Big Lots Faces Financial Troubles
Discount retailer Big Lots is facing significant challenges as it has announced sweeping closures of its stores across the United States after filing for bankruptcy three months ago. Earlier this year, the chain had already closed 400 locations, leaving 963 stores still operational.
Beginning of the End: “Going Out of Business” Sales
The remaining stores will soon start “going out of business” sales, although the timeline for these closures is still unclear. Bruce Thorn, President and CEO of Big Lots, commented, We all have worked extremely hard and have taken every step to complete a going concern sale. While we remain hopeful that we can close an alternative going concern transaction to protect the value of the Big Lots estate, we have made the difficult decision to begin the GOB process.
Chapter 11 Bankruptcy Filing
Big Lots filed for Chapter 11 bankruptcy protection in September, shortly after announcing plans to close 340 stores. This move was part of a sale agreement with an affiliate of Nexus Capital Management LP. Thorn expressed pride in the efforts of Big Lots employees by saying, We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings.
Challenges from External Factors
The company attributed its struggles to high inflation and rising interest rates, which have significantly impacted customer spending on its primary products. Despite strong endeavors to stabilize, Big Lots resorted to a court-supervised process in hopes of maximizing value and ensuring ongoing operations.
Failed Acquisition and Current Status
Big Lots aimed to sell all its assets and operations to Nexus, but that agreement fell apart. Bloomberg reported that the failure was due to the acquisition not being economically feasible as the inventory was valued lower than expected. Additionally, landlords pressured Big Lots in court regarding the sale’s delay.
Future Plans and Discussions
Currently, discussions are underway between Big Lots, Nexus, and another potential buyer to explore the chance of salvaging several hundred stores instead of closing the entire chain, as noted by Big Lots attorney Brian M. Resnick.
