Big Lots’ recent Chapter 11 bankruptcy filing has raised many questions regarding its future and that of its nearly 1,400 stores nationwide.
At a Glance
- Big Lots has filed for Chapter 11 bankruptcy protection.
- The company plans to sell its assets and business operations to Nexus Capital Management.
- Big Lots’ locations and website will remain open during the bankruptcy process.
- High inflation and interest rates have negatively impacted Big Lots’ business.
- The company is closing roughly 300 of its 1,400 stores in the U.S., with potential for more closures.
Big Lots Struggles Financially Amid Market Changes
The well-known discount retailer Big Lots has officially filed for Chapter 11 bankruptcy, citing significant financial struggles stemming from evolving market conditions. The company’s financial woes include declines in store sales for nine consecutive quarters and nearly $3.1 billion in debt against $3.18 billion in assets. The retail giant’s shares also dropped 40% to 30 cents in premarket trading.
Big Lots will keep its stores and website operational as it navigates the bankruptcy process. CEO Bruce Thorn reassured stakeholders: “The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability, while we optimize our operational footprint, accelerate improvement in our performance, and deliver on our promise to be the leader in extreme value.”
Big Lots closing dozens of stores, as company warns bankruptcy looms https://t.co/Nbg9PXJCxz
— Columbus Dispatch (@DispatchAlerts) July 10, 2024
Sale to Nexus Capital Management to Secure Future
As part of its restructuring plan, Big Lots plans to sell its assets and business operations to Nexus Capital Management, which will act as a “stalking horse” bidder in a court-supervised auction. The deal is expected to close in the fourth quarter if no higher bids are received. The company has also secured $707.5 million in financing, including $35 million from current lenders, to support its operations during this transition.
“Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers,” Big Lots’ President and CEO Bruce Thorn said in a press release. “To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner.”
This move comes amid a challenging retail environment influenced by high inflation, rising interest rates, and decreased discretionary spending. Big Lots’ core customers, looking for value, have notably reduced their spending on non-essential home and seasonal products, further impacting the company’s bottom line.
The Road Ahead for Big Lots
Big Lots plans to close around 300 underperforming stores out of its nearly 1,400 locations across the country. This store closures strategy aims to streamline operations and consolidate resources to build a more sustainable business model.
“Big Lots operates in a very crowded and competitive market where other value players do a far better job of delivering on low prices and compelling bargains. It needs to step up its game if it is to succeed post-bankruptcy,” Neil Saunders, managing director of GlobalData, remarked.
The retail sector is currently grappling with what some analysts call a “retail apocalypse,” marked by mass store closures and financial instability across several major chains. Despite these challenges, Big Lots remains optimistic that through strategic reorganization and new ownership, it can regain financial stability and market presence.
