Home Big Lots Touts New FILO Loan as Liquidity Booster
April 19, 2024

Big Lots Touts New FILO Loan as Liquidity Booster

Posted In: Retail Articles

As it looks to address costs and lagging sales, Big Lots has increased its borrowing capacity by up to $200 million with a new FILO term loan facility through 1903P Loan Agent, LLC, an affiliate of Gordon Brothers Capital. 

The loan significantly enhances Big Lots’ liquidity position, the retailer stated, and is incremental to the borrowing capacity within the company’s current $900 million asset-based revolving loan facility.

Big Lots maintained it had achieved significant sequential improvement in its results during 2023 and, as reported on its March 7 earnings call, the company expects further improvements during 2024. As part of the earnings call, Big Lots indicated it would continuing to evaluate additional actions to bolster its liquidity.

Big Lots has identified five key actions the company is undertaking to reclaim its discount heritage. The retailer is focused on becoming the premier partner for closeouts and liquidations, it asserted, growing bargain offerings to 75% of sales, and creating an annual pipeline of closeout deals worth more than $1 billion at original retail value across furniture, décor and pantry essentials.

Big Lots continues to aggressively manage capital and expenses, the company noted, and it remains on track to achieve at least $200 million in profitability improvements identified through its Project Springboard initiative launched in spring 2023.

“We remain fully committed to improving our results and returning the company to health and prosperity,” said Jonathan Ramsden, Big Lots chief financial and administrative officer. “The financing announced today gives us additional flexibility as we continue our focus on delivering extreme bargains and unmistakable value to our customers. We are confident that our five key actions will drive significant improvement in sales and gross margin in the coming quarters.”

According to Pulse Ratings, Big Lots landing the incremental loan is a positive development as the retailer proceeds with strategic initiatives on cost cutting and driving top-line sales. However, Pulse noted it comes at a cost in the form of added interest expense that will add to the company’s existing cash burn.

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