of property and equipment, partially offset by a decrease of $93.4 million in capital expenditures. The increase in cash proceeds from sale of property and equipment was due to the completion of the sale and leaseback transactions for our four distribution centers in the second quarter of 2020. The decrease in capital expenditures was driven by our decisions to reduce our investments in our Store of the Future concept in 2020, reduce investments in new stores in 2020 to preserve liquidity and promote safety during the COVID-19 coronavirus pandemic, and a decrease in investments in our Apple Valley, California distribution center which opened in late 2019.
Cash (used in) provided by financing activities increased by $152.2$260.3 million to cash used in financing activities of $140.1$118.4 million in the year-to-date 2020first quarter of 2021 compared to cash provided by financing activities of $12.1$141.9 million in the year-to-date 2019.first quarter of 2020. The primary driverincrease was primarily driven by borrowings under the Credit Agreement in the first quarter of 2020, which was due to our borrowing approximately $200 million under the Credit Agreement in the first quarter of 2020 as a liquidity safeguard at the outset of the increase in cash used in financing activities wasCOVID-19 pandemic and an increase in net repayments of long-term debt of $329.9 million, partially offset by an increase in net financing proceeds from sale and leaseback of $124.1 million and a decrease in payment for treasury shares acquired in the first quarter of $52.9 million. The increase in net repayments of long-term debt was a result of the repayment of all outstanding borrowings2021 primarily due to shares repurchased under the 2018 Credit Agreement following2020 Repurchase Authorization. In the completion of the sale and leaseback transaction for our four distribution centers in the secondfirst quarter of 2020. The increase in net financing proceeds from sale and leaseback was driven by the sale and leaseback transactions completed for our four distribution centers in second quarter of 2020. The decrease in payment for treasury shares acquired was due to the absence of a2020, we had no active share repurchase program in the year-to-date 2020 compared to the year-to-date 2019.place.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates its estimates, judgments, and assumptions, and bases its estimates, judgments, and assumptions on historical experience, current trends, and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. See note 1 to our consolidated financial statements included in our 20192020 Form 10-K for additional information about our accounting policies.
The estimates, judgments, and assumptions that have a higher degree of inherent uncertainty and require the most significant judgments are outlined in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 20192020 Form 10-K. Had we used estimates, judgments, and assumptions different from any of those discussed in our 20192020 Form 10-K, our financial condition, results of operations, and liquidity for the current period could have been materially different from those presented.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to market risk from exposure to changes in interest rates on investments that we make from time to time and on borrowings under the 2018 Credit Agreement. We had no borrowings under the 2018 Credit Agreement at AugustMay 1, 2020.2021. An increase of 1% in our variable interest rate on our expected future borrowings would not currently materially affect our financial condition, results of operations, or liquidity.
We are subject to market risk from exposure to changes in our derivative instruments associated with diesel fuel. At AugustMay 1, 2020,2021, we had outstanding derivative instruments, in the form of collars, covering 5.53.0 million gallons of diesel fuel. The below table provides further detail related to our current derivative instruments, associated with diesel fuel.
| Calendar Year of Maturity | Calendar Year of Maturity | | Diesel Fuel Derivatives | | | Fair Value | Calendar Year of Maturity | | Diesel Fuel Derivatives | | Fair Value |
| | Puts | | Calls | | Asset (Liability) | Calendar Year of Maturity | | Puts | | Calls | | Asset (Liability) |
| | | (Gallons, in thousands) | | | (In thousands) | | | (Gallons, in thousands) | | (In thousands) |
2020 | | 1,920 | | | 1,920 | | | $ | (964) | | |
2021 | 2021 | | 2,400 | | | 2,400 | | | (1,030) | | 2021 | | 1,800 | | | 1,800 | | | $ | 84 | |
2022 | 2022 | | 1,200 | | | 1,200 | | | (476) | | 2022 | | 1,200 | | | 1,200 | | | 183 | |
Total | Total | | 5,520 | | | 5,520 | | | $ | (2,470) | | Total | | 3,000 | | | 3,000 | | | $ | 267 | |
Additionally, at AugustMay 1, 2020,2021, a 10% difference in the forward curve for diesel fuel prices could affect unrealized gains (losses) in other income (expense) by approximately $1.5$1.0 million.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have each concluded that such disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
No response is required under Item 103 of Regulation S-K. For information regarding certain legal proceedings to which we have been named a discussion of certain litigated matters,party or are subject, see note 7 to the accompanying consolidated financial statements.
Item 1A. Risk Factors
During the secondfirst quarter of 2020,2021, there were no material changes to the risk factors previously disclosed in our 20192020 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| | | | | | | | | | | | | | |
(In thousands, except price per share data) | | | | |
Period | (a) Total Number of Shares Purchased (1)
| (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
May 3, 2020 - May 30, 2020 | — | | $ | 27.15 | | — | | $ | — | |
May 31, 2020 - June 27, 2020 | — | | — | | — | | — | |
June 28, 2020 - August 1, 2020 | — | | — | | — | | — | |
Total | — | | $ | 27.15 | | — | | $ | — | |
| | | | | | | | | | | | | | |
(In thousands, except price per share data) | | | | |
Period | (a) Total Number of Shares Purchased (1)(2) | (b) Average Price Paid per Share (1)(2) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |
January 31, 2021 - February 27, 2021 | 41 | | $ | 55.25 | | 39 | | $ | 325,000 | |
February 28, 2021 - March 27, 2021 | 543 | | 67.85 | | 500 | | 290,948 | |
March 28, 2021 - May 1, 2021 | 954 | | 68.56 | | 610 | | 249,634 | |
Total | 1,538 | | $ | 67.96 | | 1,149 | | $ | 249,634 | |
(1) In May 2020,February, March, and April 2021, in connection with the vesting of certain outstanding restricted stock units, PSUs, and performance share units,PRSUs, we acquired 394946, 42,930 and 344,189 of our common shares, thatrespectively, which were withheld to satisfy minimum statutory income tax withholdings.
(2) The 2020 Repurchase Authorization is comprised of an August 27, 2020 authorization by our Board of Directors for the repurchase of up to $500.0 million of our common shares. During the first quarter of 2021, we purchased approximately 1.1 million of our common shares for approximately $77.5 million under the 2020 Repurchase Authorization. The 2020 Repurchase Authorization has no scheduled termination date.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibits marked with an asterisk (*) are filed herewith.
Certain portions of the exhibits marked with a pound sign (#) have been excluded from the exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K.
| | | | | | | | | | | |
| Exhibit No. | | Document |
| | | Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit 10.1 to our Form 8-K dated March 9, 2021). |
| | | Agreement for Purchase and SaleForm of Real Property, as amended, between Durant DC, LLC and BIGDUOK001 LLC relating to the registrant’s distribution center located in Durant, Oklahoma. |
| | | Lease Agreement, as amended, between Big Lots Stores, Inc. and BIGCOOH002, LLC relating2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement (incorporated herein by reference to the registrant’s distribution center located in Columbus, Ohio.Exhibit 10.2 to our Form 8-K dated March 9, 2021). |
| | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | XBRL Taxonomy Definition Linkbase Document |
| | | XBRL Taxonomy Presentation Linkbase Document |
| | | XBRL Taxonomy Labels Linkbase Document |
| | | XBRL Taxonomy Calculation Linkbase Document |
| 101.Sch | | XBRL Taxonomy Schema Linkbase Document |
| 101.Ins | | XBRL Taxonomy Instance Document - the instance document does not appear in the Interactive Date File because its XBRL tags are embedded within the Inline XBRL document |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: SeptemberJune 9, 20202021
| | | | | |
| BIG LOTS, INC. |
| |
| By: /s/ Jonathan E. Ramsden |
| |
| Jonathan E. Ramsden |
| Executive Vice President, Chief Financial and Administrative Officer |
| (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer) |