Big Lots

Big Lots has been all over the news recently. There have been so many twists and turns in t For years now, there have been various headlines about the company losing money, planning to close stores, they've been filed a report saying there was substantial doubt about the company's ability to continue as a going concern. However, I want to say that the situation was first brought to most people's attention when the company filed for bankruptcy in September of 2024, saying they were unable to keep up with their payments on more than $550 million in debts. Obviously, a bad sign there, and even shocking to a lot of people considering Big Lots has traditionally been one of the more successful and stable retailers out there. For over a decade, they have been consistently operating around 1,400 locations throughout almost every state in the country. In fact, I made a video on t So clearly through that bankruptcy, it was reported that Big Lots was going to be acquired by a private equity firm called Nexus Capital Management that essentially saved the company and allowed it to continue operating. Well, a few months later, it was reported that the deal fell apart and Big Lots would be shutting down entirely, closing all of their stores, and that was upsetting news. Not only to the 27,000 Big Lots employees that were the most directly affected, but to their millions of customers, some of w Then, at the last minute, a new buyer came in to save 200 to 400 of the stores. So as of right now, as I make this at the start of 2025, it is looking I believe that t I agree that it would be interesting to take a look at how everyt The official statement from the company at the time of the bankruptcy was, the prevailing economic trends have been particularly challenging to Big Lots as its core customers curb the discretionary spending on the home and seasonal product categories that represent a significant portion of the company's revenue. Now, I do believe that is true, and actually a decent surface level explanation of what happened, but I would For t At its core, the store'strategy is to find stuff that other companies do not want anymore, typically because they made too much of it, it has become outdated, the company itself is shutting down. Whatever the reason, there are companies out there with inventory that they simply want to get rid of and are willing to sell it off at a reduced price. See, the company that became Big Lots was started in 1967, when a man named Sol Shank opened a store in Col Notably, in 1982, when DeLorean, the car company filed for bankruptcy, he was the one who came in, bought up their 2,500 unsold cars and a bunch of parts at a discounted bundle price, and made a profit by selling them one by one to the public. By the 1990s, it was one of the country's largest closeout retailers, growing in part through major acquisitions of similar companies, so it was operating under multiple different names, including Odd Lots and my personal favorite, McFruegles. In 2001, they changed the name of all the stores to Big Lots, remodeled the interiors, expanded their distribution system, and launched a nationwide advertising campaign to promote all the changes. That is pretty much when Big Lots started taking its familiar shape. One of the biggest pros and cons of selling closeout merchandise is that it is unpredictable. They want to keep the customers guessing as to what new treasure they might st Do you see what I mean? It can be a deep topic, but in the end, Big Lots has to find the right balance between revolving closeout items and traditional items. In 2013, Big Lots started s In 2018, they got a new CEO who s Honestly, it is tricky to say what that balance should be, and t I'm just arguing that maybe they should have relied more heavily on their biggest strengths, Competition. I don't have too much to say here, other than the fact that Big Lots has had trouble standing out against increasingly aggressive competition. Online retailers, I'm sure most of I'm sure I don't have to expand too far on that, but when it comes to furniture specifically, Wayfair stands out as a company that has grown significantly over the past decade, w Customers competing mainly on price and value, I made a video about TJ Maxx and all of its brands, including home goods, that have done really well by selling comparable merchandise with its similar off-pricing strategy. There are so many different angles in w For the next reason on my list, I touched on it a second ago, but I have so much more to say about furniture, w See, traditionally, Big Lots has been known for selling furniture, but in the 2010s, they were emphasizing it more than ever before. To me anyway, it almost looks Each year, it was making up a In 2019, they bought the rights to the furniture brand, Broig What I'm trying to say is furniture seemed to be the future of Big Lots, and I have to admit it proved to be perfect timing and a really good strategy before backfiring. In 2020, during the pandemic, furniture sales across the board went through the roof. I guess the explanation be Since Big Lots had already been transitioning into more of a furniture store, t 2020 turned out to be Big Lots' best-selling year, the year of their I mean, Big Lots was optimistic and ready to take advantage of all t Following the pandemic, furniture sales again across the board have been very low. Part of it has to do with real estate sales decreasing, part of it is inflation and interest rates, and maybe part of it is the fact that all those people bought new furniture during the pandemic, so now they simply do not need more of it. So as I'm sure you could see where all t By 2023, sales had dropped to their lowest level since before the 2010s, income had turned to losses, their same-store sales showed the biggest ever decrease and as a result, their debt level grew to an all-time In 2023, Big Lots CEOs said that they had overbought inventory and had to engage in unprecedented levels of markdowns to clear it out. I mean, we can see how it proved to be a decent investment for a little bit and how they could fall into that trap of doubling down on it, but we could also see how that may have been a little reckless and short-sighted. Believe it or not, that comparison very closely describes exactly what happened with the final reason on my list that I'm going to call stock buybacks. The management at Big Lots must have really thought that it was about to take off, because the company started buying back its own stock off the market, According to SEC filings, Big Lots bought 3. 8 million shares of its own stock in 2020 for $172. 8 million, averaging around $45 per share. And then the following year, acquired 7. 7 million more shares for $417. 7 million, averaging to around $54 per share. In short, they spent a lot of money buying Big Lots stock back in 2020 and 2021, w That stock price has since fallen to less than a dollar per share, meaning Big Lots lost almost $600 million through stock buybacks that probably would have come in handy when they were filing for bankruptcy because they could not afford to keep up with their $550 million in debt. My s Then when one of their bigger investments, in furniture, and to a smaller extent various home goods, started showing some real promise, they grabbed onto it and treated it But then, by the time it became clear that they had made a mistake, they were already too invested, and that's when it became a struggle. Throughout most of 2024, they were the focus of all these depressing headlines, but here we are in 2025, and as of right now Let me know in the comments, what do you see for the future of Big Lots? Is it a strong enough brand with a loyal enough customer base that it could survive through these missteps and potentially even rebuild back to 1500 locations and beyond, or has the time passed? I'm just reflecting here, I've been following this story for a while, and it is wild to think that I made that video about Big Lots only 6 years ago when they still had yet to even reach their peak n So any thoughts you have about Big Lots or anything else I'd