SC 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )*

Big Lots, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

089302103

(CUSIP Number)

Mill Road Capital III, L.P.

Attn: Thomas E. Lynch

382 Greenwich Avenue

Suite One

Greenwich, CT 06830

203-987-3500

With a copy to:

Peter M. Rosenblum, Esq.

Foley Hoag LLP

155 Seaport Blvd.

Boston, MA 02210

617-832-1151

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

March 7, 2022

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 089302103 13D Page 2 of 10 Pages

1.	Names of Reporting Persons. Mill Road Capital III, L.P.
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (a)  ☐        (b)  ☐
3.	SEC Use Only
4.	Source of Funds (See Instructions) WC
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ☐
6.	Citizenship or Place of Organization Cayman Islands
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 1,462,851
		8.	Shared Voting Power
		9.	Sole Dispositive Power 1,462,851
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,462,851
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ☐
13.	Percent of Class Represented by Amount in Row (11) 5.1%
14.	Type of Reporting Person (See Instructions) PN

CUSIP No. 089302103 13D Page 3 of 10 Pages

1.	Names of Reporting Persons Mill Road Capital III GP LLC
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (a)  ☐        (b)  ☐
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ☐
6.	Citizenship or Place of Organization Cayman Islands
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power 1,462,851
		8.	Shared Voting Power
		9.	Sole Dispositive Power 1,462,851
		10.	Shared Dispositive Power
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,462,851
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ☐
13.	Percent of Class Represented by Amount in Row (11) 5.1%
14.	Type of Reporting Person (See Instructions) OO

CUSIP No. 089302103 13D Page 4 of 10 Pages

1.	Names of Reporting Persons. Thomas E. Lynch
2.	Check the Appropriate Box if a Member of a Group (See Instructions) (a)  ☐        (b)  ☐
3.	SEC Use Only
4.	Source of Funds (See Instructions) AF
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ☐
6.	Citizenship or Place of Organization USA
Number of Shares Beneficially Owned by Each Reporting Person With		7.	Sole Voting Power
		8.	Shared Voting Power 1,462,851
		9.	Sole Dispositive Power
		10.	Shared Dispositive Power 1,462,851
11.	Aggregate Amount Beneficially Owned by Each Reporting Person 1,462,851
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ☐
13.	Percent of Class Represented by Amount in Row (11) 5.1%
14.	Type of Reporting Person (See Instructions) IN

CUSIP No. 089302103 Page 5 of 10 Pages

Item 1. Security and Issuer

This joint statement on Schedule 13D relates to the common stock, par value $0.01 per share (the “Common Stock”), of Big Lots, Inc., an Ohio corporation (the “Issuer”). The address of the Issuer’s principal executive offices is 4900 E. Dublin-Granville Road, Columbus, Ohio 43081.

Item 2. Identity and Background

(a)    This joint statement on Schedule 13D is being filed by Thomas E. Lynch, Mill Road Capital III GP LLC, a Cayman Islands limited liability company (the “GP”), and Mill Road Capital III, L.P., a Cayman Islands exempted limited partnership (the “Fund”). Each of the foregoing is referred to in this Schedule 13D as a “Reporting Person” and, collectively, as the “Reporting Persons.” Mr. Lynch, Justin C. Jacobs and Eric Yanagi are the management committee directors of the GP and, in this capacity, are referred to in this Schedule 13D as the “Managers.” The GP is the sole general partner of the Fund. Mr. Lynch has shared authority to vote and dispose of the shares of Common Stock reported in this Schedule 13D.

The Reporting Persons have entered into a Joint Filing Agreement dated March 15, 2022, a copy of which is filed as Exhibit 1 to this Schedule 13D, pursuant to which they have agreed to file this Schedule 13D jointly in accordance with Rule 13d-1(k) under the Exchange Act.

(b)    The business address of Mr. Lynch, and the address of the principal business and the principal office of the GP and the Fund, is 382 Greenwich Avenue, Suite One, Greenwich, CT 06830. The business address of Mr. Jacobs is 7448 NE 4th Court, Miami, FL 33138. The business address of Mr. Yanagi is 400 Oyster Point Blvd, Suite 526, South San Francisco, CA 94080.

(c)    The principal business of the GP is acting as the sole general partner of the Fund. The principal business of the Fund is investing in securities. The present principal occupation or employment of each Manager is as a management committee director of the GP and of Mill Road Capital Management LLC, a Delaware limited liability company (the “Management Company”), which provides advisory and administrative services to the GP and is located at 382 Greenwich Avenue, Suite One, Greenwich, CT 06830.

(d)    None of the Managers, the GP and the Fund has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e)    None of the Managers, the GP and the Fund was, during the last five years, a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order (1) enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or (2) finding any violation with respect to such laws.

(f)    Each Manager is a citizen of the United States.

CUSIP No. 089302103 Page 6 of 10 Pages

Item 3. Source and Amount of Funds or Other Consideration

The Reporting Persons acquired beneficial ownership of an aggregate of 1,462,851 shares of Common Stock for $29,402,530.35 using working capital from the Fund and the proceeds of margin loans under margin loan facilities maintained in the ordinary course of business by the Fund with a broker on customary terms and conditions.

Item 4. Purpose of Transaction

The Reporting Persons acquired shares of the Common Stock based on their belief that the Common Stock represents an attractive investment opportunity. The following information may be deemed pertinent.

On March 15, 2022, the Management Company issued a letter to the shareholders of the Issuer (the “Shareholder Letter”) expressing praise for the Issuer’s management team and its successful implementation of a strategic plan, and encouraging the Issuer’s board of directors to engage a financial advisor and pursue a sale process. The Management Company believes a sale process could maximize value for the Issuer’s shareholders at an assumed purchase price of $55-$70 per share, which represents a premium of 72%-119% over the closing price of the Common Stock on March 14, 2022 of $31.99. The Shareholder Letter is attached hereto as Exhibit 3 and incorporated herein by reference.

The Reporting Persons intend to review continuously their equity interest in the Issuer. Depending upon their evaluation of the factors described below, one or more of the Reporting Persons may from time to time purchase additional securities of the Issuer, dispose of all or a portion of the securities then held by such Reporting Persons, or cease buying or selling such securities; any such additional purchases or sales of securities of the Issuer may be in the open market, in privately negotiated transactions or otherwise.

The Reporting Persons may wish to engage in a constructive dialogue with officers, directors and other representatives of the Issuer, as well as the Issuer’s shareholders; topics of discussion may include, but are not limited to, the Issuer’s markets, operations, competitors, prospects, strategy, personnel, directors, ownership and capitalization. The Reporting Persons may also enter into confidentiality or similar agreements with the Issuer and, subject to such an agreement or otherwise, exchange information with the Issuer. The factors that the Reporting Persons may consider in evaluating their equity interest in the Issuer’s business include the following: (i) the Issuer’s business and prospects; (ii) the performance of the Common Stock and the availability of the Common Stock for purchase at particular price levels; (iii) the availability and nature of opportunities to dispose of the Reporting Persons’ interests; (iv) general economic conditions; (v) stock market conditions; (vi) other business and investment opportunities available to the Reporting Persons; and (vii) other plans and requirements of the Reporting Persons.

Depending on their assessment of the foregoing factors, the Reporting Persons may, from time to time, modify their present intention as stated in this Item 4.

The Reporting Persons intend to continuously review their options but, except as set forth above, do not have at this time any other specific plans that would result in (a) the acquisition of additional securities of the Issuer or the disposition of securities of the Issuer; (b) any extraordinary corporate transactions such as a merger, reorganization or liquidation involving the Issuer or any of its subsidiaries; (c) any sale or transfer of a material amount of the assets of the Issuer or of any of its subsidiaries; (d) any change in the present management or Board of Directors of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Issuer’s Board of Directors; (e) any material

CUSIP No. 089302103 Page 7 of 10 Pages

change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) any change in the Issuer’s charter or by-laws that may impede the acquisition of control of the Issuer by any person; (h) the Issuer’s Common Stock being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system or a registered national securities association; (i) causing a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above.

Item 5. Interest in Securities of the Issuer

(a, b)    The percentages of beneficial ownership reported in this Item 5, and on each Reporting Person’s cover page to this Schedule 13D, are based on a total of 28,467,377 shares of Common Stock issued and outstanding, consisting of (i) 30,540,270 shares of Common Stock issued and outstanding as of December 3, 2021, as reported in the Issuer’s quarterly report on Form 10-Q for the fiscal quarter ended October 30, 2021, less (ii) 2,072,893 shares of Common Stock repurchased by the Issuer between December 8, 2021 and January 29, 2022, as described in the earnings release of the Issuer dated March 3, 2022 attached as Exhibit 99.1 to the Issuer’s current report on Form 8-K filed with the SEC on March 7, 2022. All of the share numbers reported below, and on each Reporting Person’s cover page to this Schedule 13D, are as of March 15, 2022, unless otherwise indicated. The cover page to this Schedule 13D for each Reporting Person is incorporated by reference in its entirety into this Item 5(a, b).

The Fund directly holds, and thus has sole voting and dispositive power over, 1,462,851 shares of Common Stock. The GP, as sole general partner of the Fund, also has sole authority to vote (or direct the vote of), and to dispose (or direct the disposal) of, these shares on behalf of the Fund, and Mr. Lynch has shared authority to vote (or direct the vote of), and to dispose (or direct the disposal) of, these shares on behalf of the GP. Accordingly, each of the Reporting Persons beneficially owns 1,462,851 shares of Common Stock, or approximately 5.1% of the outstanding shares of Common Stock, and the Reporting Persons beneficially own, in the aggregate, 1,462,851 shares of Common Stock, or approximately 5.1% of the outstanding shares of Common Stock.

(c)    No Reporting Person, other than the Fund as set forth in the table below and as described in Item 6, effected any transaction in shares of the Common Stock from January 14, 2022 (the date 60 days prior to the filing of this Schedule 13D) to March 15, 2022:

Date of Purchase / Sale	Shares Purchased / (Sold) (#)			Purchase / Sale Price per Share ($)
1/21/2022*		74,000		$	42.5000
1/24/2022		(25,500	)	$	42.5369
1/25/2022		(18,507	)	$	44.0826
2/1/2022		(700	)	$	43.9000
3/7/2022		100		$	36.4800

^*  Effected pursuant to the exercise of a Put Option (as defined in Item 6) by the option’s counterparty.

CUSIP No. 089302103 Page 8 of 10 Pages

Except as otherwise described in this Schedule 13D, the above listed transactions were conducted in the ordinary course of business on the open market for cash. The purchase and sale prices do not reflect brokerage commissions paid.

In addition, during the Reporting Period, the Fund sold the Put Options described in Item 6, which is incorporated by reference into this Item 5(c).

(d)    No person other than the Reporting Persons is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of shares of the Common Stock.

(e)    Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The table below lists the standard American-style, exchange-traded put options (“Put Options”) sold by the Fund during the Reporting Period, all of which are outstanding as of March 15, 2022. Each of the below listed transactions was conducted in the ordinary course of business on the open market for cash, and the sale prices do not reflect brokerage commissions paid.

Date of Sale	Value per Underlying Share at which Put Options were Sold ($)		Shares Underlying Put Options (100s)		Put Options’ Strike Price per Share ($)		Put Options’ Expiration Date
1/20/2022	$	6.8485		375	$	42.50		07/15/2022
1/21/2022	$	6.8577		557	$	42.50		07/15/2022

Each of these Put Options gives the option’s counterparty the right (but not the obligation) to sell to the Fund, on or before the option’s expiration date, the number of shares of Common Stock underlying the option, at a sale price per share equal to the option’s strike price per share. If a Put Option is exercised on or before its expiration date, the Fund must purchase the shares of Common Stock underlying the option in exchange for the option’s aggregate exercise price.

The table below lists the standard American-style, exchange-traded call options (“Call Options”) sold by the Fund during the Reporting Period, all of which are outstanding as of March 15, 2022. Each of the below listed transactions was conducted in the ordinary course of business on the open market for cash, and the sale prices do not reflect brokerage commissions paid.

CUSIP No. 089302103 Page 9 of 10 Pages

Date of Sale	Value per Underlying Share at which Call Options were Sold ($)		Shares Underlying Call Options (100s)		Call Options’ Strike Price per Share ($)		Call Options’ Expiration Date
3/2/2022	$	2.2801		145	$	40.00		04/14/2022
3/3/2022	$	1.7500		2	$	40.00		04/14/2022
3/4/2022	$	2.5000		143	$	40.00		04/14/2022

Each of these Call Options gives the option’s counterparty the right (but not the obligation) to purchase from the Fund, on or before the option’s expiration date, the number of shares of Common Stock underlying the option, at a purchase price per share equal to the option’s strike price per share. If a Call Option is exercised on or before its expiration date, the Fund must deliver the shares of Common Stock underlying the option in exchange for the option’s aggregate exercise price.

Except as otherwise described in this Schedule 13D, including the Exhibits attached hereto, there are no contracts, arrangements, understandings, or relationships (legal or otherwise) among the Reporting Persons, or between any Reporting Person(s) and any third party, with respect to any securities of the Issuer, including, but not limited to, those involving the transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, put or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

Item 7. Material to be Filed as Exhibits

Exhibit 1	Joint Filing Agreement by and among Thomas E. Lynch, Mill Road Capital III GP LLC and Mill Road Capital III, L.P. dated as of March 15, 2022.
Exhibit 2	Confirming Statement of Thomas E. Lynch dated March 15, 2022.
Exhibit 3	Letter from Mill Road Capital Management LLC to the Shareholders of Big Lots, Inc. dated March 15, 2022.

[signature page follows]

CUSIP No. 089302103 Page 10 of 10 Pages

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

DATE: March 15, 2022
MILL ROAD CAPITAL III, L.P.
By:	Mill Road Capital III GP LLC,
	its General Partner
By:	/s/ Thomas E. Lynch
	Thomas E. Lynch
	Management Committee Director and Chairman
MILL ROAD CAPITAL III GP LLC
By:	/s/ Thomas E. Lynch
	Thomas E. Lynch
	Management Committee Director and Chairman
THOMAS E. LYNCH
/s/ Thomas E. Lynch
Thomas E. Lynch

EX-99.1

CUSIP No. 089302103 Page 1 of 1 Page

Exhibit 1

JOINT FILING AGREEMENT

Pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree, as of March 15, 2022, that only one statement containing the information required by Schedule 13D, and each amendment thereto, need be filed with respect to the ownership by each of the undersigned of shares of common stock of Big Lots, Inc., an Ohio corporation, and such statement to which this Joint Filing Agreement is attached as Exhibit 1 is filed on behalf of each of the undersigned.

MILL ROAD CAPITAL III, L.P.
By:	Mill Road Capital III GP LLC,
	its General Partner
By:	/s/ Thomas E. Lynch
	Thomas E. Lynch
	Management Committee Director and Chairman
MILL ROAD CAPITAL III GP LLC
By:	/s/ Thomas E. Lynch
	Thomas E. Lynch
	Management Committee Director and Chairman
THOMAS E. LYNCH
/s/ Thomas E. Lynch
Thomas E. Lynch

EX-99.2

CUSIP No. 089302103 Page 1 of 1 Page

Exhibit 2

CONFIRMING STATEMENT

This Statement confirms that the undersigned has authorized and designated Justin C. Jacobs and Eric Yanagi, each acting singly, to execute and file on the undersigned’s behalf all Forms 3, 4 and 5 and Schedule 13D (including any amendments thereto) that the undersigned may be required to file with the U.S. Securities and Exchange Commission as a result of the undersigned’s ownership of or transactions in securities of Big Lots, Inc., an Ohio corporation. The authority of Justin C. Jacobs and Eric Yanagi under this Statement shall continue until the undersigned is no longer required to file any of Forms 3, 4 and 5 and Schedule 13D with regard to the undersigned’s ownership of or transactions in securities of Big Lots, Inc. unless earlier revoked in writing. The undersigned acknowledges that Justin C. Jacobs and Eric Yanagi are not assuming any of the undersigned’s responsibilities to comply with Section 16 or Section 13 of the Securities Exchange Act of 1934, as amended.

Dated: March 15, 2022	/s/ Thomas E. Lynch
	Thomas E. Lynch

EX-99.3

March 15, 2022 Mill Road Capital, Owner of 5% of Big Lots, Believes Management Has Done a Great Job but Current Public Valuation Ignores Recent Improvement and Positive Long-Term Outlook, Therefore Board Should Pursue Sale Process to Maximize Present Value of $55-$70 per Share for Shareholders Dear Fellow Shareholders, As one of the largest shareholders of Big Lots, we believe the company’s management team has successfully executed a strategic plan over the last several years which has materially improved the company’s long-term outlook and underlying value. Specifically, management has: - Improved the company’s merchandise assortment and sales productivity with ongoing mix optimization of treasure hunt items and standout bargains in addition to essential products - Expanded Big Lots’ owned brands such as Broyhill (over $700 million in sales) and Real Living (over $600 million in sales) which enable the company to offer customers compelling value at attractive margins. Management believes that both brands can exceed $1 billion in annual sales over time - Achieved eCommerce sales penetration in excess of 5% in Fiscal 2021, more than triple the level achieved in Fiscal 2019, and which management believes can grow to 10% -15% over time
- Grew Big Lots’ loyalty rewards program to approximately 22 million members, a roughly 3 million member increase relative to Fiscal 2019’s level, which represents a larger base of future customers who are more likely to be repeat shoppers
- Increased Big Lots’ Fiscal 2021 organic sales base by 13% relative to Fiscal 2019 which represents an increase that management expects to retain - Monetized the company’s owned distribution centers for $725 million which, when combined with internal cash generation, has facilitated a net cash balance sheet position and approximately $600 million of share repurchases during the last two years Big Lots’ management team not only successfully executed on its strategic plan during the COVID pandemic but has also recently communicated a compelling future growth plan. More specifically, in January 2022 Big Lots announced a long-term growth and margin outlook which implies an approximately 150% - 320% increase in annual operating income1. The company reaffirmed this long-term outlook on March 3rd. As components of this plan, Big Lots intends to generate consistent low single-digit annual comparable sales growth and open over 500 new units over the next roughly five years which implies a mid-single-digit annual square footage growth tailwind. Management has also identified 100 - 200 basis points of gross margin expansion potential through pricing & promotion optimization, improved space planning, product mix evolution, shrink reduction, and supply chain normalization. The combination of enhanced sales productivity, continued eCommerce expansion, meaningful new store growth, and multiple profit margin expansion initiatives creates an attractive multiyear sales and earnings growth outlook.
382 Greenwich Avenue, Suite One • Greenwich, CT 06830 • (203) 987-3500

We are very pleased that Big Lots’ management and board clearly have confidence in the long-term outlook for the business as demonstrated by recently communicated financial objectives and a large share repurchase program. We are highly disappointed, however, that the company’s current public market valuation fails to recognize management’s recent execution and ability to drive future growth. The company’s current share price of $31.99 implies a Total Enterprise Value / Consensus Fiscal 2022 EBITDA multiple2 of 2.6x which in our view fails to reflect the company’s growth potential, recession-resistant business model and remaining owned real estate value, especially when taking into account that the company’s Consensus Fiscal 2022 EBITDA estimate is burdened by abnormally high freight expense which is likely to normalize over time. Pro forma for an assumed $300 million3 sale leaseback of Big Lots’ owned real estate, the company currently trades at an even lower multiple of 2.0x Total Enterprise Value / Pro Forma Consensus Fiscal 2022 EBITDA4. As can be seen below, relative to the average valuation multiple of other publicly traded discount / off-price retailers Big Lots’ current valuation multiple represents an approximately 80% discount despite the company having generated cumulative organic sales growth over the past three years that is in line with the peer group average. As a result of this strong recent sales performance, Big Lots’ current organic sales base is approximately 13% higher than it was in Fiscal 2019, a level which management expects to retain based on the company’s Fiscal 2022 full year sales outlook. Additionally, the company’s balance sheet has a net cash position with significant available liquidity to continue repurchasing stock at accretive levels. Big Lots’ current share price also implies a 3.8% dividend yield. Despite these factors, approximately 29% of Big Lots’ outstanding shares are currently sold short which further underscores the public market’s lack of confidence in the company’s outlook. Same Store Sales % Growth & Valuation Multiple: BIG vs. Discount / Off-Price Retailers Same Store Sales Growth %      FY 2019     FY 2020 Actual / Consensus FY 2021 Guidance / Consensus FY 2022 Cumulative FY ‘19-’21 Long-Term Guidance TEV/ Consensus FY 2022 EBITDA Big Lots    0.3% 16.1% -2.5% ~ o.o% 13.5% + LSDAnnual 2.0x / 2.6x Burlington Stores    2.7% NA15.0%-3.1%NA13.4x Dollar General    3.9% 16.3%-2.7%2.1%17.6%12.7x Dollar Tree    1.8% 6.1%1.0%4.0%9.1%11.3x Ollie’s Bargain Outlet Holdings    -2.1% 15.6%-9.0%0.0%2.9%9.2x Ross Stores    3.0% NA13.0%2.3%NA9.9x The TJX Companies    4.0% -4.0%15.0%5.5%14.8%11.4x Discount / Off-Price Retailer Average     11.1% 11.3x Source: Company Reports, Capital IQ. Big Lots’ FY 22 same store sales growth based on management outlook provided 3/3/22. Trading data as of 3/14/22. Note: Big Lots’ valuation multiple of 2.6x excludes owned real estate value; 2.0x assumes $300mm sale leaseback (5240mm after-tax) at 6.75% cap rate. Page 2 of 5

Despite the public market’s unwillingness to recognize the recent improvement that management has driven in Big Lots’ business, we believe there is a universe of well-capitalized buyers with long-term capital that would reward Big Lots’ shareholders with a large premium to the company’s current share price level due to the following factors: 1) Opportunity to increase operating income by more than 100% over the next five years1 2) A current valuation of 2.6x EBITDA which ignores the company’s long-term growth potential2 3) Owned real estate value which could exceed $300 million in a sale leaseback transaction3 4) Attractive low-cost transaction financing given company’s recession-resistant business model 5) Track record of resilience during challenging economic environments as demonstrated by positive same store sales growth generated during the 2008-2009 and 2020 U.S. recessions As evidence of the company’s low-cost debt capacity, in September 2021 Big Lots successfully raised a $600 million undrawn senior unsecured revolving credit facility with an interest rate level in the low single-digits (LIBOR + 1.375% rate at closing) with an optional $300 million incremental uncommitted credit facility. Full use of the facility would imply $900 million in funded debt at a low single-digit interest rate with a funded debt to Consensus Fiscal 2022 EBITDA ratio of 2.7x. In addition, a sale leaseback of Big Lots’ owned real estate would provide further transaction financing at a modest cost and would effectively unlock a value arbitrage by selling a non-core asset at what is likely to be a double-digit multiple of EBITDA. As a reminder, in 2020 the company achieved a 6.9% capitalization rate on the sale leaseback of its distribution centers. Achievement of a similar or better capitalization rate on the sale leaseback of the company’s owned stores (the majority of which are located in California) and corporate headquarters would imply a pre-tax real estate sale multiple in excess of 14x EBITDA, and incremental rent from such a transaction would be deductible for tax purposes. Illustratively, if one were to simply assume full use of the company’s existing debt facility plus estimated after-tax proceeds from a potential sale leaseback of the company’s owned real estate, the result is over $1.1 billion of low-cost financing that could be used to finance an acquisition of the company3 (excluding new equity capital). To put that figure into context, Big Lots’ current total enterprise value is approximately $860 million2. More attractive actual acquisition financing structures than this illustrative example may become available to credible buyers in a formal and competitive sale process. Consequently, we believe the likely ample availability of low-cost transaction financing combined with Big Lots’ earnings growth potential would enable potential buyers to offer a substantial premium to the company’s current share price and still achieve an attractive investment return on equity capital deployed. Page 3 of 5

Big Lots Valuation ($ in Millions) % Premium to Current Share Price (3/14/22)    72% 80% 88% 95% 103% 111% 119% Valuation: Excluding Sale leaseback     Offer Price per Share    $55.00 $57.50 $60.00 $62.50 $65.00 $67.50 $70.00 Implied Shares Outstanding at 1/29/22    28.5 28.528.528.528.528.528.5 Equity Value    $1,566 $1,637$1,708$1,779$1,850$1,922$1,993 Net Cash at 1/29/22    (50) (50)(50)(50)(50)(50)(50) Total Enterprise Value    $1,515 $1,587$1,658$1,729$1,800$1,871$1,942 (x) FY 2022E Consensus EBITDA    4.5x 4.7x4.9x5.1x5.3x5.6x5.8x (x) FY 2023E Consensus EBITDA    4.3x 4.5x4.7x4.9x5.1x5.3x5.5x Valuation: Including Sale leaseback     Offer Price per Share    $55.00 $57.50 $60.00 $62.50 $65.00 $67.50 $70.00 Implied Shares Outstanding at 1/29/22    28.5 28.528.528.528.528.528.5 Equity Value    $1,566 $1,637$1,708$1,779$1,850$1,922$1,993 Net cash at 1/29/22: PF for Sale Leaseback    (290) (290)(290)(290)(290)(290)(290) Total Enterprise Value    $1,275 $1,347$1,418$1,489$1,560$1,631$1,702 (x) FY 2022E Pro Forma Consensus EBITDA    4.0x 4.3x 4.5x 4.7x 4.9x 5.2x 5.4x (x) FY 2023E Pro Forma Consensus EBITDA    3.8x 4.1x 4.3x 4.5x 4.7x 4.9x 5.1x Note: Consensus FY 2022 and FY 2023 EBITDA estimates per Capital IQ As can be seen in the illustration above, after factoring in the estimated after-tax value of the company’s owned real estate which could be unlocked in a sale leaseback transaction, a purchase multiple range of 4.0x – 5.4x Fiscal 2022 Pro Forma Consensus EBITDA implies an offer price per share range of $55.00 - $70.00 per share, or a 72%- 119% premium to the company’s current share price5. We therefore believe there is a significant disconnect between the company’s current public market valuation and the price a well-capitalized buyer could pay to take the company private in a formal sale process. We also believe that the recent acquisition proposals received by Kohl’s Corporation (NYSE: KSS) support our view that there are currently credible buyers for retail assets that possess growth potential, attractive transaction financing, and a discounted valuation .Consequently, we strongly believe the best path to present value maximization for all shareholders is for Big Lots’ board of directors to engage an independent financial advisor in the near-term to actively solicit acquisition proposals for the company. We look forward to constructively discussing our views in greater detail with the company. Sincerely, Mill Road Capital Management LLC Page 4 of 5

Notes 1 Percent increase in annual operating income is based on long-term targets disclosed in Big Lots’ January 2022 Investor Presentation ($8-$10 billion of sales and 6%-8% operating margin) relative to Fiscal 2022 Consensus EBIT estimate of $191 million as of 3/14/22 per Capital IQ. 2 Total enterprise value based on Big Lots’ share price as of 3/14/22; balance sheet and shares outstanding are as of 1/29/22 and take into account the shares repurchased during the company’s 4th quarter of Fiscal 2021 as disclosed in a press release on 3/3/22. Consensus Fiscal 2022 EBITDA estimate of $336 million is as of 3/14/22 per Capital IQ. 3 Mill Road Capital estimate based on publicly disclosed information. Assumes $300 million sale leaseback transaction with $240 million of after-tax proceeds and a 6.75% capitalization rate. 4 Balance sheet and shares outstanding as of 1/29/22 after taking into account the shares repurchased during the company’s 4th quarter of Fiscal 2021 as disclosed in a press release on 3/3/22. Multiple is pro forma for an assumed $300 million sale leaseback transaction. Total enterprise value is assumed to be reduced by $240 million of assumed after-tax cash proceeds, and Fiscal 2022 Consensus EBITDA estimate is assumed to be reduced by incremental rent from a sale leaseback transaction at an assumed 6.75% capitalization rate. 5 Premium range based on Big Lots’ share price as of 3/14/22; balance sheet and shares outstanding as of 1/29/22 after taking into account the shares repurchased during the company’s 4th quarter of Fiscal 2021 as disclosed in a press release on 3/3/22. Purchase multiple range is pro forma for an assumed $300 million sale leaseback transaction. Total enterprise value is assumed to be reduced by $240 million of assumed after-tax cash proceeds, and Fiscal 2022 Consensus EBITDA estimate is assumed to be reduced by incremental rent from a sale leaseback transaction at an assumed 6.75% capitalization rate. Page 5 of 5