Good morning. This is Alvin Concepcion, Vice President of Investor Relations at Big Lots. Welcome to the Big Lots first quarter conference call. Currently, all lines are in a listen-only mode. If you require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. On the call with me today are Bruce Thorn, President and Chief Executive Officer, and Jonathan Ramsden, Executive Vice President, Chief Financial and Administrative Officer. Before starting today's call, we would like to remind you that any forward-looking statements made on the call involve risks and uncertainties that are subject to the company's safe harbor provisions, as stated in the company's press release and SEC filings, and that actual results can differ materially from those described in the forward-looking statements. We would also like to point out that commentary today is focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP adjusted results are available in today's press release. The Q1 earnings release presentation and related financial information are available at biglots.com/corporate/investors. The question and answer session will follow the prepared remarks. I will now turn the call over to Bruce. Good morning, everyone, and thank you for joining us. I will talk more about our Q1 results and full year outlook in a moment, I want to start by being very clear on how we see our current situation. First, macroeconomic headwinds have created significant challenges for us, which are reflected in our results and outlook. We are confident that these headwinds will abate, and that when they do, we will see a major boost to our business. Specifically, our lower-income consumer has been hurt by inflation and by lower tax refunds and higher interest rates, and their confidence has been shaken by banking failures. Further, we continue to cycle the pull forward of higher ticket purchases during the pandemic. We fully expect those effects to soften or reverse over time, and that furniture and seasonal, in particular, will return to being the strong growth drivers for our business that they have been in the past, especially as we continue to bring newness and incredible value to our assortment. Second, while we navigate through this difficult environment, we are being very aggressive in how we are managing our business. We have internally identified over $100 million of structural SG&A savings that are now incorporated into our forecast for 2023. These include the impact of our decision to close all four of our forward distribution centers to reduce costs and remove excess capacity. Importantly, however, these savings do not include any benefit from work we have recently done with an external partner. That project has identified a clear path to over $200 million of additional bottom-line opportunities across gross margin and SG&A. We expect most of this to be realized in 2024, but there will be meaningful benefit in 2023. Specific areas of opportunity include both national and private brand sourcing, transportation, including accessorial charges, store and field operations, general administrative expense, pricing and promotions, inventory allocation, and omni-channel optimization. All of the above opportunities are in addition to the significant reduction in inbound freight rates we are realizing. In addition, we are also managing inventory and CapEx much lower. That brings me to the third point, which is that we are also highly focused on ensuring we have plenty of liquidity to get through this period of macroeconomic challenges. In addition to cost and inventory reduction efforts, these actions include an expected further asset monetization and a decision made by our board of directors this week to suspend our dividend. Fourth, and most importantly, we are highly encouraged by green shoots we are seeing as we work to turn the business. Notably, these reflect progress in both merchandising and marketing as we seek to get customers back into our stores and have them rediscover a refreshed and exciting assortment, incredible value, and great service. The key to all of the above is continued laser focus on the five key actions you've heard us describe over the past several quarters. As a reminder, the five key actions center around accelerating the mix of bargains and treasures that our customers want and need, making them easier to find with clearer signage and marketing, easier to take home with a leading omni-channel platform, and bringing them to more customers who are currently underserved, particularly in rural and small town markets where we know we outperform. Combined with a focus on improving productivity, making disciplined investment decisions, and seizing opportunities from distressed competitors, I am confident that as we pass through this challenging period, we will emerge a significantly stronger company. Turning back to some of the things we're excited about and that are driving our optimism. As it relates to assortment, we are finding significant opportunities to enhance the newness and value of our assortment by procuring from over-inventoried mass retailers, distressed retailers and vendors, and through new sourcing partners overseas. For example, we are unlocking elevated quality and freshness at a great value from India, which should hit stores this fall. We also procured Broyhill merchandise at a significant discount out of the bankruptcy of our former vendor, and we'll pass these savings on to our customers. We have also been working with our vendors to lower prices through product engineering and cost reductions, aided by lower freight costs. Our efforts to provide more bargains are starting to be recognized by our customers. The proportion of bargain items featured on our lead end caps being rated as excellent value has doubled since the beginning of the year. Our customer net price perception score in April increased by a couple hundred basis points from March, and several hundred basis points from the start of the year. Seasonal items, such as lawn and garden, contributed to nearly a quarter of our comp sales decline in the quarter, but we have taken aggressive actions to cycle through them by the end of Q2, including canceling orders. We are also very encouraged that we have begun to see stabilization in our furniture business. This month, we started phasing in new Broyhill collections from our new suppliers and have received positive customer feedback about the quality. In August, more new Broyhill products will be phased in, along with a robust marketing campaign, so we're thrilled about that. Our test to flex assortment by increasing food and consumables inventory in stores where the demand is stronger in those categories, has shown encouraging early results. We also continue to optimize pricing in food and consumables, which is delivering incremental margin benefits. Our recent marketing efforts are also beginning to bear fruit. Our campaign to draw in dislocated Bed Bath & Beyond customers by accepting the expired 20% off coupons, increased brand awareness with over 90 million TV and radio impressions. It also drove new loyalty membership sign-ups, with around 20% of redemptions from the net new customers to Big Lots. Our April marketing campaigns to existing customers have been more efficient, with our best-performing campaigns featuring a closeout from a trendy, over-inventoried retailer, which drove increased visits and a low single-digit lift in store sales to date, as well as our Budget Booster event. We are also doing work to better refine our customer segmentation and messaging, and by focusing on our best customers with our most attractive offering, we have found ways to improve the effectiveness of marketing with a lower cost to acquire a customer. We have been improving the customer experience. Our associates continue to go above and beyond the call of duty for our customers, which has led to very positive customer feedback. We have achieved a Net Promoter Score in the mid-80s range in Q1, which is up from the prior year and top tier in the industry. Our online Net Promoter Score has also improved significantly in April, up several hundred basis points from both March and the beginning of the year, as we continue to improve the customer journey through a more curated experience, better site navigation, and eliminating friction. As a result of our efforts to introduce more bargains and treasures, market them better, and serve our customers well, the reactivation of lapsed customers was strong in Q1, up 9%. While there's still a lot of work to do, we are encouraged about what we're seeing so far. I would now like to make a few comments about Q1, which was clearly a disappointing quarter. In addition to the macroeconomic factors I referenced a moment ago, our furniture sales, especially Broyhill Upholstery, continued to be adversely impacted by product shortages related to the abrupt closure of our largest vendor, United Furniture Industries, in November, while seasonal lawn and garden was affected by unfavorable weather. As a result, comp sales in Q1 were softer than we expected, particularly in March. Trends improved slightly in April, more in line with what we saw in February. We had higher levels of late-quarter promotions that targeted seasonal and furniture divisions than we would have liked, and mix was unfavorable. Gross margins also came in lower than we expected. By addressing these sales challenges quickly and head-on, with increased markdown and promo activity, and also through canceling orders in light of the soft environment, we were able to end the quarter with inventory that was down and in line with sales decline this quarter. While Q2 will remain challenging, we expect a more significant improvement in the back half of the year. This is when our efforts to strengthen our business model will gain more momentum, which I'll go into more in a bit. We should see more pronounced benefits to our cost structure, as well as a more normalized level of markdowns. As I mentioned, with the help of an external partner, we have also identified significant bottom-line opportunities, both in gross margin and SG&A, that we will be pursuing over the next 18 months. Jonathan will discuss this more in a moment. Another helpful factor for the back half is that we will fully mitigate the impact of the United Furniture supply disruption by the end of Q2. We are sourcing a more compelling assortment of Broyhill and Real Living products through our vendors, which we are confident will improve the quality and value impression in the category, particularly online, where the shopping journey for the furniture often begins. Turning back to the Q1, you heard me discuss the sales and margin challenges and how we acted quickly to clean up slow-moving inventory. We tightly managed costs with SG&A that came in better than our guidance. We remain focused on strengthening our balance sheet and liquidity position and reduced our CapEx outlook. Many thanks to our team for managing through a difficult period. Jonathan will add more color in a moment. Looking at specific category performance in the quarter, seasonal comps declined 25% in Q1, due in part to unfavorable weather, which affected lawn and garden sales, as well as customers generally pulling back on higher-ticket outdoor furniture, which typically sells well this time of year, due to concerns about the economy. As a result, we have offered targeted coupons and promotions in the category and are selling through it, with inventory in the category better than last year. Given seasonal is one of our highest margin categories, the sales decline unfavorably impacted our mix, and combined with the promotional activity, it unfavorably impacted our overall gross margin. In Q2, gazebos and our patio dining sets are off to a great start, and we are just starting to hit peak season in our largest markets in the Midwest and Northeast. This illustrates the opportunity to own key categories or segments, particularly in the back half of the year, as our fresh assortment begins to flow through our stores towards the end of summer. Our furniture, soft home, and hard home categories were down double digits. Consumers were hesitant to make higher ticket purchases in this economic environment. This caution was exacerbated by soft tax refunds, which traditionally drive Q1 sales. The furniture product shortages I mentioned earlier, unfavorably impacted our comp sales and furniture by about 1,200 basis points. It also indirectly affected demand in other home categories due to the halo impact that furniture has on soft home textiles and houseware assortments. We are mitigating our sales and inventory exposure by sourcing through other vendors, which will fill the majority of the gap by the end of Q2. As we roll out more on-trend assortments at a great value throughout the summer, we expect our results in the back half to benefit. Food and consumables held up relatively well, given the traffic challenges we experienced. I'd now like to recap the five key actions I mentioned earlier and that we have discussed over the past several quarters. We believe these actions will put us on the path to achieving the long runway of profitable growth that we see. First, as it relates to bargains, which are closeout items, off-price brands, and limited time deals, we continue to source great deals across the categories from bankrupt competitors as well as mass retailers and vendors with excess inventory. Recently, we made great purchases in the consumables, home, and furniture categories. Our penetration rate of bargains is now nearly 20%, so we're making good progress towards our goal to grow our penetration to one-third of our assortment. This is the highest level I've seen since being CEO. We're continuing to lower prices through working with our vendors on product engineering and realizing cost reductions, aided by lower freight costs. With all the great bargains flowing into our stores, our second key action is to communicate unmistakable value with a clearer and more effective marketing strategy. We think there's a long-term opportunity to bring these better bargains and deals to more customers who are currently underserved. This leads to our third action, which is to increase store relevance by leveraging our strengths, particularly in rural and small town markets where we know we outperform. Next, we will win with omnichannel by providing a better customer experience in a more profitable way. Last, but not least, our fifth key action is to drive productivity across cost of goods, SG&A inventory, and CapEx. We are making great strides in all of these areas. We remain highly confident that these five key actions will position us to emerge better and stronger than ever as we emerge from this challenging period. I mentioned earlier, given the difficult environment and our current financial performance, the board this week made the decision to suspend our dividend. That was, of course, not a decision the board took lightly, but in the near term, we believe protecting and enhancing liquidity should be our highest priority. On that note, tough times don't last, tough companies do, and Big Lots is damn tough. I will now pass it over to Jonathan, and I will return in a few moments to make some closing comments before taking your questions. Thanks, Bruce. Good morning. A special thank you goes out to the broader Big Lots team for all of their hard work and for remaining focused in a tough environment. Like Bruce, I'm confident that those efforts are putting us on track to emerge a better, stronger, and more dynamic company. I will go through details on our Q1 results in a moment. I want to start by addressing two points that Bruce referenced in his comments. First, as Bruce noted, we are aggressively going after cost savings and productivity gains across our business. Our internal efforts have now identified over $100 million of structural OpEx savings, up from the $70 million we referenced on our last earnings call. The increase is driven in part by our decision to accelerate the closure of our four forward distribution centers, which ceased operations this month. This will reduce cost and remove excess capacity. We will also realize significant inbound freight savings in 2023, which benefits our gross margin. In addition, we have now reduced 2023 CapEx to around $80 million from over $100 million previously. Beyond those efforts, we have identified an additional $200 million or more of bottom line opportunities across OpEx and gross margin, some of which we expect to realize in 2023, with most of the balance in 2024. These savings have been identified in partnership with an external firm we engaged during the past quarter, and reflect opportunities across multiple areas, as Bruce referenced a moment ago. Second, we are intently focused on managing our liquidity to ensure we are prepared and positioned to navigate through the current economic challenges. As well as benefiting from the cost reductions referenced above, our liquidity position will also be strengthened by aggressive inventory management. We are working towards a step change in how we manage inventory turns, targeting an improvement of at least 15% over the next year, and at least double that over time. In terms of overall liquidity, we have and expect to maintain excess availability under our asset-based lending facility. However, we are also pursuing other measures to further bolster our liquidity. These include being in the advanced stages of a further asset monetization opportunity and the suspension of our dividend, which Bruce just referenced. Regarding asset monetization, this week, we entered into a letter of intent for a sale-leaseback of our Apple Valley, California, distribution center, our corporate headquarters building in Columbus, Ohio, and most of our remaining own stores. The value of the transaction is expected to be around $340 million, equating to $240 million in net proceeds after considering the $100 million balance remaining on the synthetic lease on our California DC. We plan to use the net proceeds to pay down debt under our asset-based lending facility. Due to available NOLs, we expect taxes on the gain on the sale of the assets to be minimal. We are targeting closing in late Q2 or early Q3. The transaction is subject to customary due diligence and execution of a definitive purchase and sale agreement with standard closing conditions. With that, I would like to go into more detail on our Q1 results, which I will discuss on an adjusted basis, excluding synthetic lease exit costs, forward distribution center contract termination costs, store asset impairment charges, and a gain on the sale of own stores, and will then address our outlook. The Q1 summary can be found on page nine of our quarterly results presentation. Q1 net sales were $1.12 billion, an 18.3% decrease compared to $1.37 billion a year ago. The decline versus 2022 was driven by a comparable sales decrease of 18.2%, which was below our guidance range. Going into the quarter, as Bruce mentioned, we expected weakness in the sales environment due to high inflation, weak overall demand for high ticket items, and lower tax refunds. We also knew that product shortages related to United Furniture Industries would impact sales, with an estimated adverse impact to our overall comps of approximately 300 basis points, excluding attachment impacts in soft home and other categories. However, fears of a banking crisis increased the level of caution, and unfavorable weather impacted seasonal lawn and garden. As a result, comp sales in Q1 were softer than we anticipated. Importantly, we acted quickly to clear inventory, which was down in line with our sales decline. Our Q1 adjusted net loss was $98.7 million, and the adjusted diluted loss per share for the quarter was $3.40. The gross margin rate for the Q1 was 34.9%, down 180 basis points from last year's rate, which was softer, due primarily to higher levels of late quarter promotions that targeted the seasonal and furniture categories. Turning to adjusted SG&A, total expenses for the quarter, including depreciation, were $510.5 million, better than the $518.1 million last year. Better than our guidance of up slightly versus 2022. We saw favorability across multiple line items as we continued to manage expenses aggressively. Adjusted operating margin for the quarter was -10.5%. Interest expense for the quarter was $9.1 million, up from $2.8 million in the Q1 of last year, due to higher amounts drawn on our credit facility and higher interest rates year-over-year. The adjusted income tax rate in the quarter was 22.3%. Total ending inventory cost was down 18.8% to last year at $1.09 billion. During the Q1, we opened three new stores and closed one store. We ended Q1 with 1,427 stores and total selling sq ft of 33 million. Capital expenditures for the quarter were $16.9 million compared to $43.7 million last year. Adjusted depreciation expense in the quarter was $35.6 million, down $1.8 million to the same period last year. We ended the Q1 with $51.3 million of cash and cash equivalents and $501.6 million of long-term debt. At the end of Q1 2022, we had $61.7 million of cash and cash equivalents and long-term debt of $270.8 million. We did not execute any share repurchases during Q1, but have $159 million remaining available under our December 2021 authorization. Turning to the outlook, we are not providing formal full year guidance in light of significant uncertainties. Sales comps should improve sequentially in the back half of the year as our key merchandising and marketing actions gain traction, we lap easier comparisons, especially in Q4, and as we move past the effects of the United Furniture shutdown. Gross margin should also improve over the prior year, driven by less markdown activity and lower costs, particularly in freight. Turning to more specifics on Q2, we are continuing to see significant pressure in the market environment, particularly in higher ticket and more discretionary items. Further, we expect a continued adverse impact to our comps from pro- product shortages in furniture of around 100 basis points. As a result, we expect comps in Q2 to be similar to Q1 and to be down in the high teens range. Net new stores will add about 30 basis points of growth versus 2022. With regard to gross margin, we expect the rate in the Q2 to slightly improve versus the prior year, but remain in the low 30s due to significant markdowns on slow-moving seasonal inventory. Despite buying down significantly for this spring, seasonal sales have lagged our plan and caused us to be over inventoried again, as Bruce noted earlier. In Q2, we expect SG&A dollars to be down slightly versus 2022 due to the cost-saving efforts I mentioned earlier, primarily in our supply chain, including the closure of our forward distribution centers, payroll and headcount reductions. This will be offset largely by inflationary impacts across wages and other line items. With regard to CapEx, as I mentioned earlier, we now expect a lower level of around $80 million for the year and continue to look for opportunities to reduce this further. We expect around 15-17 store openings in 2023, with closures expected to be above that number, but concentrated at the end of the year. Most of the CapEx for new stores has already been spent or incurred as we paused all new commitments a while back. We do not plan to restart store openings until our business performance has stabilized. In the meantime, we are continuing to evaluate underperforming stores to determine if we can improve their performance or otherwise, if we can affect an early closure. We expect full year depreciation of around $147 million, including approximately $36 million in Q2. We expect a share count of approximately 29.3 million for Q2. We expect total Q2 inventory to be down in line with sales again, and are being aggressive in managing inventory levels through the balance of the year. All of our commentary on Q2 excludes the potential impact of impairment charges on one-time expenses, including STC exit costs and external partner fees related to our cost reduction work, as well as gains on asset sales. Overall, as Bruce referenced, driving improved productivity and efficiency across our operations is one of our five key areas of focus in 2023 and beyond. We remain focused on significantly improving inventory turns, reducing structural costs, and finding ways to make our CapEx dollars go further. This is key to returning the company to growth and profitability. I will now turn the call back over to Bruce. Thank you, Jonathan. To sum it up, we are doing our best to manage well through a very difficult environment. Even though visibility is low as to when the environment will improve, we are confident it eventually will. In the meantime, we're focused on tightly managing our expenses and improving liquidity, and remain optimistic that our five key actions will improve our business in the back half of the year and beyond. I'd like to end the call by again thanking our associates for all their efforts. I'll now turn the call back over to the moderator so that we can begin to address your questions. Thank you. Thank you. We will now be conducting our question and answer session. If you'd like to be placed into the question queue, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it might be necessary to pick up your handset before pressing star one. Once again, to be placed into the question queue, press star one at this time. One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Krisztina Katai with Deutsche Bank. Please proceed with your question. Good morning. This is Jessica Taylor on for Christina. Thanks for taking our question. I was just wondering if you could give us any details on quarter-to-date trends and, you know, how you're seeing your business progress as the weather changes? Hi, Jessica, this is Bruce. Yeah, our guidance is in line with what we're seeing quarter to date. We're seeing the weather improve, and that's helping our seasonal lawn and garden patio furniture. We still expect a tough Q2 as we continue to cycle through some of the heavy promotions we have from last year's heavy up on inventory and sell-through. We see that getting better and better through the quarter as we enter the back half, as we cycle through those heavy promotions, get back in our Broyhill assortment, that's been disrupted by the UFI closure last year. Pretty much what we're seeing is in line with our guidance. Thank you. Just as a follow-up, just when you think about your inventory, I think great job making sure that it is in line with your comp. Just wondering about, like, the composition, how you feel about the composition of the inventory. Do you feel like, you know, what you have are the things that you would want, and how would you kind of break that down? Hey, Jessica, it's Jonathan. I'll jump in that one. I think where we're still on the heavier side is in seasonal, which is why you're seeing that pretty significant pressure on our gross margin in Q2 as we work through the. You know, even though seasonal, you know, we expect to pick up, you know, we were well behind coming out of Q1, so we needed to be more promotional, and we expect that to continue through Q2, and we're committed to being clean on seasonal inventory in, at the end of Q2, so that we're positioned to be much stronger from a gross margin perspective in the back half of the year. Thank you. Thank you. Thank you. Our next question comes from line of Brad Thomas with KeyBanc Capital Markets. Please proceed with your question. Hi, good morning. I wanted to talk just a little bit about the performance amongst some of the different categories. You know, we've broadly been hearing of the consumer pulling back on discretionary spend. Bruce, I was hoping you could talk a little bit more about some of the initiatives you have in food and consumables and some of the closed out goods. You know, we can see the numbers. We know that those categories are down, but can you talk about some of the bright spots and what maybe gives you hope for some improvement going forward here? Hi, Brad. First off, Q1 was a little tough. Obviously, the market conditions and headwinds continue. We believe that as they abate, we'll see a good boost in our margin-rich categories, that being furniture, seasonal, home and decor areas. Some of the things we're doing is, first and foremost, we're getting back into Broyhill. It's been our Q1, a full quarter without Broyhill. That obviously impacts our online ability to sell Broyhill, and quite frankly, almost all shopping journeys for furniture start online. You know, as we cycle through this in the Q2, in the back half, we'll have Broyhill back in line. We're actually, this Memorial Day weekend, while the first phase of Broyhill coming back in, that's good news for us, and we're excited about it. We've got seven new collections coming in Broyhill, modern collections, new fashion forward, trend right, priced right. Really exciting things to see. Our team's been out, Margarita, John, and Tony, and team's been out to India and Vietnam. We're sourcing new product to close out prices that are very fashion forward, exciting. We're getting new products that, you know, are real wood, marble, natural stone. All these things are coming in and will be sourced with a price point that will create FOMO, fear of missing out on opportunities in the back half of the year. We're excited about all that. We've also got upholstery coming in, you know, in the Q3, new upholstery that is gonna hit, 200 plus stores, will grow to 400 plus stores. Just high-end style, new stuff, a lot of energy, I think, that's gonna be brought to the assortment that we're excited about. With respect to the food and consumables, we continue to flex our assortments to those marketplaces where our customers really want the food and consumables, and we're seeing good results. Where we flex the assortment up, we're seeing results in high single-digit improvement from prior periods. We continue to flex our pricing, assortment, across the fleet, where we learned in California last year that by honing our prices on SKUs, we could see great results. We've extended that pricing and that flexing, along with the assortment flexing, to other markets in the Northeast and Midwest, and we'll continue to do that in the Pac Northwest. All this coming together, we're learning a lot. We're dealing with the consumer pulling back on the larger ticket items right now. That will eventually abate, and when it does, our margin rich and categories that we're known for will improve, and we'll be ready for it for our customers. Great. just with respect to the new $200 million opportunity that you highlighted this morning, you know, can you maybe talk about line of sight to any of that hitting in 2023 here and maybe where those might be showing up? Thanks. Hey, hey, Brad. Good morning. I'll jump in on that one. Yeah, we do think there's some opportunity to realize some of that in 2023. As you heard earlier on, we've already upped our target for internally identified cost savings in 2023 from $70 million to over $100 million. We think, you know, with this new initiative, there's potentially $25 million, you know, plus million that we could recognize in 2023, maybe a little bit more, and then we expect to get most of that $200 million benefit realized in 2024. By the way, I would say that, yeah, there is also a range there. We also believe there's upside to that $200 million number, as we get deeper into the project. That's broadly how we're seeing it today. Great. Thank you. Thanks, Brad. Thanks, Brad. Thank you. Our next question comes from the line of Joe Feldman with Telsey Advisory Group. Please proceed with your question. Hey, hey, guys, thanks for taking the question. You know, with regard to the inventory, being down 18, almost 19%, you know, I guess, how clean is it or healthy is it? Like, are there still pockets where you do have some excess that you'd like to clear? Or conversely, I mean, you made it pretty clear that furniture is not where it should be. Are there other areas that you feel like should be... You'd like to be a little better inventory that would sell? Hey, Joe, this is Bruce. I'll start, I know Jonathan will add a little bit. You know, first and foremost, as Jonathan mentioned earlier, you know, just the Q1, we didn't see the lawn and garden patio set sell as fast. Weather was tough, and there was pullback. Now, we cut back on that seasonal buy, but still, just the pullback from the consumer was a little bit more. We started promoting it, a targeted promotion in Q1, which brought down margins, but started moving through that. Now, with the better weather, we're seeing good results, and we'll continue to get through that and cycle through that in Q2. What's more, some of the mitigation furniture we brought in late last year with the UFI closure, sudden abrupt closure, that product, it's a little bit harder to market online because they're different pieces. They're not complete sets like Broyhill. They're selling, but not at the rate we wanted them to sell. We juiced that a bit with promotions, and we're continuing to target those promotions through Q2. We make room for the new Broyhill sets coming in, which we're already seeing great results in. Those are the two areas. I think all other areas are performing decently. We're always focused on increasing our turns across all inventory. I'd say those are the two spots that we're dealing with and feel like we're in good shape, and have healthy inventory everywhere else. Got it. No, that's great. Thank you. Then, I guess for my quick follow-up, for maybe for Jonathan, I guess, as you talked about, you know, the gross margin being better in the second half, if I recall correctly, last earnings call, it was maybe the upper 30% area. Is that off the table? Should we be thinking more mid 30%? Or maybe if you could share any color on what the gross margin might look like in the second half, that'd be helpful. Thanks. Yeah, sure, Joe. Part of it goes back to Bruce's response on the prior question. You know, with seasonal being the one category where we're significantly up in inventory year-over-year at the end of Q1, we'll be working through that aggressively, you know, during Q2 to get into the right place on seasonal, and that will be the major driver of why our gross margin rate in Q2 is as low as it's projected to be. You know, seasonal is traditionally a very high margin category, but, you know, right now we're operating, you know, well below what we traditionally accomplish in seasonal. That's what's pulling our margin down in Q2. We've bought much more conservatively for seasonal in the back half of the year, so we don't expect to have that drag. And we're also seeing an acceleration of freight benefits. We're getting a significant benefit in Q1 and Q2, but we expect that to be even greater in Q3, Q4 on a year-over-year basis. Yeah, with those impacts, we do expect to be able to get back into the high thirties. The work we're doing, you know, this new project we've referenced, working with an external partner, has identified some further significant gross margin opportunities. Some of that we would, you know, hope to start getting in the latter part of this year, as I just referenced, in earlier questions. All of those things give us confidence that we will be getting back up into the high thirties in the latter part of this year, particularly in Q4. You know, I'll just add, Joe, that also keep in mind, Broyhill will be fully back in stock with new collections, as I mentioned earlier. That gives us our best foot forward. We've got closeout or bargain penetration at 20%. It's grown significantly and will continue to grow through the year. We see accretive margin points, significant accretion from that, from those sales as well. That's helpful. Thank you, guys. Good luck with this quarter. Thanks. Thanks, Joe. Thank you. Thank you. Our next question comes from the line of Jason Haas with Bank of America. Please proceed with your question. Hey, good morning, and thanks for taking my questions. Jonathan, I was curious if you could walk us through the math on how much is available on the revolver as of the end of Q1. I believe there's $900 million total availability, and then I think I saw $500 million was drawn on it. I don't know if that $900 million gets reduced because of the borrowing base. I think you may have tripped a covenant, and then I'm not sure if there's any letters of credit that count against it. If you could just walk through the math, I think that'd be helpful. Thanks. Hey, Jason, yeah, happy to do that. The net available liquidity we have at the end of Q1, we reference in the, you know, is $328 million. That takes into account, you know, covenant limitations, letters of credit and so on, that are, you know, that reduce the overall size of the facility that's available to us. The borrowing base, you know, does come into play at times too. $328 million is the available liquidity at the end of Q1, taking into account also some cash on hand. As we referenced, you know, we expect to boost that with $240 million of proceeds from this new sale-leaseback transaction. The value of the overall transaction will be $340 million, there's about $100 million outstanding on the synthetic lease on the Apple Valley distribution center that we'll need to pay down. 328 plus 240 gets you into the high five hundreds. We've historically referenced our goal as being to be at $500 million-$550 million of available liquidity. We expect to be, you know, right back in that zone once we've completed the sale-leaseback and asset monetization. Got it. Thank you. That's helpful. As a follow-up, do you have a sense yet what the incremental rent would look like on the proposed sale-leaseback? Overall, you know, the cap rate we're looking at is somewhere in the sort of high 7s. When you look at what we're currently borrowing at under the ABL in the sort of mid 6s, you know, the actual spread from a, you know, from an interest expense standpoint, will be relatively narrow between those two amounts. There will be some incremental expense, and then there's a little bit of geography around interest versus rent and so on. Overall, the net PNL impact will be relatively modest. Got it. Thank you. Thank you. Our next question comes from the line of Karen Short with Credit Suisse. Please proceed with your question. Hi, thank you. Sorry, can you just clarify that? With respect to the incremental rent expense at a 7 time cap rate, I think is what you said, how would that be PNL neutral? The cap rate on the sale-leaseback will be in the high 7s. We're currently borrowing under the ABL in the mid-60s. Those proceeds will come in at that high 7 cap rate. We pay down the synthetic lease of $100 million, which actually has a higher interest rate. The rest of the proceeds will be used to pay down the ABL, which is at that mid-60s rate. Overall, you end up with a few million dollars of net PNL impact for the transaction as a whole. Okay, not debt to EBITDA neutral. What would your pro forma debt to EBITDA be looking like? Yeah. The sale-leaseback typically results in rent expense. You know, we're still finalizing some aspects of that. Right. There can be some PNL geography, as I, you know, was referencing in response to Jason's, you know, question a moment ago. We're still finalizing that, but the EBITDA impact would typically be the high 7s cap rate applied to the net proceeds. The synthetic lease is booked currently as rent expense, and then we're paying down ABL, which is booked as interest expense. Okay. we'll lay out that. Go ahead, Karen. No, go ahead. ... You know, when we execute a PSA, we'll lay out all that in more detail, you know, in terms of all those moving parts and expected gain on sale. As we look to outer years, I mean, let's call it 2024, as you said, by later 2023, you should start capturing the $100 million potentially, and then 2024 sounds like it's more of the $200 million. How generally to think about what actual free cash flow looks like in 2024? Yeah, well, obviously, that's going to be heavily influenced by where we are on sales and margin, and clearly, at this point, we're not giving guidance on that. All other things being equal, this transaction would, you know, have a modest, you know, depletion impact on EBITDA, but again, be offset by a significant reduction in interest expense below the operating income line. Okay, there's no concern as it relates to, like, fixed charge coverage ratios, covenant-wise? All we have today in terms of covenant is a springing fixed. We have a springing fixed charge covenant ratio in our ABL, which we've already taken into account in the net liquidity position we're referencing. The assumption that covenant is sprung, that's already baked into the $328 million of available liquidity we're referencing. Okay, great. Thank you. All that does, just to be clear, is it reduces the total gross availability of the ABL if we trigger that covenant, which again, we're assuming we have in the liquidity outlook we're providing. Okay, that makes sense. Thank you. Thanks, Karen. Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question. Hi, thank you. Good morning. I just wondered if you could maybe talk through a little bit more about what the environment, or how you know, the quarter was influenced, and maybe Q2 will be influenced just from the bankruptcy of one of your competitors? Are you baking in any kind of lift in the, in the back half from that specifically, and in terms of any sales, shift that you can gain from that? Hi, Kate. You know, first off, we think there's a big opportunity for us to bring in some of the dislocated customers from the Bed Bath & Beyond bankruptcy. We've got a good store footprint overlap with their stores within 10 miles. Our recent campaign to honor their 20% discount was a great success in terms of attracting 90 million TV and radio impressions, and that resulted in good redemption rates that allowed us to sign up more loyalty customers from that. We expect that to continue. Right now, they're in the process of liquidating their stores and their products. As they finalize that, we expect to get a influx of more customers, and we'll focus on, as well as other companies that, unfortunately, have gone out of business. All of those are areas that we've used conquest marketing to attract their dislocated customers, and we'll continue to do that. As we work that marketing angle and also improve our assortment into more high quality, good brands, fashion forward, price right, fear of missing out products, I think we're gonna be well positioned to take on more customers and sell more at better margins. The environment right now, like we said, in Q1 and Q2, is pretty tough. The consumer, especially the low household income consumer, has been struggling. You know, their debt's up, their ability to make large purchases has been weakened. They've had tax returns that are lower than prior year, and they're using that to pay down some of the debt they have incurred. We think those conditions are gonna abate over time, and we'll be very well positioned and start seeing improvement in the back half of the year and into 2024. Okay, our second question, and I apologize, I dialed into the call a little bit late. I don't think I heard much in terms of store openings and your thoughts around store openings as a result of this, you know, more difficult environment. Yep. Kate, I'll be able to jump in on that one. We previously referenced around 18 openings for the year. We've taken that down to 15-17. We have not made any new commitments now for a significant period of time. We essentially paused all new, you know, lease executions several months ago, you know, probably even longer at this point. The stores that we're still expecting to open are ones that were already in the pipeline, where we already had signed leases, you know, were already under construction, some of which have already opened. At this point, you know, we're not planning to restart approving new leases, executing new leases until we see a stabilization in the business. We continue to believe there is a significant opportunity there over time, that there are many locations where we could open successful stores, particularly in the small town and rural markets we've talked about. Right now, we're pausing all of that activity until the business stabilizes and starts to improve. Are you committed at this point in time for any in 2024, or is it all just through 2023? We're not committed to anything in 2024. There's a couple stores that could potentially move out into 2024. We're trying to hold on all CapEx commitments to the extent we can at this point. There's a couple stores that could move into 2024, we're not adding any other new stores in 2024. Thank you. Thank you. Our next question comes from the line of Anthony Chukumba with Loop Capital Markets. Please proceed with your question. Good morning. Thanks for taking my question. I had a question. You know, you talked about the merchandising changes in terms of, you know, adding more sort of bargain, you know, sort of treasure hunt type merchandise. I guess, and you said it's now 20% of your assortment, your goal is to get that to a third. What are you seeing in terms of actual sell-through on those items relative to your expectations? Hey, Anthony, Bruce here. We're very pleased with the sell-through. Obviously, the customers are looking for deals during these tough times right now, and the sell-through is coming with an accretive margin of at least 150 basis points. We feel good about the progress we're making with that bargain penetration. It's at 20%. We're gonna continue to grow that to at least 1/3 of our assortment. The product that Margarita and the team are bringing in is just outstanding product. Like I said, it's high quality, it's trend-right, it's priced in an off-price, off-priced fashion to really scream value. We're buying, you know, breadth, adding assortment, accessories, and not so much depth, so we can move in and out of the product. I think there's gonna be a lot of excitement. The product's high quality. Some of the stuff we're getting out of Vietnam and India, as well as distressed retailers, is just really good product. One of the big close-outs we've got from a high-end mass retailer has added low single-digit lifts to our stores. We're seeing really good traction with that, and we expect that to continue going forward. We've got some really nice stuff coming in, very good styles, and it's gonna be exciting once we get all this in place and get Broyhill back online, literally, and our customer to be able to shop us and have the ability to do that. I feel like we're doing well. The sell-through is good and, definitely resonating with the customer. Got it. On Broyhill, that segues nicely into my follow-up question. Just wanted to get a better understanding. You said that you're gonna buy some Broyhill closeout merchandise from United Furniture. I just wanted to make sure I better understood that. Yeah, Anthony, the... when UFI abruptly closed back in November of last year, they basically turned the trucks around immediately, and all product, you know, was shut down, and then the banks took over, and they finally worked things out to the point where we could access some of that Broyhill product that was made exclusively for Big Lots. As a result of that, we're receiving some of that Broyhill inventory that was produced in finished goods level, you know, this quarter. It's a pretty sizable amount at a closeout price, so that'll be helpful, and we'll sell through that, I think, pretty quickly, and that'll help us as we transition to the new Broyhill. We've got several vendors producing that, very high quality, great vendor base, very differentiated now. Very pleased with the quality. In fact, some of the responses we've seen from customers so far is they're loving the product. That closeout is just the residual inventory that was held up after the closure. The banks worked it out, and we got it at good prices, and we're just mixing that into our assortment as we speak. Got it. Good luck with the remainder of this year. Thanks. Thanks, Anthony. Thank you. Our next question comes from the line of Peter Keith with Piper Sandler. Please proceed with your question. Hey, thank you. Good morning, everyone. I wanted to just dig a little bit deeper into the $200 million of additional savings that were identified by the external partner. You kind of highlighted some high-level buckets, but maybe could you be a bit more granular in some of the initiatives you might be taking to help us understand the opportunity? Hey, Peter. Good morning. I'll be happy to give a little more color on that. I guess, first of all, on the SG&A component, I think we've already come a long way. You're aware that we've already taken out a lot of costs prior to 2023, we've talked about another $100 million plus that we've identified through our own efforts, you know, in 2023. I think we've done a good job on that over the past several years. There is some more opportunity, though, in SG&A that we've identified, that is across store and field ops, supply chain in general, and administrative spend, where we think there's a fairly decent number there. I would say the bigger piece, though, is in COGS, where we think there's significant opportunity both across national and private brands, to drive some savings there. There are other areas in terms of inventory allocation, as Bruce referenced earlier, which we think can help meaningfully with gross margin, pricing and promo, omni-channel optimization. There's a whole series of work streams that we're gonna be activating. Again, we think the overall size of the prize is actually well above $200 million, but we think we can go after that $200 million in the next 18 months or so and realize most of that on a run rate basis by the end of 2024. Okay. Obviously, the ocean freight costs will be running lower in the back half. Is there any way to quantify what you think that will lift gross margin by? Hey, Peter, I couldn't make out what you just said. Freight? Oh, yeah. The, ocean freight benefit in back half, could you quantify that for us? Yes. We've been getting a meaningful year-over-year benefit in the spring. Rates have continued to come down, and, you know, we're lapping pretty high rates in the back half of 2022. We expect that rate impact to accelerate in the back half of the year relative to where we've been to date. You know, and you, we're really seeing, and you're certainly seeing in the public data on how those ocean container rates have come down, and you know, we're seeing numbers that, you know, largely correlate with that, and we expect to get a very meaningful benefit in the back half of the year, greater than we've been seeing in the front half. Yeah. Is there any way to put a number to that, just so we can get a little more confidence on the trajectory of gross margin? Yeah, I guess in terms of the overall, you know, freight rates, I mean, we were looking at, you know, year-over-year, probably a 25% reduction in the spring, and then we're probably looking more like a 50% reduction year-over-year, fully loaded, rates, including all, you know, the accessorial charges and so on. Hopefully, that helps a little bit. Okay. Lastly for me, just more on the account payables. Inventory is coming down nicely, down 19%. You got it down to a similar level for Q2. Payables were down 35%, and how should we think about that in conjunction with inventory, particularly as we look to Q2? Yeah, I mean, as ever, you know, there's a lot of moving parts in that calculation. You know, we did work aggressively to get inventory down at the end of Q2. That probably had more impact later in the quarter, so it probably had less impact on payables at the end of the quarter than on the inventory piece itself. You know, we're looking to be, you know, I would say, on a more sort of normalized payables to inventory rate over time. We're not doing anything fundamentally, you know, different there. It's more just a timing impact, I think, that you're seeing at the end of Q1. Okay. Thank you very much. Thank you. This does conclude today's conference call and webcast. A replay of this call will become available. You can access the replay until July ninth by dialing toll-free 877-660-6853 and enter replay confirmation 13738614, followed by the pound sign. The toll number is 201-612-7415, with replay confirmation 13738614, followed by the pound sign. You may now disconnect and have a great day. Thank you for your participation.