Big Lots, a major national retail store, filed for bankruptcy on Monday, leaving the future of its 1,400 store locations uncertain.
The Daily Mail reported that Monday’s Chapter 11 bankruptcy filing makes Big Lots the latest American retail chain to declare bankruptcy in 2024. The outlet noted that a Standard & Poor’s July report indicated that 21 major American retail and restaurant chains had already declared bankruptcy in the first half of 2024, marking the highest number of bankruptcy filings since the COVID-19 pandemic in 2020.
Big Lots’ leadership is currently hoping to sell the retail chain to Nexus Capital, a private equity firm, after it reduces its debts and closes numerous stores, according to The Daily Mail.
The Daily Mail reported that Debtwire’s Sarah Foss suggested that Big Lots is trying to restructure the company without having to close down all of it stores like other retail chains have been forced to do in 2024. Foss said, “Big Lots is hoping to avoid the path of retail chains 99 Cents Only Stores and Conn’s which have had to liquidate in bankruptcy.”
As part of the company’s attempt to remain in business, Big Lots borrowed $707.5 million and announced that it would be closing roughly 300 of its 1,400 locations, according to The Daily Mail.
Neil Saunders, a retail analyst, told The Daily Mail that bankruptcy was “the inevitable destination” for a retail chain that experienced 16 consecutive quarters of a decline in sales.
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Saunders claimed that Big Lots faces two main challenges, noting, “The first is that 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.”
The retail analyst added, “The other issue [is] the assortment is very jumbled and muddled, which is partly a function of the way the business operates.”
According to Saunders, if Big Lots had enough financial capital reserved in the bank, the retailer “might have been able to navigate through these challenges.” However, Saunders explained that it was “not the case” due to the company’s $573 million in long-term debt and increasing interest payments.
“Bankruptcy will allow Big Lots to try and put itself on a more stable footing,” Saunders added. “This includes restructuring debt and closing poorly performing stores. The sale to Nexus Capital, which is something of a stalking horse bid, gives certainty that the chain will survive in some form.”
