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Mill Road's Big Lots call faces bumps

May 27, 2022
Illustration of a dollar bill with a pixelated no symbol being drawn over George Washington.

Illustration: Brendan Lynch/Axios

Big Lots’ share plunge this morning is likely to throw a wrench in activist Mill Road’s plans for the company.

Why it matters: The economic winds aren’t looking so good for the retailer, signaling the value of the discount chain may remain depressed for some time.

Flashback: In March, Mill Road urged a sale of the discount home furnishing retailer, claiming the company could fetch $55 to $70 apiece for its shares.

  • The day before Mill Road’s filing, Big Lots’ shares were trading at $31.99. Today, shares opened down 14% but recovered to trade near $28.

What’s happening: Big Lots today reported a surprise loss and weaker-than-expected sales in its first quarter.

  • The company said it was grappling with higher costs and margin pressure and it has started offering more markdowns to lure customers.

The bottom line: The pinch of higher gas prices and inflation is more acutely felt by the discount chain’s budget-conscious consumers, and that’s not likely to abate anytime soon.

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