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 ~~May 1, 2021~~April 30, 2022

☐ 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, INC.

(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:


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.

Large accelerated filer

☑

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

☐

Emerging growth company

☐

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 June ~~4, 2021,~~3, 2022, was ~~34,639,480.~~28,917,471.

Table of Contents

BIG LOTS, INC.

FORM 10-Q

FOR THE FISCAL QUARTER ENDED ~~MAY 1, 2021~~APRIL 30, 2022

TABLE OF CONTENTS


		Page
Part I. Financial Information		2

Item 1.	Financial Statements	2

a)	Consolidated Statements of Operations and Comprehensive Income for the Thirteen Weeks Ended April 30 , 202 2 (Unaudited) and May 1 , 202 1 ~~(Unaudited) and May~~ 2 ~~, 20~~20 (Unaudited)	2

b)	Consolidated Balance Sheets at ~~May~~ 1April 30, 2022 (Unaudited) and January 29 , 202 1 ~~(Unaudited) and~~ ~~January~~30 ~~, 202~~12 (Unaudited)	3

c)	Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks Ended ~~May~~ 1April 30 , 202 12 (Unaudited) and May 2 ~~, 20~~201, 2021 (Unaudited)	4

d)	Consolidated Statements of Cash Flows for the Thirteen Weeks Ended ~~May~~ 1April 30 , 202 12 (Unaudited) and May 2 ~~, 20~~201, 2021 (Unaudited)	5

e)	Notes to Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1312

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2019

Item 4.	Controls and Procedures	2019

Part II. Other Information		2019

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item ~~1A.~~ 3.	~~Risk Factors~~Defaults Upon Senior Securities	20

Item 2. 4.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Mine Safety Disclosures	2120

Item 3. 5.	~~Defaults Upon Senior Securities~~Other Information	2120

~~Item 4.~~	~~Mine Safety Disclosures~~	21

~~Item 5.~~	~~Other Information~~	21

Item 6.	Exhibits	2221

Signature		2221

Table of Contents

Part I. Financial Information

Item 1. Financial Statements


BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Unaudited) (In thousands, except per share amounts)


		Thirteen Weeks Ended					Thirteen Weeks Ended
		May 1, 2021		May 2, 2020			April 30, 2022		May 1, 2021
Net sales	Net sales	$	1,625,552	$	1,439,149	Net sales	$	1,374,714	$	1,625,552
Cost of sales (exclusive of depreciation expense shown separately below)	Cost of sales (exclusive of depreciation expense shown separately below)	971,605		868,393		Cost of sales (exclusive of depreciation expense shown separately below)	870,120		971,605
Gross margin	Gross margin	653,947		570,756		Gross margin	504,594		653,947
Selling and administrative expenses	Selling and administrative expenses	497,418		458,631		Selling and administrative expenses	480,779		497,418
Depreciation expense	Depreciation expense	33,977		37,690		Depreciation expense	37,356		33,977
Operating profit		122,552		74,435
Operating (loss) profit						Operating (loss) profit	(13,541)		122,552
Interest expense	Interest expense	(2,568)		(3,322)		Interest expense	(2,750)		(2,568)
Other income (expense)	Other income (expense)	960		(3,317)		Other income (expense)	1,040		960
Income before income taxes		120,944		67,796
Income tax expense		26,381		18,473
Net income and comprehensive income		$	94,563	$	49,323
(Loss) income before income taxes						(Loss) income before income taxes	(15,251)		120,944
Income tax (benefit) expense						Income tax (benefit) expense	(4,169)		26,381
Net (loss) income and comprehensive (loss) income						Net (loss) income and comprehensive (loss) income	$	(11,082)	$	94,563

Earnings per common share
Earnings (loss) per common share						Earnings (loss) per common share
Basic	Basic	$	2.68	$	1.26	Basic	$	(0.39)	$	2.68
Diluted	Diluted	$	2.62	$	1.26	Diluted	$	(0.39)	$	2.62

Weighted-average common shares outstanding	Weighted-average common shares outstanding					Weighted-average common shares outstanding
Basic	Basic	35,349		39,129		Basic	28,621		35,349
Dilutive effect of share-based awards	Dilutive effect of share-based awards	693		111		Dilutive effect of share-based awards	—		693
Diluted	Diluted	36,042		39,240		Diluted	28,621		36,042

Cash dividends declared per common share	Cash dividends declared per common share	$	0.30	$	0.30	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)


		May 1, 2021		January 30, 2021			April 30, 2022		January 29, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	613,329	$	559,556	Cash and cash equivalents	$	61,707	$	53,722
Inventories	Inventories	901,482		940,294		Inventories	1,338,737		1,237,797
Other current assets	Other current assets	114,001		85,939		Other current assets	125,362		119,449
Total current assets	Total current assets	1,628,812		1,585,789		Total current assets	1,525,806		1,410,968
Operating lease right-of-use assets	Operating lease right-of-use assets	1,631,817		1,649,009		Operating lease right-of-use assets	1,729,053		1,731,995
Property and equipment - net	Property and equipment - net	723,158		717,216		Property and equipment - net	749,416		735,826
Deferred income taxes	Deferred income taxes	17,741		16,329		Deferred income taxes	10,199		10,973
Other assets	Other assets	36,008		68,914		Other assets	37,283		37,491
Total assets	Total assets	$	4,037,536	$	4,037,257	Total assets	$	4,051,757	$	3,927,253

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	380,942	$	398,433	Accounts payable	$	488,524	$	587,496
Current operating lease liabilities	Current operating lease liabilities	219,367		226,075		Current operating lease liabilities	233,683		242,275
Property, payroll, and other taxes	Property, payroll, and other taxes	112,532		109,694		Property, payroll, and other taxes	95,920		90,728
Accrued operating expenses	Accrued operating expenses	158,136		138,331		Accrued operating expenses	121,977		120,684
Insurance reserves	Insurance reserves	34,803		34,660		Insurance reserves	36,227		36,748
Accrued salaries and wages	Accrued salaries and wages	73,799		49,830		Accrued salaries and wages	24,745		45,762
Income taxes payable	Income taxes payable	70,340		43,601		Income taxes payable	1,325		894
Total current liabilities	Total current liabilities	1,049,919		1,000,624		Total current liabilities	1,002,401		1,124,587
Long-term debt	Long-term debt	32,063		35,764		Long-term debt	270,800		3,500
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	1,466,090		1,465,433		Noncurrent operating lease liabilities	1,577,932		1,569,713
Deferred income taxes	Deferred income taxes	3,805		7,762		Deferred income taxes	22,854		21,413
Insurance reserves	Insurance reserves	59,379		57,452		Insurance reserves	59,847		62,591
Unrecognized tax benefits	Unrecognized tax benefits	10,601		11,304		Unrecognized tax benefits	10,623		10,557
Other liabilities	Other liabilities	147,177		181,187		Other liabilities	126,972		127,529
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
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		1,175		1,175
Treasury shares - 82,575 shares and 81,960 shares, respectively, at cost		(2,782,987)		(2,709,259)
Preferred shares - authorized 2,000 shares; $0.01 par value; none issued						Preferred shares - authorized 2,000 shares; $0.01 par value; none issued	—		—
Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 28,893 shares and 28,476, respectively						Common shares - authorized 298,000 shares; $0.01 par value; issued 117,495 shares; outstanding 28,893 shares and 28,476, respectively	1,175		1,175
Treasury shares - 88,602 shares and 89,019 shares, respectively, at cost						Treasury shares - 88,602 shares and 89,019 shares, respectively, at cost	(3,107,806)		(3,121,602)
Additional paid-in capital	Additional paid-in capital	615,955		634,813		Additional paid-in capital	619,754		640,522
Retained earnings	Retained earnings	3,434,359		3,351,002		Retained earnings	3,467,205		3,487,268
Total shareholders’ equity	Total shareholders’ equity	1,268,502		1,277,731		Total shareholders’ equity	980,328		1,007,363
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	4,037,536	$	4,037,257	Total liabilities and shareholders’ equity	$	4,051,757	$	3,927,253

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 May 2, 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		49,323		49,323
Dividends declared ($0.30 per share)		—	0		—	0		0		(11,905)		(11,905)
Purchases of common shares		(119)	0		119	(1,940)		0		0		(1,940)
Restricted shares vested		240	0		(240)	7,782		(7,782)		0		0
Performance shares vested		65	0		(65)	2,107		(2,107)		0		0
Other		0	0		0	7		(1)		0		6
Share-based employee compensation expense		—	0		—	0		2,985		0		2,985
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													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		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		94,563		94,563		Comprehensive income	—	—		—	—		—		94,563		94,563
Dividends declared ($0.30 per share)	Dividends declared ($0.30 per share)	—	0		—	0		0		(11,206)		(11,206)		Dividends declared ($0.30 per share)	—	—		—	—		—		(11,206)		(11,206)
Purchases of common shares	Purchases of common shares	(1,538)	0		1,538	(104,491)		0		0		(104,491)		Purchases of common shares	(1,538)	—		1,538	(104,491)		—		—		(104,491)
Restricted shares vested	Restricted shares vested	390	0		(390)	12,995		(12,995)		0		0		Restricted shares vested	390	—		(390)	12,995		(12,995)		—		—
Performance shares vested	Performance shares vested	533	0		(533)	17,770		(17,770)		0		0		Performance shares vested	533	—		(533)	17,770		(17,770)		—		—
Other	Other	0	0		0	(2)		0		0		(2)		Other	—	—		—	(2)		—		—		(2)
Share-based employee compensation expense	Share-based employee compensation expense	—	0		—	0		11,907		0		11,907		Share-based employee compensation expense	—	—		—	—		11,907		—		11,907
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		Balance - May 1, 2021	34,920	$	1,175	82,575	$	(2,782,987)	$	615,955	$	3,434,359	$	1,268,502
Thirteen Weeks Ended April 30, 2022														Thirteen Weeks Ended April 30, 2022
Balance - January 29, 2022														Balance - January 29, 2022	28,476	1,175		89,019	(3,121,602)		640,522		3,487,268		1,007,363
Comprehensive income														Comprehensive income	—	—		—	—		—		(11,082)		(11,082)
Dividends declared ($0.30 per share)														Dividends declared ($0.30 per share)	—	—		—	—		—		(8,981)		(8,981)
Purchases of common shares														Purchases of common shares	(280)	—		281	(10,639)		—		—		(10,639)
Restricted shares vested														Restricted shares vested	356	—		(356)	12,483		(12,483)		—		—
Performance shares vested														Performance shares vested	341	—		(342)	11,952		(11,952)		—		—
Share-based employee compensation expense														Share-based employee compensation expense	—	—		—	—		3,667		—		3,667
Balance - April 30, 2022														Balance - April 30, 2022	28,893	1,175		88,602	(3,107,806)		619,754		3,467,205		980,328

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents


BIG LOTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In thousands)


		Thirteen Weeks Ended					Thirteen Weeks Ended
		May 1, 2021		May 2, 2020			April 30, 2022		May 1, 2021
Operating activities:	Operating activities:					Operating activities:
Net income		$	94,563	$	49,323
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income						Net (loss) income	$	(11,082)	$	94,563
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:						Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	34,116		37,819		Depreciation and amortization expense	37,631		34,116
Non-cash lease expense	Non-cash lease expense	64,457		57,766		Non-cash lease expense	68,473		64,457
Deferred income taxes	Deferred income taxes	(5,369)		(8,838)		Deferred income taxes	2,215		(5,369)
Non-cash impairment charge	Non-cash impairment charge	194		362		Non-cash impairment charge	222		194
Loss on disposition of equipment		780		129
(Gain) loss on disposition of property and equipment						(Gain) loss on disposition of property and equipment	(1,568)		780
Non-cash share-based compensation expense	Non-cash share-based compensation expense	11,907		2,985		Non-cash share-based compensation expense	3,667		11,907
Unrealized (gain) loss on fuel derivatives		(1,005)		3,144
Unrealized gain on fuel derivatives						Unrealized gain on fuel derivatives	(699)		(1,005)
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Inventories	Inventories	38,813		114,707		Inventories	(100,940)		38,813
Accounts payable	Accounts payable	(17,492)		(102,779)		Accounts payable	(98,972)		(17,492)
Operating lease liabilities	Operating lease liabilities	(53,511)		(54,919)		Operating lease liabilities	(66,127)		(53,511)
Current income taxes	Current income taxes	29,435		27,077		Current income taxes	(8,856)		29,435
Other current assets	Other current assets	1,294		(486)		Other current assets	3,908		1,294
Other current liabilities	Other current liabilities	2,703		16,315		Other current liabilities	(20,432)		2,703
Other assets	Other assets	389		4,395		Other assets	107		389
Other liabilities	Other liabilities	3,019		(879)		Other liabilities	(3,780)		3,019
Net cash provided by operating activities		204,293		146,121
Net cash (used in) provided by operating activities						Net cash (used in) provided by operating activities	(196,233)		204,293
Investing activities:	Investing activities:					Investing activities:
Capital expenditures	Capital expenditures	(32,160)		(28,928)		Capital expenditures	(43,741)		(32,160)
Cash proceeds from sale of property and equipment	Cash proceeds from sale of property and equipment	7		26		Cash proceeds from sale of property and equipment	2,505		7
Other	Other	(17)		(11)		Other	(5)		(17)
Net cash used in investing activities	Net cash used in investing activities	(32,170)		(28,913)		Net cash used in investing activities	(41,241)		(32,170)
Financing activities:	Financing activities:					Financing activities:
Net (repayments of) proceeds from long-term debt		(3,580)		157,337
Net proceeds from (repayments of) long-term debt						Net proceeds from (repayments of) long-term debt	267,300		(3,580)
Payment of finance lease obligations	Payment of finance lease obligations	(1,293)		(982)		Payment of finance lease obligations	(497)		(1,293)
Dividends paid	Dividends paid	(12,460)		(12,478)		Dividends paid	(10,705)		(12,460)
Payment for treasury shares acquired	Payment for treasury shares acquired	(101,016)		(1,940)		Payment for treasury shares acquired	(10,639)		(101,016)
Other	Other	(1)		6		Other	—		(1)
Net cash (used in) provided by financing activities		(118,350)		141,943
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	245,459		(118,350)
Increase in cash and cash equivalents	Increase in cash and cash equivalents	53,773		259,151		Increase in cash and cash equivalents	7,985		53,773
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of period	Beginning of period	559,556		52,721		Beginning of period	53,722		559,556
End of period	End of period	$	613,329	$	311,872	End of period	$	61,707	$	613,329

The accompanying notes are an integral part of these consolidated financial statements.

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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~~home discount retailer ~~operating~~ in the United States (“U.S.”). At ~~May 1, 2021,~~April 30, 2022, we operated ~~1,413~~1,434 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 websites are not 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.~~whole. 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 2021 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 January ~~30,~~ 29, 2022 (“2021 ~~(“2020~~ 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 2022 (“2022”) is comprised of the 52 weeks that began on January 30, 2022 and will end on January 28, 2023. Fiscal year 2021 (“2021”) iswas comprised of the 52 weeks that began on January 31, 2021 and ~~will end~~ended on January 29, 2022. ~~Fiscal year 2020 (“2020”) was comprised of the 52 weeks that began on February 2, 2020 and ended on January 30, 2021.~~ The fiscal quarters ended April 30, 2022 (“first quarter of 2022”) and May 1, 2021 (“first quarter of 2021”~~) and May 2, 2020 (“first quarter of 2020”~~) were both comprised of 13 weeks.

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 to stores in cost of sales. ~~Warehousing, distribution,~~Distribution and outbound transportation costs included in selling and administrative expenses were ~~$66.2~~$82.0 million and ~~$52.3~~$66.2 million for the first quarter of ~~2021~~2022 and the first quarter of ~~2020,~~2021, 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, payment card-linked marketing and in-store point-of-purchase signage and presentations. Advertising expenses are included in selling and administrative expenses. Advertising expenses were ~~$21.8~~$21.4 million and ~~$23.0~~$21.8 million for the first quarter of ~~2021~~2022 and the first quarter of ~~2020,~~2021, respectively.

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Supplemental Cash Flow Disclosures

The following table provides supplemental cash flow information for the first quarter of ~~2021~~2022 and the first quarter of ~~2020:~~2021:


		Thirteen Weeks Ended					Thirteen Weeks Ended
(In thousands)	(In thousands)	May 1, 2021		May 2, 2020		(In thousands)	April 30, 2022		May 1, 2021
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	$	468	$	3,211	Cash paid for interest	$	3,326	$	468
Cash paid for income taxes, excluding impact of refunds	Cash paid for income taxes, excluding impact of refunds	2,303		122		Cash paid for income taxes, excluding impact of refunds	2,933		2,303
Gross proceeds from long-term debt	Gross proceeds from long-term debt	0		514,500		Gross proceeds from long-term debt	648,200		—
Gross payments of long-term debt	Gross payments of long-term debt	3,580		357,163		Gross payments of long-term debt	380,900		3,580
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	76,727		75,317		Cash paid for operating lease liabilities	90,725		76,727
Non-cash activity:	Non-cash activity:					Non-cash activity:
Share repurchases payable	Share repurchases payable	3,476		0		Share repurchases payable	—		3,476
Assets acquired under finance leases						Assets acquired under finance leases	1,377		—
Accrued property and equipment	Accrued property and equipment	26,306		27,213		Accrued property and equipment	26,073		26,306
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	47,661		62,641		Operating lease right-of-use assets obtained in exchange for operating lease liabilities	65,753		47,661

Reclassifications

InWe periodically assess, and make minor adjustments to, our product hierarchy, which can impact the ~~first quarter of 2021, we realigned select merchandise categories to be consistent with the initial realignment~~roll-up of our ~~merchandising team and changes to our management reporting. We eliminated our Electronics, Toys, & Accessories category by absorbing its former merchandise departments into three of our existing~~ merchandise categories. ~~We moved our apparel, jewelry, and hosiery departments into our Soft Home~~Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category ~~our toys department into our Seasonal~~for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category ~~and our electronics department into our Hard Home merchandise category.~~

Our six merchandise categories, which match our internal management and reporting of merchandise net sales are now as follows: Food; Consumables; Soft Home; Hard Home; Furniture; and Seasonal. The Food category includes our beverage & grocery; candy & snacks; and specialty foods departments. The 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~~compared to ~~provide comparative information, we have reclassified our results into the new alignment for both periods presented.~~previously reported amounts.

Recent Accounting Pronouncements

There are currently no new accounting pronouncements with a future effective date that are of significance, or potential significance, to us.

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NOTE 2 – DEBT

Bank Credit Facility

On ~~August 31, 2018,~~September 22, 2021, we entered into a ~~$700~~$600 million five-year unsecured credit facility (“Credit Agreement”)~~. The Credit Agreement~~ that expires on ~~August 31, 2023.~~September 22, 2026. In connection with our entry into the Credit Agreement, we paid bank fees and other expenses in the aggregate amount of ~~$1.5~~$1.2 million, which are being amortized over the term of the Credit Agreement.

Borrowings under the Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness. The Credit Agreement includes a ~~$30~~$50 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 Credit Agreement also contains an environmental, social and governance (“ESG”) provision, which may provide favorable pricing and fee adjustments if we meet ESG performance criteria to be established by a future amendment to the Credit Agreement. Under the Credit Agreement, we have the option to establish incremental term loans and/or increases in the revolving credit limits in an aggregate amount of up to $300 million, subject to the lenders agreeing to increase their commitments. Additionally, the Credit Agreement includes two options to extend the maturity date of the Credit Agreement by one year each, subject to each lender agreeing to extend the maturity date of its respective loans. The interest rates, pricing and fees under the Credit Agreement fluctuate based on our debt ~~rating.~~rating or leverage ratio, whichever results in more favorable pricing to us. The 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~~The Credit Agreement updated the LIBOR fallback language to implement fallback provisions, pursuant to which the interest rate on the loans will transition to an alternative rate upon the occurrence of certain LIBOR cessation events. Loans made under the Credit ~~Agreement.~~Agreement may be prepaid without penalty. The 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 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, ~~CA.~~CA, which was amended concurrent with our entry into the Credit Agreement to conform with the covenants of the Credit Agreement. A violation of any of the covenants could result in a default under the Credit Agreement that would permit the lenders to restrict our ability to further access the Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the Credit Agreement. At ~~May 1, 2021,~~April 30, 2022, we had 0$270.8 million in outstanding borrowings ~~outstanding~~ under the Credit Agreement ~~while $5.8~~and $5.0 million ~~was~~ committed to outstanding letters of credit, leaving ~~$694.2~~$324.2 million available under the Credit Agreement.

~~Secured Equipment Term Note~~

On August 7, 2019, we entered into a $70.0 million term note agreement (“2019 Term Note”), which is secured by the equipment at our Apple Valley, CA distribution center. 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)
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

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~~NOTE 3 – FAIR VALUE MEASUREMENTS~~

At May 1, 2021 and January 30, 2021, we held investments in money market funds, which were recorded 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.

At 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 May 1, 2021, the fair value of our investments were recorded in our consolidated balance sheets as follows:~~

(In thousands) Balance Sheet Location May 1,
2021 Level 1
Assets:
Money market funds Cash and cash equivalents $ 175,135 $ 175,135
Mutual funds - deferred compensation plan Other current assets $ 29,988 $ 29,988

~~As of January 30, 2021, the fair value of our investments were recorded in our consolidated balance sheets as follows:~~

(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~~debt is estimated based on the quoted market prices for 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~~Given the variable rate features and relatively short maturity of the instruments underlying our long-term debt, the carrying value of ~~the instrument~~these instruments approximates ~~its~~their fair value.

~~The carrying value of accounts receivable and accounts payable approximates fair value because of the relatively short maturity of these items.~~

NOTE 43 – SHAREHOLDERS’ EQUITY

Earnings per Share

There were 0no adjustments required to be made to the weighted-average common shares outstanding for purposes of computing basic and diluted earnings per ~~share. At May 2, 2020, we excluded performance restricted~~ share ~~units (“PRSUs”) from the securities outstanding~~ for ~~the computation of earnings per share because the minimum applicable performance conditions had not been attained.~~all periods presented. At May 1, 2021, all outstanding awards were included in our computation of earnings per share because the minimum applicable performance conditions had been attained. At April 30, 2022, performance share units that vest based on relative total shareholder return (“TSR PSUs” - see Note 4 for a more detailed description of these awards), were excluded from our computation of earnings per share because the minimum applicable performance conditions had not been attained. Antidilutive restricted stock units (“RSUs”), performance share units (“PSUs”), performance restricted share units (“PRSUs”), and ~~PRSUs,~~TSR PSUs are excluded from the calculation because they decrease the number of diluted shares outstanding under the treasury stock method. The ~~restricted stock units,~~RSUs, PSUs, PRSUs, and ~~PRSUs~~TSR PSUs that were antidilutive, as determined under the treasury stock method, were ~~0.1~~0.4 million and ~~0.3~~0.1 million for the first quarter of ~~2021~~2022 and the first quarter of ~~2020,~~2021, respectively.

Due to the net loss in first quarter of 2022, any potentially dilutive shares were excluded from the denominator in computing diluted earnings (loss) per common share for the first quarter of 2022.

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Share Repurchase Programs

On ~~August 27, 2020,~~December 1, 2021, our Board of Directors authorized the repurchase of up to ~~$500~~$250 million of our common shares (“~~2020~~2021 Repurchase Authorization”). Pursuant to the ~~2020~~2021 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~~2021 Repurchase Authorization has no scheduled termination date.

~~During~~ In the first quarter of ~~2021, we acquired approximately 1.1 million of our outstanding common~~2022, no shares ~~for $77.5 million~~were repurchased under the ~~2020~~2021 Repurchase Authorization. As of ~~May 1, 2021,~~April 30, 2022, we had ~~$249.6~~$159.4 million available for future repurchases under the ~~2020~~2021 Repurchase Authorization.

~~In addition to shares repurchased under the 2020 Repurchase Authorization, purchases~~

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Purchases of common shares reported in the consolidated statements of shareholders’ equity include shares acquired to satisfy income tax withholdings associated with the vesting of share-based awards.

Dividends

We declared and paid cash dividends per common share during the first quarter of ~~2021~~2022 as follows:


		Dividends Per Share		Amount Declared		Amount Paid			Dividends Per Share		Amount Declared		Amount Paid
2021:				(In thousands)		(In thousands)
2022:								2022:			(In thousands)		(In thousands)
First quarter	First quarter	$	0.30	$	11,206	$	12,460	First quarter	$	0.30	$	8,981	$	10,705
Total	Total	$	0.30	$	11,206	$	12,460	Total	$	0.30	$	8,981	$	10,705

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,~~RSUs and ~~PRSUs.~~PSUs. 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 54 – SHARE-BASED PLANS

We have issued ~~restricted stock units,~~RSUs, PSUs, PRSUs, and ~~PRSUs~~TSR PSUs under our shareholder-approved equity compensation plans. We recognized share-based compensation expense of ~~$11.9~~$3.7 million and ~~$3.0~~$11.9 million in the first quarter of ~~2021~~2022 and the first quarter of ~~2020,~~2021, respectively. As of April 30, 2022, there were no PRSUs outstanding.

Non-vested Restricted Stock Units

The following table summarizes the non-vested ~~restricted stock units~~RSU activity for the first quarter of ~~2021:~~2022:


		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 January 30, 2021		1,214,212	$	22.71
Outstanding non-vested RSUs at January 29, 2022					Outstanding non-vested RSUs at January 29, 2022	909,287	$	33.87
Granted	Granted	206,685	70.77		Granted	418,247	38.13
Vested	Vested	(390,116)	22.74		Vested	(355,911)	29.29
Forfeited	Forfeited	(31,181)	25.26		Forfeited	(23,271)	29.59
Outstanding non-vested restricted stock units at May 1, 2021		999,600	$	32.56
Outstanding non-vested RSUs at April 30, 2022					Outstanding non-vested RSUs at April 30, 2022	948,352	$	37.52

The non-vested ~~restricted stock units~~RSUs granted in the first quarter of ~~2021~~2022 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.

Performance Share Units

In the first quarter of 2020, we awarded 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 PRSUs have a contractual term of three years. Shares issued in connection with vested PRSUs are generally restricted from sale, transfer, or other

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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, in 2021, and in the first quarter of ~~2021,~~2022, we issued PSUs to certain members of management, which will vest if certain financial performance objectives are achieved over a three-year performance period and the grantee remains employed by us during the performance period. The 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.

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 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.

~~We have begun or expect to begin recognizing expense related to PSUs and PRSUs as follows:~~

Issue Year Outstanding PSUs and PRSUs at May 1, 2021 Actual Grant Date Expected Valuation (Grant) Date Actual or Expected Expense Period
2019 255,487 March 2021 Fiscal 2021
2020 3,223 April 2020 Fiscal 2020-2021
2021 166,055 March 2023 Fiscal 2023
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

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the distribution of an amount of shares that is greater or less than the number of PSUs granted, as defined in the award agreement.

In the first quarter of 2022, we also awarded TSR PSUs to certain members of management, which vest based on the achievement of total shareholder return (“TSR”) targets relative to a peer group over a three-year performance period and require the grantee to remain employed by us through the end of the performance period. If we meet the applicable performance thresholds over the three-year performance period and the grantee remains employed by us through the end of the performance period, the TSR 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. We use a Monte Carlo simulation to estimate the fair value of the TSR PSUs on the grant date and recognize expense over the service period. The TSR PSUs have a contractual period of three years.

We have begun or expect to begin recognizing expense related to PSUs and TSR PSUs as follows:

Issue Year

Measurement Basis

Outstanding PSUs and TSR PSUs at April 30, 2022

Actual Grant Date

Expected Valuation (Grant) Date

Actual or Expected Expense Period

2019

ROIC/EPS

6,109

March 2021

Fiscal 2021

2021

ROIC/EPS

170,426

March 2023

Fiscal 2023

2022

Relative TSR

68,231

March 2022

Fiscal 2022 - 2024

2022

ROIC/EPS

272,951

March 2024

Fiscal 2024

Total

517,717

During the first quarter of ~~2021,~~2022, the PSUs issued in ~~2018~~2019 vested with an average performance attainment higher than the targets established. During the first quarters of ~~2021~~2022 and ~~2020,~~2021, we recognized ~~$8.6~~$0.1 million and ~~$0.4~~$8.6 million in share-based compensation expense related to PSUs and ~~PRSUs,~~TSR PSUs, respectively.

The following table summarizes the activity related to PSUs and ~~PRSUs~~TSR PSUs for the first quarter of ~~2021:~~2022:


		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 PRSUs at January 30, 2021		474,031	$	24.31
Outstanding PSUs and TSR PSUs at January 29, 2022					Outstanding PSUs and TSR PSUs at January 29, 2022	240,110	$	70.24
Granted	Granted	263,787	70.24		Granted	68,231	58.09
Vested	Vested	(470,808)	24.27		Vested	(234,001)	70.24
Forfeited	Forfeited	(8,300)	70.24		Forfeited	—	—
Outstanding PSUs and PRSUs at May 1, 2021		258,710	$	69.74
Outstanding PSUs and TSR PSUs at April 30, 2022					Outstanding PSUs and TSR PSUs at April 30, 2022	74,340	$	59.09

The following activity occurred under our share-based plans during the respective periods shown:


		First Quarter					First Quarter
(In thousands)	(In thousands)	2021		2020		(In thousands)	2022		2021
Total fair value of restricted stock vested	Total fair value of restricted stock vested	$	26,901	$	4,040	Total fair value of restricted stock vested	$	12,631	$	26,901
Total fair value of performance shares vested	Total fair value of performance shares vested	$	37,168	$	924	Total fair value of performance shares vested	$	13,753	$	37,168

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The total unearned compensation ~~cost~~expense related to all share-based awards outstanding, excluding PSUs issued in 2021 and 2022, at ~~May 1, 2021~~April 30, 2022 was approximately ~~$46.2~~$32.9 million. This compensation cost is expected to be recognized through ~~April 2024~~March 2025 based on existing vesting terms with the weighted-average remaining expense recognition period being approximately ~~1.7~~2.4 years from ~~May 1, 2021.~~April 30, 2022.

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NOTE 65 – INCOME TAXES

In 2021, the provision for income taxes was based on a current estimate of the annual effective tax rate, adjusted to reflect the effect of discrete items.

For 2022, the Company's estimated annual effective tax rate has fluctuated with changes in estimated full-year pre-tax earnings due to uncertainty in our forecasted earnings resulting from an unpredictable retail landscape due to macroeconomic pressures, including cost inflation, and a decline in consumer discretionary spending. Differences between pre-tax and taxable income, such as non-deductible executive compensation, cause the effective income rate to vary significantly. Accordingly, the Company does not believe that it can estimate the annual effective tax rate for 2022 with sufficient precision and, as permitted by GAAP, has determined the income tax benefit for the first quarter of 2022 based upon the year-to-date pre-tax loss and the effect of differences between book and taxable loss.

We have estimated the reasonably possible expected net change in unrecognized tax benefits through April ~~30, 2022,~~29, 2023, 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 $4.0 million. Actual results may differ materially from this estimate.

NOTE 76 – CONTINGENCIES

Legal Proceedings

We are involved in 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 87 – BUSINESS SEGMENT DATA

We use the following ~~six~~seven merchandise categories, which are consistent with our internal management and reporting of merchandise net sales: Food; Consumables; Soft Home; Hard Home; Furniture; Seasonal; and ~~Seasonal.~~Apparel, Electronics, & Other. The Food category includes our beverage & grocery; ~~candy & snacks;~~specialty foods; and ~~specialty foods~~pet departments. The Consumables category includes our health, beauty and cosmetics; plastics; paper; ~~chemical;~~ and ~~pet~~chemical departments. The Soft Home category includes our home décor; frames; fashion bedding; utility bedding; bath; window; decorative textile; ~~home organization;~~and area ~~rugs; jewelry; apparel; and hosiery~~rugs departments. The Hard Home category includes our small appliances; table top; food preparation; stationery; home maintenance; home organization; and ~~electronics~~toys 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. The Apparel, Electronics, & Other department includes our apparel; electronics; jewelry; hosiery; and candy & snacks departments, as well as the assortments for The Lot, our cross-category presentation solution, and the Queue Line, our streamlined checkout experience.

InWe periodically assess, and make minor adjustments to, our product hierarchy, which can impact the ~~first quarter~~roll-up of ~~2021, we realigned~~ our merchandise ~~categories and eliminated our Electronics, Toys, & Accessories~~categories. Our financial reporting process utilizes the most current product hierarchy in reporting net sales by merchandise category ~~which comprised $75.1 million~~for all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported ~~in the first quarter of 2020. See the reclassifications section of~~ n ~~ote 1~~ ~~to the consolidated financial statements for further discussion.~~amounts.

The following table presents net sales data by merchandise category:

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


	First Quarter
(In thousands)	2022		2021
Furniture	$	390,386	$	481,431
Seasonal	234,171		303,918
Food	176,620		180,297
Soft Home	166,295		223,854
Consumables	155,310		162,388
Hard Home	129,284		152,198
Apparel, Electronics, & Other	122,648		121,466
Net sales	$	1,374,714	$	1,625,552

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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, inflation, 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.

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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 first quarter of ~~2021~~2022 that we believe are key indicators of our operating performance when compared to our operating performance from the first quarter of ~~2020:~~2021:

•Net sales ~~increased $186.4~~decreased $250.8 million, or ~~13.0%~~15.4%.

•Comparable sales for stores open at least fifteen months, plus our e-commerce operations, ~~increased $159.3~~decreased $268.3 million, or ~~11.3%~~17.0%.

•Gross margin dollars ~~increased $83.2~~decreased $149.3 million, while gross margin rate ~~increased 50~~decreased 350 basis points to ~~40.2%~~36.7% of sales.

•Selling and administrative expenses ~~increased $38.8~~decreased $16.6 million. As a percentage of net sales, selling and administrative expenses ~~decreased 130~~increased 440 basis points to ~~30.6%~~35.0% of net sales.

•Operating (loss) profit rate ~~increased 230~~decreased 850 basis points to ~~7.5%~~(1.0)%.

•Diluted earnings (loss) per share ~~increased~~decreased to ~~$2.62~~$(0.39) per share from ~~$1.26~~$2.62 per share.

•Cash and cash equivalents ~~increased by $301.5~~decreased $551.6 million, tofrom $613.3 million ~~from~~at the end of the first quarter of ~~2020.~~2021 to $61.7 million at the end of the first quarter of 2022.

•Inventory increased by ~~11.8%~~48.5% or ~~$94.9~~$437.2 million, tofrom $901.5 million ~~from~~at the end of the first quarter 2021 to $1,338.7 million at the end of ~~2020.~~the first quarter 2022.

•We declared and paid a quarterly cash dividend in the amount of $0.30 per common share in the first quarter of ~~2021,~~2022, which was consistent with the quarterly cash dividend of $0.30 per common share paid in the first quarter of ~~2020.~~

•~~We acquired 1.1 million of our outstanding common shares for $77.5 million under the 2020 Repurchase Authorization (as defined below).~~2021.

See the discussion and analysis below for additional details regarding our operating results.

STORES

The following table presents stores opened and closed during the first quarter of ~~2021~~2022 and the first quarter of ~~2020:~~2021:


			2021	2020			2022	2021
Stores open at the beginning of the fiscal year	Stores open at the beginning of the fiscal year		1,408	1,404	Stores open at the beginning of the fiscal year		1,431	1,408
Stores opened during the period	Stores opened during the period		13	6	Stores opened during the period		7	13
Stores closed during the period	Stores closed during the period		(8)	(6)	Stores closed during the period		(4)	(8)
		Stores open at the end of the period	1,413	1,404		Stores open at the end of the period	1,434	1,413

We expect our store count at the end of ~~2021~~2022 to increase by approximately 2030 stores compared to our store count at the end of ~~2020.~~2021.

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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:


		First Quarter					First Quarter
		2021		2020			2022		2021
Net sales	Net sales	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)	59.8		60.3		Cost of sales (exclusive of depreciation expense shown separately below)	63.3		59.8
Gross margin	Gross margin	40.2		39.7		Gross margin	36.7		40.2
Selling and administrative expenses	Selling and administrative expenses	30.6		31.9		Selling and administrative expenses	35.0		30.6
Depreciation expense	Depreciation expense	2.1		2.6		Depreciation expense	2.7		2.1
Operating profit		7.5		5.2
Operating (loss) profit						Operating (loss) profit	(1.0)		7.5
Interest expense	Interest expense	(0.2)		(0.2)		Interest expense	(0.2)		(0.2)
Other income (expense)	Other income (expense)	0.1		(0.2)		Other income (expense)	0.1		0.1
Income before income taxes		7.4		4.7
Income tax expense		1.6		1.3
Net income		5.8	%	3.4	%
(Loss) income before income taxes						(Loss) income before income taxes	(1.1)		7.4
Income tax (benefit) expense						Income tax (benefit) expense	(0.3)		1.6
Net (loss) income and comprehensive (loss) income						Net (loss) income and comprehensive (loss) income	(0.8)	%	5.8	%

FIRST QUARTER OF ~~2021~~2022 COMPARED TO FIRST QUARTER OF ~~2020~~2021

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 first quarter of ~~2021~~2022 compared to the first quarter of ~~2020~~2021 were as follows:


First Quarter	First Quarter															First Quarter
($ in thousands)	($ in thousands)	2021				2020				Change				Comps		($ in thousands)	2022				2021				Change				Comps
Furniture	Furniture	$	481,431	29.6	%	$	415,700	28.9	%	$	65,731	15.8	%	13.7	%	Furniture	$	390,386	28.4	%	$	481,431	29.6	%	$	(91,045)	(18.9)	%	(20.8)	%
Seasonal	Seasonal	328,794		20.2		215,302		15.0		113,492		52.7		51.0		Seasonal	234,171		17.0		303,918		18.7		(69,747)		(22.9)		(24.0)
Food																Food	176,620		12.9		180,297		11.1		(3,677)		(2.0)		(3.2)
Soft Home	Soft Home	303,981		18.7		248,743		17.2		55,238		22.2		20.6		Soft Home	166,295		12.1		223,854		13.8		(57,559)		(25.7)		(27.1)
Consumables	Consumables	204,015		12.6		237,241		16.5		(33,226)		(14.0)		(14.7)		Consumables	155,310		11.3		162,388		10.0		(7,078)		(4.4)		(5.5)
Food		175,131		10.8		203,819		14.2		(28,688)		(14.1)		(15.1)
Hard Home	Hard Home	132,200		8.1		118,344		8.2		13,856		11.7		9.3		Hard Home	129,284		9.4		152,198		9.4		(22,914)		(15.1)		(16.7)
Apparel, Electronics, & Other																Apparel, Electronics, & Other	122,648		8.9		121,466		7.4		1,182		1.0		(1.1)
Net sales	Net sales	$	1,625,552	100.0	%	$	1,439,149	100.0	%	$	186,403	13.0	%	11.3	%	Net sales	$	1,374,714	100.0	%	$	1,625,552	100.0	%	$	(250,838)	(15.4)	%	(17.0)	%

InWe periodically assess, and make minor adjustments to, our product hierarchy, which can impact the ~~first quarter~~roll-up of ~~2021, we realigned~~ our merchandise ~~categories and eliminated our Electronics, Toys, & Accessories merchandise category. See~~categories. Our financial reporting process utilizes the ~~reclassifications discussion~~most current product hierarchy in ~~note 1~~ ~~to the consolidated financial statements for additional information. In order to provide comparative information, we have reclassified our results into the new~~reporting net sales by merchandise category ~~alignment~~ for ~~both~~all periods presented. Therefore, there may be minor reclassifications of net sales by merchandise category compared to previously reported amounts.

Net sales ~~increased $186.4~~decreased $250.8 million, or ~~13.0%~~15.4%, to $1,374.7 million in the first quarter of 2022, compared to $1,625.6 million in the first quarter of ~~2021, compared to $1,439.1 million in the first quarter of 2020.~~2021. The ~~increase~~decrease in net sales was primarily driven by ~~an 11.3% increase~~a 17.0% decrease in our comps, which decreased net sales by $268.3 million, partially offset by our non-comparable sales, which increased net sales by ~~$159.3 million. Additionally, our non-comparable sales increased net sales by $27.1~~$17.5 million, driven by the net increase of 21 stores since the first quarter of 2021 and increased sales of 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.

Our net sales ~~during~~and comps decreased in the first quarter of ~~2021 benefited from~~2022 due to the absence of government sponsored relief packages ~~related to COVID-19, which included stimulus payments and enhanced unemployment benefits, the majority of which~~that were ~~released in January 2021 and March 2021. Additionally, we continued to experience increased demand for our home products~~present in the first quarter of 2021, which ~~includes our Furniture, Seasonal, Soft Home,~~included government stimulus payments and ~~Hard Home merchandise categories. We believe this~~enhanced unemployment benefits, and resulted in increased ~~demand was~~net sales and comps in the ~~result~~first quarter of ~~the continuation of nesting trends~~2021. Additionally, we experienced decreased demand in ~~2020 due to customers investing more time and~~the

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~~discretionary funds in their home~~first quarter of 2022 as a ~~byproduct~~result of general economic pressures on our customers caused by inflation and other macroeconomic impacts, including rising fuel and food prices, which we believe impacted the ~~COVID-19 pandemic.~~ discretionary spending of our customers.

In the first quarter of ~~2021, nesting trends shifted toward patio furniture~~2022, we experienced decreased comps and ~~other outdoor~~net sales in all of our merchandise categories except our Apparel, Electronics, & Other category where net sales increased slightly. Our home products categories - Furniture, Seasonal, Soft Home, and Hard Home - were most impacted, as purchases from these categories are generally more discretionary. As discussed above, the absence of stimulus and enhanced unemployment benefits and a challenging macroeconomic environment reduced our customer's discretionary spending. Furthermore, our Seasonal category was negatively impacted in the first quarter of 2022 by cooler weather stretching into March and April in much of the country, which ~~drove~~led to a slow start to the ~~increased~~lawn & garden and summer selling season, both weather-sensitive departments. Accordingly, we experienced lower net sales and comps in our Seasonal ~~merchandise~~ category ~~compared to the first quarter of 2020. While our business~~ in the first quarter of ~~2021 benefited from COVID-19-related factors, such as government stimulus, we believe~~2022 in the ~~strength~~northern parts of ~~our trend-right home offerings provided a strong foundation for net sales growth~~the U.S. compared to the ~~first quarter of 2020. Additionally, we believe that~~southern U.S., particularly the southeastern U.S.

While our ~~strategic initiatives - including The Lot, Queue Line, Broyhill~~®,Food and ~~Pantry Optimization - continued to contribute to our increased~~Consumables categories experienced decreased comps and 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. Queue Line offers~~2022, these categories performed relatively better than 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.

~~Partially offsetting our success in~~ home ~~offerings was a decline in net sales in our Food and Consumables merchandise~~products categories during the first quarter of 2021 due to a decrease in demand for essential products, which we define as food, consumables, health products, and pet supplies, compared to the first quarter of 2020. Demand for essential products surged in the first quarter of ~~2020~~2022 as ~~customers stocked up on these products at the onset~~they are less sensitive to changes in discretionary spending.

Our Apparel, Electronics, & Other category experienced a slight decrease in comps as a result of the ~~COVID-19 pandemic. Our customers did not stock up on these products to the same extent~~decreased discretionary spending in the first quarter of 2021. Despite the decline in net sales in the first quarter of 2021 in our Food and Consumables categories compared to the first quarter of 2020, the performance of our Food and Consumables categories was consistent with our expectations, and we believe that our Pantry Optimization initiative has been successful to date.2022 discussed above.

Gross Margin

Gross margin dollars ~~increased $83.2~~decreased $149.3 million, or ~~14.6%~~22.8%, to $504.6 million for the first quarter of 2022, compared to $653.9 million for the first quarter of ~~2021, compared to $570.8 million for the first quarter of 2020.~~2021. The ~~increase~~decrease in gross margin dollars was primarily due to ~~an increase~~a decrease in net sales ~~which increased~~and gross margin ~~dollars by $73.9 million.~~rate. Gross margin as a percentage of net sales ~~increased 50~~decreased 350 basis points to 36.7% in the first quarter of 2022 compared to 40.2% in the first quarter of ~~2021 compared~~2021. The gross margin rate decrease was primarily due to ~~39.7%~~higher markdowns, higher inbound freight costs, and a higher shrink rate. The higher markdowns were a result of our being more promotional in the first quarter of ~~2020. The gross margin rate increase was primarily due~~2022 compared to ~~lower markdowns and favorable product mix resulting from increased sales in higher average gross margin items, particularly in our Seasonal category, in~~ the first quarter of ~~2021 compared to lower average gross margin items in the first quarter of 2020, partially offset by higher inbound~~2021. Inbound freight ~~costs. Freight~~ costs increased ~~primarily~~ due to higher ocean carriage rates, detention and demurrage charges ~~resulting from delayed receipt of inventory~~ related to supply chain ~~constraints, high transportation rates,~~delays, and ~~increasing~~higher fuel costs. The higher shrink rate was driven by a higher rate of theft and other loss in our stores during 2021, which has led to unfavorable physical inventory counts in the 2022 physical inventory cycle and a higher shrink accrual rate in the fourth quarter of 2021 and first quarter of 2022.

Selling and Administrative Expenses

Selling and administrative expenses were $480.8 million for the first quarter of 2022, compared to $497.4 million for the first quarter of ~~2021, compared to $458.6 million for the first quarter~~2021. The decrease of ~~2020. The increase of $38.8~~$16.6 million in selling and administrative expenses was driven by ~~an increase~~decreases in accrued bonus expense of $19.1 million, share-based compensation expense of $8.2 million, and self-insurance expense of $3.6 million, partially offset by increases in distribution and transportation expense of $13.9 million, accrued bonus expense of $8.9 million, share-based compensation expense of $8.9 million, $2.1 million of store occupancy costs, and store-related payroll expense of $1.9 million, partially offset by the absence of proxy contest related costs of $3.7$15.8 million. The increase in distribution and transportation expenses was driven by rent on our leased distribution centers, four of which were sold and leased back in the second quarter of 2020, and higher outbound transportation volume and higher distribution costs to support our increased net sales. The increasedecrease in accrued bonus expense was due to ~~increased~~lower performance in the first quarter of ~~2021~~2022 relative to our quarterly and annual operating plans as compared to the first quarter of ~~2020 and accrual of a discretionary bonus for most of our non-exempt associates in the first quarter of~~ 2021. Our share-based compensation expense ~~increased primarily~~decreased 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 openedgranted in the first quarter of 2021, which ~~have~~carried a higher ~~rents~~grant date fair value and for which substantially more awards were granted than the stores closed, normal rent increases resulting from lease renewals, and a higher store count at the end of the first quarter of 2021 compared to the first quarter of 2020. The increase in store-related payroll was primarily due to additional payroll hours to support our increased net sales2022 TSR PSUs granted in the first quarter of ~~2021.~~2022. The ~~proxy contest related costs were comprised of legal, public relations,~~decrease in self-insurance expense was primarily driven by favorable workers' compensation, general liability, and ~~advisory fees, and settlement costs~~healthcare claims experience, which led to lower incurred ~~to resolve a proxy contest~~expense in the first quarter of ~~2020.~~2022. The increase in distribution and transportation expenses was driven by increased fuel costs and outbound transportation rates.

As a percentage of net sales, selling and administrative expenses ~~decreased 130~~increased 440 basis points to 35.0% for the first quarter of 2022 compared to 30.6% for the first quarter of ~~2021 compared to 31.9% for the first quarter of 2020.~~

2021.

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Depreciation Expense

Depreciation expense ~~decreased $3.7~~increased $3.4 million to ~~$34.0~~$37.4 million in the first quarter of ~~2021,~~2022, compared to ~~$37.7~~$34.0 million for the first quarter of ~~2020.~~2021. Depreciation expense as a percentage of sales ~~decreased 50~~increased 60 basis points compared to the first quarter of ~~2020.~~2021. The ~~decrease~~increase was primarily driven by ~~the sale of four distribution centers~~investments in ~~second quarter of 2020~~our strategic initiatives, new stores, and ~~the disposition of other store assets since the first quarter of 2020.~~supply chain improvements.

Interest Expense

Interest expense was $2.8 million in the first quarter of 2022, compared to $2.6 million in the first quarter of ~~2021, compared to $3.3 million in the first quarter of 2020.~~2021. The ~~decrease~~increase in interest expense was driven by ~~a decrease~~an increase in total average borrowings. We had total average borrowings (including finance leases and the financing liability related to the sale and leaseback transactions for four of our distribution ~~centers~~centers) of $301.1 million in the ~~second~~first quarter of ~~2020)~~2022 compared to total average borrowings of $180.7 million in the first quarter of ~~2021 compared to total average borrowings of $452.8 million in the first quarter of 2020.~~2021. The ~~decrease~~increase in total average borrowings was driven by our ~~repayment of all outstanding~~ borrowings under the Credit Agreement ~~as a condition~~throughout the first quarter of 2022, while we had no borrowings under our revolving credit facility in the first quarter of 2021, partially offset by the repayment of the ~~closing~~balance of ~~the sale and leaseback transactions~~a term note agreement in the second quarter of 2020, partially offset by the establishment of the financing liability in connection with the sale and leaseback transactions. The decrease in total average borrowings was partially offset by a higher average interest rate on the sale and leaseback financing liability.2021.

Other Income (Expense)

Other income (expense) was $1.0 million ~~of income~~ in the first quarter of ~~2021, compared to $(3.3) million of expense~~2022 and in the first quarter of ~~2020.~~2021. The ~~change~~income in both years was ~~primarily~~ driven by unrealized gains on our diesel fuel ~~derivatives due to an increase in current and forward diesel fuel prices in the first quarter of 2021 as compared to a sharp decline in prices in the first quarter of 2020.~~derivatives.

Income Taxes

The effective income tax rate for the first quarter of ~~2021~~2022 and the first quarter of ~~2020~~2021 was ~~21.8%~~27.3% and ~~27.2%~~21.8%, respectively. The ~~decrease~~increase in the effective income tax rate was primarily attributable to ~~the~~audit settlements and a net ~~tax benefit~~deficiency associated with ~~settlement~~vesting of share-based payment awards ~~during~~in 2022 compared to a net benefit in the first quarter of 2021, partially offset by an increase in employment-related tax credits in 2022. Additionally, the increase in the effective income tax rate was impacted by the loss before income taxes in the first quarter of 2022 compared to the income before income taxes in the first quarter of 2021.

~~2021~~Known Trends and 2022 Guidance

In ~~March 2020,~~late 2021 and early 2022, the ~~World Health Organization declared COVID-19 a pandemic. The effects of the virus, the related government response, and the impact on consumer spending behaviors have significantly~~U.S. economy has experienced its highest inflationary period in decades, which has adversely impacted costs in our business and ~~reduced~~adversely impacted the buying power of our ~~visibility~~customers. We expect the inflationary environment to ~~future financial results.~~continue and negatively impact discretionary spending by our customers. At this time, the Company does not believe it has sufficient visibility to provide full year guidance for ~~2021.~~2022.

Given a wider-than-usual range of potential outcomes, we are not currently providing earnings per share guidance for the second quarter of 2022. However, we do anticipate a loss in the second quarter of 2022. As of May ~~28, 2021, and excluding consideration of potential share repurchase activity,~~27, 2022, we expect the following in the second quarter of ~~2021:~~2022:

•~~Comparable~~A comparable sales decrease in the ~~low double~~mid-to-high single digits ascompared to the second quarter of ~~2020 benefited significantly from a government sponsored relief package;~~2021;

•Gross margin rate ~~below last year~~ in ~~consideration~~the low 30s as result of ~~macro-economic headwinds in freight cost;~~increased promotional activity and inbound transportation costs; and

•Selling and administrative expenses slightly ~~below last year; and~~

•~~Diluted earnings per share in~~up compared to the ~~range~~second quarter of ~~$1.00 to $1.15.~~

2021.

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Capital Resources and Liquidity

On ~~August 31, 2018,~~September 22, 2021, we entered into the Credit Agreement which provides for a ~~$700~~$600 million five-year unsecured credit ~~facility. The Credit Agreement~~facility that expires on ~~August 31, 2023.~~September 22, 2026. Borrowings under the Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness. The Credit Agreement includes a ~~$30~~$50 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 Credit Agreement also contains an environmental, social and governance (“ESG”) provision, which may provide favorable pricing and fee adjustments if we meet ESG performance criteria to be established by a future amendment to the Credit Agreement. Under the Credit Agreement, we have the option to establish incremental term loans and/or increases in the revolving credit limits in an aggregate amount of up to $300 million, subject to the lenders agreeing to increase their commitments. Additionally, the Credit Agreement includes two options to extend the maturity date of the Credit Agreement by one year each, subject to each lender agreeing to extend the maturity date of its respective loans. The interest rates, pricing and fees under the Credit Agreement fluctuate based on our debt ~~rating.~~rating or leverage ratio, whichever results in more favorable pricing to us. The 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~~The Credit Agreement updated the LIBOR fallback language to implement fallback provisions, pursuant to which the interest rate on the loans will transition to an alternative rate upon the occurrence of certain LIBOR cessation events. Loans made under the Credit Agreement may be prepaid without penalty. The 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 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, ~~CA.~~CA, which was amended concurrent with our entry into the Credit Agreement to conform with the covenants of the Credit Agreement. A violation of any of the covenants could result in a default under the Credit Agreement that would permit the lenders to restrict our ability to further access the Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the Credit Agreement. At ~~May 1, 2021,~~April 30, 2022, we were in compliance with the covenants of the Credit Agreement.

At ~~May 1, 2021,~~April 30, 2022, we had no$270.8 million of borrowings under the Credit Agreement, and the borrowings available under the Credit Agreement were ~~$694.2~~$324.2 million, after taking into account the reduction in availability resulting from outstanding letters of credit totaling ~~$5.8~~$5.0 million.

~~On August 7, 2019, we entered into the 2019 Term Note, a $70 million term note agreement, which was secured by the equipment at our California distribution center.~~ The ~~interest rate on the note was fixed at 3.3%. In light~~primarily source of our ~~strong~~ liquidity is cash flows from operations and ~~current market conditions, on June 7, 2021, we prepaid the remaining $44.3 million principal balance~~borrowings under ~~the 2019 Term Note. In connection with the prepayment, we incurred a $0.4 million prepayment fee~~our credit facility as necessary. Our net income and, ~~recognized a $0.5 million loss on debt extinguishment~~consequently, our cash provided by operations are impacted by net sales volume, seasonal sales patterns, and operating profit margins. Our cash provided by operations typically peaks in the ~~second~~fourth quarter of ~~2021.~~

each fiscal year due to net sales generated during the holiday selling season. Generally, our working capital requirements peak late in our third fiscal quarter or early in our fourth fiscal quarter as we build our inventory levels prior to the holiday selling season. We have historically funded ~~our working capital~~those requirements with cash provided by operations and borrowings under our credit facility. ~~However, based on our current cash and cash equivalents position and projected cash flows from operations, we intend~~We expect to borrow under the Credit Agreement during 2022 to fund our ~~working capital requirements, along with capital expenditures, share repurchases, and other contractual commitments, for the upcoming quarter without borrowing~~cash requirements. However, we currently expect to reduce our borrowings under the Credit ~~Agreement.~~Agreement at the end of the second quarter of 2022 compared to the first quarter of 2022. Cash requirements include among other things, capital expenditures, working capital needs, interest payments, and other contractual commitments.

~~In August 2020,~~On December 1, 2021, our Board of Directors authorized the repurchase of up to ~~$500~~$250 million of our common shares ~~(“2020~~under the 2021 Repurchase ~~Authorization”).~~Authorization. Pursuant to the ~~2020~~2021 Repurchase Authorization, we ~~are authorized to~~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~~2021 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~~date. In the first quarter of ~~2021,~~2022, we ~~purchased 1.1 million of our common~~did not repurchase shares ~~for $77.5 million~~ under the ~~2020~~2021 Repurchase ~~Authorization, at an average price~~Authorization. As of ~~$67.45. At May 1, 2021,~~April 30, 2022, we had ~~$249.6~~$159.4 million available for future repurchases under the ~~2020~~2021 Repurchase Authorization.

In ~~February 2021,~~March 2022, our Board of Directors declared a quarterly cash dividend of $0.30 per common share payable on April ~~2, 2021~~1, 2022 to shareholders of record as of the close of business on March ~~19, 2021.~~18, 2022. The cash dividend of $0.30 per common share is consistent with our quarterly dividends declared in ~~2020.~~2021. In the first quarter of ~~2021,~~2022, we paid approximately ~~$12.5~~$10.7 million in dividends, ~~consistent with~~compared to the dividends paid of $12.5 million in the first quarter of ~~2020.~~2021.

In May ~~2021,~~2022, our Board of Directors declared a quarterly cash dividend of $0.30 per common share payable on June ~~25, 2021~~24, 2022 to shareholders of record as of the close of business on June ~~11, 2021.~~10, 2022.

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The following table compares the primary components of our cash flows from the first quarter ~~2021~~2022 compared to the first quarter ~~2020:~~2021:


(In thousands)	(In thousands)	2021		2020		Change		(In thousands)	2022		2021		Change
Net cash provided by operating activities		$	204,293	$	146,121	$	58,172
Net cash (used in) provided by operating activities								Net cash (used in) provided by operating activities	$	(196,233)	$	204,293	$	(400,526)
Net cash used in investing activities	Net cash used in investing activities	(32,170)		(28,913)		(3,257)		Net cash used in investing activities	(41,241)		(32,170)		(9,071)
Net cash (used in) provided by financing activities		$	(118,350)	$	141,943	$	(260,293)
Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	$	245,459	$	(118,350)	$	363,809

Cash (used in) provided by operating activities ~~increased~~decreased by ~~$58.2~~$400.5 million to cash used in operating activities of $196.2 million in the first quarter of 2022 compared to cash provided by operating activities of $204.3 million in the first quarter of ~~2021 compared to $146.1 million~~2021. The decrease was driven by the combined increase in cash outflows from inventories and accounts payable, which were driven by increased inventory levels at the end of the first quarter of ~~2020. The increase was principally driven by our higher~~2022, a lower net (loss) income after adjusting for non-cash activities such as non-cash share-based compensation expense and non-cash lease ~~expense.~~expense, and an increase in cash outflows from current income taxes, which was driven by our lower (loss) income before income taxes in the year-to-date 2022.

Cash used in investing activities increased by ~~$3.3~~$9.1 million to $41.2 million in the first quarter of 2022 compared to $32.2 million in the first quarter of ~~2021 compared~~2021. The increase was principally driven by an increase in capital expenditures, which was primarily due to ~~$28.9~~increased investments in new stores.

Cash provided by (used in) financing activities increased by $363.8 million to cash provided by financing activities of $245.5 million in the first quarter of ~~2020. The increase was principally due to an increase in capital expenditures.~~

~~Cash (used in) provided by financing activities increased by $260.3 million~~2022 compared to cash used in financing activities of $118.4 million in the first quarter of ~~2021 compared to cash provided by financing activities of $141.9 million in the first quarter of 2020.~~2021. The increase was ~~primarily~~ driven by net proceeds from long-term debt due to borrowings under the Credit Agreement to fund working capital requirements, and a decrease 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 COVID-19 pandemic and an increasepayment for treasury shares acquired. The decrease in payment for treasury shares acquired was due to shares repurchased under a share repurchase authorization in first quarter of 2021, whereas there were no shares repurchased in the first quarter of ~~2021 primarily due to shares repurchased~~2022 under the ~~2020~~2021 Repurchase Authorization. In

Based on historical and expected financial results, we believe that we have or, if necessary, have the ~~first quarter of 2020, we had no active share repurchase program in place.~~ability to obtain, adequate resources to fund our cash requirements, including ongoing and seasonal working capital requirements, proposed capital expenditures, new projects, and currently maturing obligations.

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 ~~2020~~2021 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 ~~2020~~2021 Form 10-K. Had we used estimates, judgments, and assumptions different from any of those discussed in our ~~2020~~2021 Form 10-K, our financial condition, results of operations, and liquidity for the current period could have been materially different from those presented.

1918

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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 Credit Agreement. We had no$270.8 million in borrowings under the Credit Agreement at ~~May 1, 2021.~~April 30, 2022. An increase of 1% in our variable interest rate on our expected future borrowings ~~would not currently materially~~could affect our financial condition, results of operations, or ~~liquidity.~~liquidity through higher interest expense by approximately $2.7 million.

We are subject to market risk from exposure to changes in our derivative instruments associated with diesel fuel. At ~~May 1, 2021,~~April 30, 2022, we had outstanding derivative instruments, in the form of collars, covering ~~3.0~~0.9 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)			Puts	Calls	Asset (Liability)
		(Gallons, in thousands)		(In thousands)			(Gallons, in thousands)		(In thousands)
2021		1,800	1,800	$	84
2022	2022	1,200	1,200	183		2022	900	900	$	1,555
Total	Total	3,000	3,000	$	267	Total	900	900	$	1,555

Additionally, at ~~May 1, 2021,~~April 30, 2022, a 10% difference in the forward curve for diesel fuel prices could affect unrealized gains (losses) in other income (expense) by approximately ~~$1.0~~$0.4 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

For information regarding certain legal proceedings to which we have been named a party or are subject, see note 76 to the accompanying consolidated financial statements.

Item 1A. Risk Factors

During the first quarter of ~~2021,~~2022, there were no material changes to the risk factors previously disclosed in our ~~2020~~2021 Form 10-K.

2019

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


(In thousands, except price per share data)	(In thousands, except price per share data)							(In thousands, except price per share data)
Period	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		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
January 30, 2022 - February 26, 2022								January 30, 2022 - February 26, 2022	1	$	42.09	—	$	159,425
February 27, 2022 - March 26, 2022								February 27, 2022 - March 26, 2022	49	36.58		—	159,425
March 27, 2022 - April 30, 2022								March 27, 2022 - April 30, 2022	230	38.17		—	159,425
Total	Total	1,538	$	67.96	1,149	$	249,634	Total	280	$	37.91	—	$	159,425

(1) In February, March, and April ~~2021,~~2022, in connection with the vesting of certain outstanding ~~restricted stock units,~~RSUs and PSUs, ~~and PRSUs,~~ we acquired ~~946, 42,930~~1,340, 48,998 and ~~344,189~~230,300 of our common shares, respectively, which were withheld to satisfy income tax withholdings.

(2) The ~~2020~~2021 Repurchase Authorization is comprised of ~~an August 27, 2020~~a December 1, 2021 authorization by our Board of Directors for the repurchase of up to ~~$500.0~~$250.0 million of our common shares. During the first quarter of 2022, we had no repurchases under the 2021 ~~we purchased approximately 1.1~~Repurchase Authorization. At April 30, 2022, the 2021 Repurchase Authorization has $159.4 million of ~~our common shares for approximately $77.5 million under the 2020 Repurchase Authorization.~~remaining authorization. The ~~2020~~2021 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.

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Item 6. Exhibits

Exhibits marked with an asterisk (*) are filed herewith.


			Exhibit No.						Document
			10.1						Form of Big Lots 2020 Long-Term Incentive Plan Performance Share Units Award Agreement (incorporated herein by reference to Exhibit ~~10.1~~10.14 to our Form ~~8-K~~10-K dated March ~~9, 2021)~~29, 2022).
			10.2						~~Form of~~ Big Lots, ~~2020 Long-Term Incentive Plan Restricted Stock Units Award Agreement (incorporated herein by reference to Exhibit 10.2 to our Form 8-K dated March 9, 2021).~~Inc. Executive Severance Agreement.
			10.3						Big Lots, Inc. Senior Executive Severance Agreement.
			31.1*						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			31.2*						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			32.1*						Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			32.2*						Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			101.Def*						XBRL Taxonomy Definition Linkbase Document
			101.Pre*						XBRL Taxonomy Presentation Linkbase Document
			101.Lab*						XBRL Taxonomy Labels Linkbase Document
			101.Cal*						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: June ~~9, 2021~~8, 2022


			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)

2221


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


(In thousands)	Balance Sheet Location	May 1, 2021		Level 1
Assets:
Money market funds	Cash and cash equivalents	$	175,135	$	175,135
Mutual funds - deferred compensation plan	Other current assets	$	29,988	$	29,988


(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