Big Lots declares bankruptcy, plans extensive store closures, and transfers ownership to an investment firm to stabilize operations.
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.
- Sales at stores open for at least a year have declined for nine consecutive quarters.
Big Lots Files for Chapter 11 Bankruptcy
Big Lots has filed for Chapter 11 bankruptcy in response to mounting financial difficulties and changing market conditions. This move aims to provide the retailer a legal pathway to restructure debt and regain financial stability. Alongside the bankruptcy filing, the company announced it would be closing numerous underperforming stores to cut operational costs and streamline its business.
The company mentioned that its locations and the website will continue operating throughout the bankruptcy process, ensuring minimal disruption to its customers. This decision reflects Big Lots’ commitment to maintaining customer trust and service during a time of significant organizational change.
🚨🇺🇸BIG LOTS SELLS BUSINESS TO NEXUS CAPITAL AMID BANKRUPTCY PROCEEDINGS
U.S. discount retailer Big Lots has filed for Chapter 11 bankruptcy and agreed to sell its business to Nexus Capital for $707.5 million.
Nexus will act as a "stalking horse bidder" in a court-supervised… pic.twitter.com/5wE48UgYoy
— Mario Nawfal (@MarioNawfal) September 9, 2024
Transition to Nexus Capital Management
Big Lots plans to sell its assets and business operations to Nexus Capital Management, a prominent investment firm. Nexus Capital will act as a “stalking horse” bidder in a court-supervised auction, providing a baseline price for the company’s assets. If no higher bids are received, the sale to Nexus is expected to close in the fourth quarter.
“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.
This strategy aims to position Big Lots for a successful future by leveraging Nexus Capital’s financial and operational expertise. The move is seen as a step forward in stabilizing and revitalizing Big Lots amid a challenging economic landscape.
Market Challenges and Store Closures
Big Lots’ financial difficulties have been exacerbated by high inflation, rising interest rates, and shifting consumer behavior. In addition, sales at stores open for at least a year have declined for nine consecutive quarters, leading to an unsustainable financial situation. The company has also faced increased debt, currently holding nearly $3.1 billion in liabilities.
“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,” said Neil Saunders, managing director of GlobalData.
As part of its bankruptcy plan, Big Lots will close roughly 300 of its nearly 1,400 stores in the U.S., with more closures anticipated. While this is a difficult step, it is deemed necessary for the company to optimize its store fleet and focus on more profitable locations.
The deadline for submitting bids for the purchase of Big Lots’ assets is October 15. The restructuring process is being closely monitored by analysts and industry experts who believe that Big Lots’ ability to navigate this situation effectively will be crucial for its long-term survival.
