Big Lots Stock Falls 31%. The Outlook Is ‘Very Concerning,’ Analyst Says.

“We think Big Lots’ financial situation is becoming increasingly precarious and find recent media reports the company has hired a turnaround consulting firm and is currently exploring financing options to be very concerning,” Chukumba said.

Bloomberg reported on Friday that
Big Lots
has been reaching out to bankers and investors to assess market willingness for another loan, citing people familiar with the matter.

In response to a request for comment, Big Lots pointed Barron’s to its press release on Monday that said during the fourth quarter the company generated “substantial cash flow,” which was used to pay down debt on its $900 million asset-based lending facility.

Loop Capital’s Chukumba added that because the credit facility is asset-based, with borrowing availability tied to the value of Big Lots’ eligible inventory and credit card receivables, the company is “susceptible to a ‘death spiral’ if its suppliers begin to question the company’s viability and as a result tighten their credit terms.”

Shares of Big Lots were tumbling 31% to $3.72, which would be the stock’s largest percentage decrease on record, according to Dow Jones Market Data. The stock has now fallen 78% over the last 12 months.

Big Lots has felt the pain of inflation, as consumers have been less willing to spend on big-ticket furniture items due to higher prices and interest rates. Home sales have also been hit, lessening the need for shoppers to purchase new at home goods.

“Big Lots’ results have been in a veritable free fall in our view, as evidenced by 10 consecutive quarters of comparable sales declines and seven consecutive quarters of adjusted net losses,” Chukuma added.

Write to Angela Palumbo at [email protected]