As the company stated in SEC filings, the discount retail industry is highly competitive; therefore, Big Lots has to compete with …show more content…
Based on Bloomberg data, the gross margin of Big Lots for 2013, 2014 and 2015 increased a little, from 39.17% to 29.83%. Yet, net income margin decreased by 9.7% from 2013 to 2014, but recovered by 24.7% from 2014 to 2015. This fact may indicate that the competition faced by Big Lots did have a material impact on their operating performance; however, their management made successful decisions in their operational strategies, leading to the recovery in 2015.
As for the liquidity of Big Lots, their current ratios for 2013 to 2015 fall in the reasonable range of 1.4 and 2.0. However, the quick ratios of Big Lots decreased from 0.12 to 0.08, indicating Big Lots may have trouble paying back short-term debt (since inventories occupied over 85% of current assets). In addition, as reported by Big Lots 10K, Big Lots had a total of around 1,956 million of contractual obligations at 01/30/2016. Among which, about 46.5% would be due in less than a year. Thus, Big Lots may encounter difficulty paying their short-term debt in near