Big Lots declared bankruptcy earlier this year, citing inflation and high interest rates as reasons for their business struggling. The discount retailer is known for selling a wide variety of home merchandise including furniture, accessories, kitchenware, and more. Unfortunately, like many other retailers in the industry, they filed Chapter 11 bankruptcy to gain protection from its debts.
Big Lots Files Chapter 11 Bankruptcy
Sales at Big Lots had been declining for the past 16 quarters, so it came as no surprise when the retailer announced their plans to declare bankruptcy in Septmember 2024. The store relied on sales from home and seasonal products, and with consumers significantly cutting back their spending in these areas due to high inflation and ripple effects from the 2019 COVID pandemic, the retailer struggled to remain afloat. Many other home goods stores have also struggled amid changing consumer behaviors in a difficult economy.
President and CEO Bruce Thorn stated, “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 Sells to Nexus Capital
In addition to filing for bankruptcy, the chain sought to sell to new owners in order to regain financial stability and rebuild the brand. It secured $707.5 million in financing through the bankruptcy filing. This funding should be sufficient to support the company as the sale is completed with a private equity firm: Nexus Capital.
According to Big Lots, the deal with Nexus Capital is set to be finalized and confirmed by the end of the fourth quarter of 2024.
Criticism of Big Lots
Neil Saunders, a managing director at GlobalData notes that the difficult economy and rising inflation are not the only reasons Big Lots failed to perform. In fact, he believes there is lack of value in the products.
The analyst stated, “Big Lots is not always good value for money. Many of the items it sells are not high end and are not drastically expensive, but equivalents can often be found much cheaper at other stores, including Walmart”.
However, the bankruptcy filing and funding should allow the store to remain open and with new ownership and direction. The company hopes they will return to business and re-open many more stores across the U.S. in 2025.
