A big battle brewing for Big Lots!
A proxy battle is shaping up at Big Lots where two major investors have put forth a slate of nine director candidates ahead of the off-price retailer’s annual meeting of shareholders.
Big Lots issued a statement confirming that Macellum Capital Management and Ancora Advisors had submitted to the company a notice of nomination of nine director candidates. The investors collectively own 11% of the outstanding shares of Big Lots.
“The investor group believes that the board must undergo a significant refreshment to address the company’s prolonged stock price and operating underperformance, which the investor group believes has been largely driven by the board’s poor operational oversight, ineffective capital allocation strategy and failure to optimize the Company’s balance sheet, including by monetizing the company’s real estate,” according to a statement from Macellum and Ancora.
The operator of 1,407 stores nationwide said it would carefully review and consider Macellum's and Ancora's candidates to assess their ability to add value on the board for the benefit of all shareholders. The date of the company's 2020 annual meeting has not yet been announced. Last year’s meeting was held on May 30.
“The Big Lots board of directors and management team are committed to acting in the best interests of the company and its shareholders to create long-term, sustainable value, and we are executing a thoughtful, prudent strategy to meet this objective,” the company said in a statement. “Members of the board and senior management team have held multiple discussions with Macellum and Ancora in recent weeks and the company expects to have further such discussions.”
Over the past year, Big Lots has been executing on a transformational strategic roadmap it calls, “Operation North Star,” to enhance performance and drive shareholder value. The company said Operation North Star focuses on three key areas: driving topline growth through multiple tested and proven initiatives, funding the journey through significant expense reductions, and ensuring that the company has the systems, team, and infrastructure in place to be a high-performing organization.
“Big Lots made meaningful progress in executing initiatives under its strategy throughout fiscal 2019, supporting the delivery of positive comparable sales for the full fiscal year. The company also returned a total of $98 million to shareholders in fiscal 2019 through dividends and share repurchases,” according to the statement.
The company’s statement also maintains it, “is evolving and optimizing its growth initiatives, and will continue to focus on allocating capital to the highest return opportunities that clearly and significantly exceed its cost of capital. As a result, Big Lots has reduced its expected full year 2020 capital expenditures to $160 million to $170 million dollars from its initial estimate of $200 million. The Company is also maintaining a strict focus on cost controls and a culture of prudent spending across the organization. Based on actions underway, the company expects to exceed its prior $100 million cost reduction target, and expects to deliver on this commitment by the end of 2020, one year ahead of its original plan. While the company is actively addressing a number of near-term headwinds, the board and management remain confident that Operation North Star will deliver sustainable improvements in the company's performance, and expect these to become more evident as the year progresses.”