Big Lots, a discount home goods giant with nearly 1,400 stores across 48 states, has filed for Chapter 11 bankruptcy due to economic challenges attributed to factors such as high inflation and soaring interest rates.
This iconic retailer specializing in home decor and furniture has experienced nine consecutive quarters of declining sales.
Despite the uncertainty surrounding its future, Big Lots’ President and CEO Bruce Thorn has highlighted a proposed sale to Nexus Capital as a potential positive outcome in a court-supervised auction.
“We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts. 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 President and CEO Bruce Thorn said in a statement.
Mr. Thorn continued, “We appreciate the tremendous loyalty of our customers, and our core purpose of helping them ‘Live BIG and Save LOTS’ has never been stronger. As we move through this process, we remain committed to offering extreme bargains, enabling easy shopping in our stores and online, and providing an outstanding customer experience. We are grateful for the hard work and dedication of our associates who remain focused on delivering the best service possible for our valued customers, and we deeply appreciate the partnership of our vendors as we start a new chapter for our business.”
Evan Glucoft, Managing Director of Nexus, said, “We are excited to have the opportunity to partner with Big Lots and help return this iconic brand to its status as America’s leading extreme value retailer. The Big Lots business has incredible potential and we are confident that its greatest days are ahead.”
CBS reported:
Bankruptcy seemed inevitable for the chain, which has posted 16 consecutive quarters of comparable sales declines, according to Neil Saunders, managing director of GlobalData. But he rejected the notion that the retailer’s troubles are entirely due to a challenging economic backdrop.
“Big Lots is not always good value for money. Many of the items it sells are not high end are not drastically expensive, but equivalents can often be found much cheaper at other stores, including Walmart,” the analyst noted.
Another issue plaguing Big Lots is its “very jumbled and muddled” product mix, which puts off consumers and hurts the shopping experience, Saunders added. But bankruptcy will give the retailer a chance to restructure its $573 million in long-term debt and increasing interest payments, offering “certainty that the chain will survive in some form,” he said.
Big Lots has secured commitments for $707.5 million of financing, including $35 million in new funding from some of its current lenders. If approved by the bankruptcy court, the financing is expected to provide sufficient liquidity to support the company while it works to complete the sale to Nexus Capital.
The chain has also received a delisting notice from the New York Stock Exchange because the average closing price of its shares was below $1 over a consecutive 30 trading-day period. The notice doesn’t mean that Big Lots’ stock will be immediately delisted as the company can appeal.
