Big Lots, a home goods retailer based in Columbus, Ohio, plans to shut down all of nearly 900 stores remaining after a failed deal to sell the chain. The move comes just months after the retailer filed for Chapter 11 bankruptcy protection in September and announced that it would commence going-out-of-business sales to ensure the efficacy of its estate.
References from Big Lots further suggested the cessation of an acquisition from Nexus Capital Management. The chain had bankrolled its hope of the sale into a lifebuoy now reduced to a strand. “We all have worked extremely hard and have taken every step to complete a going-concern sale,” said Bruce Thorn, Big Lots President and CEO, in a statement. Indeed, they continue to peruse and study alternative transactions to try to complete a deal at the beginning of January”. Even before this announcement, Big Lots was already in a bad place.
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The chain has already closed many of its stores, and now it will begin liquidations at its remaining 870. Before it filed for bankruptcy protection, Big Lots operated about 1,400 stores across the United States. According to Bloomberg news reports, landlords and unsecured creditors said to be owed millions for back rent wondered aloud about possible reimbursements and why the Nexus sale had not gone through. Meanwhile, Big Lots is also attaching a Worker Adjustment and Retraining Notification (WARN) notice, revealing that it will lay off 555 workers in its Columbus headquarters. The layoff will commence on December 29 and will end by next April, including the position of chief executive officer.
Retail struggles amid economic challenges
Big Lots’ closing is a part of the extensive closure and bankruptcy trend currently going on in the U.S. retail sector, which is still suffering from the COVID-19 pandemic, increasing interest rates, and tightening consumer spending.
U.S. retailers have announced 7,308 store closures thus far in 2024, according to Coresight Research, with 5,881 planned openings significantly outpacing. The number of retail bankruptcies shot up as well, with 49 filings by mid-December, almost double the 25 in 2023.
Big lots are part of the numerous shutter businesses in the year, such as 99 Cents Only Stores, Conn’s HomePlus, Badcock’s Home Furniture & More. More closures could come by New Year’s Eve. Another rumor is that Party City, located in Woodcliff Lake, New Jersey, will file for Chapter 11 bankruptcy for the second time. Another rumor is that Container Store Group is also experiencing financial strain amidst the reported withdrawal of $40 million in funding from the parent company of Bed Bath and Beyond.
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Big Lots implemented a business model that bought home goods and merchandise from closeouts and overstocks to sell them at a very low price. However, it found these pressures insurmountable. While the chain has been trying to restructure and find a buyer, it has now added to the growing list of brick-and-mortar retailers falling victim to the current economic conditions.
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Big Lots has initiated liquidation procedures, and in doing so is working with Davis Polk & Wardwell as its legal counsel, Guggenheim Securities as its financial adviser, and AlixPartners as its restructuring adviser. Real estate matters are also handled with the assistance of A&G Real Estate Partners.
While ultimate fates remain uncertain, Big Lots’s demise illustrates the growing barrage of troubles besetting U.S. retailers, especially those in the discount and home goods sectors.
