Big Lots, Inc. officially announced its voluntary Chapter 11 bankruptcy filing, confirming that it will sell all assets and business operations to an affiliate of Nexus Capital Management, a private equity firm. The discount retailer, headquartered in Columbus, Ohio, cited challenging economic conditions, including high inflation and reduced consumer spending, as primary factors driving the bankruptcy. The move is aimed at stabilizing the company’s finances and positioning it for long-term operational improvements.
Bruce Thorn, President and CEO of Big Lots, stated that the bankruptcy process will allow the company to emerge stronger under new ownership that believes in the retailer's future potential. Thorn emphasized the company's commitment to optimizing its operational footprint, accelerating performance improvements, and maintaining its focus on being a leader in extreme value retail. The transaction is expected to close in the fourth quarter of 2024.
Nexus Capital’s Managing Director, Evan Glucoft, expressed optimism about revitalizing the Big Lots brand, citing its untapped potential in the extreme value retail space. Despite the bankruptcy, Big Lots will continue to serve customers both in-store and online during the court-supervised sale process.
Financial Pressures and Market Conditions
The filing comes amid significant macroeconomic pressures. Consumers have been cutting back on discretionary spending due to elevated inflation and interest rates, which have negatively impacted retailers like Big Lots. The company's core product categories, including home goods and seasonal items, have seen declining sales as customers shift spending priorities. Big Lots has also faced an uptick in operational costs, exacerbating its financial struggles.
The retailer has been taking steps to improve its long-term performance since the pandemic, focusing on strategic initiatives designed to boost sales and profitability. However, these efforts were insufficient to overcome recent economic challenges. The company also received a NYSE non-compliance letter for failing to maintain a stock price above $1 for 30 consecutive days, raising concerns about potential delisting.
Financial Stability During Bankruptcy
To ensure continued operations during the sale process, Big Lots secured $707.5 million in financing, including $35 million in new funding from existing lenders. The company plans to use these funds, alongside cash generated from ongoing operations, to maintain liquidity and meet financial obligations as the bankruptcy progresses.
Preliminary Q2 results suggest that Big Lots saw sequential and year-over-year improvement in same-store sales and gross margins, driven by its focus on extreme value offerings. CEO Bruce Thorn expressed optimism that this momentum will continue into the second half of the year. Full Q2 results will be reported on September 12, 2024, as part of the company’s 10-Q filing.
Outlook and Future Steps
As part of the bankruptcy process, Big Lots will reassess its operational footprint, likely leading to additional store closures and adjustments to its distribution center model. The company’s primary goal is to streamline its operations while maintaining a focus on value for its core customer base.
This development highlights the broader challenges facing the retail sector, with Big Lots becoming the latest in a series of bankruptcies and store closures in 2024. Retail bankruptcies in the U.S. have surged, with 21 filings through mid-July—more than any year since 2020, according to S&P Global.
Despite its financial troubles, Nexus Capital Management believes that Big Lots has strong long-term prospects. With the right financial backing and operational adjustments, the firm hopes to restore the company to its former prominence as a leader in discount retail.
Bruce Thorn, President and CEO of Big Lots, stated that the bankruptcy process will allow the company to emerge stronger under new ownership that believes in the retailer's future potential. Thorn emphasized the company's commitment to optimizing its operational footprint, accelerating performance improvements, and maintaining its focus on being a leader in extreme value retail. The transaction is expected to close in the fourth quarter of 2024.
Nexus Capital’s Managing Director, Evan Glucoft, expressed optimism about revitalizing the Big Lots brand, citing its untapped potential in the extreme value retail space. Despite the bankruptcy, Big Lots will continue to serve customers both in-store and online during the court-supervised sale process.
Financial Pressures and Market Conditions
The filing comes amid significant macroeconomic pressures. Consumers have been cutting back on discretionary spending due to elevated inflation and interest rates, which have negatively impacted retailers like Big Lots. The company's core product categories, including home goods and seasonal items, have seen declining sales as customers shift spending priorities. Big Lots has also faced an uptick in operational costs, exacerbating its financial struggles.
The retailer has been taking steps to improve its long-term performance since the pandemic, focusing on strategic initiatives designed to boost sales and profitability. However, these efforts were insufficient to overcome recent economic challenges. The company also received a NYSE non-compliance letter for failing to maintain a stock price above $1 for 30 consecutive days, raising concerns about potential delisting.
Financial Stability During Bankruptcy
To ensure continued operations during the sale process, Big Lots secured $707.5 million in financing, including $35 million in new funding from existing lenders. The company plans to use these funds, alongside cash generated from ongoing operations, to maintain liquidity and meet financial obligations as the bankruptcy progresses.
Preliminary Q2 results suggest that Big Lots saw sequential and year-over-year improvement in same-store sales and gross margins, driven by its focus on extreme value offerings. CEO Bruce Thorn expressed optimism that this momentum will continue into the second half of the year. Full Q2 results will be reported on September 12, 2024, as part of the company’s 10-Q filing.
Outlook and Future Steps
As part of the bankruptcy process, Big Lots will reassess its operational footprint, likely leading to additional store closures and adjustments to its distribution center model. The company’s primary goal is to streamline its operations while maintaining a focus on value for its core customer base.
This development highlights the broader challenges facing the retail sector, with Big Lots becoming the latest in a series of bankruptcies and store closures in 2024. Retail bankruptcies in the U.S. have surged, with 21 filings through mid-July—more than any year since 2020, according to S&P Global.
Despite its financial troubles, Nexus Capital Management believes that Big Lots has strong long-term prospects. With the right financial backing and operational adjustments, the firm hopes to restore the company to its former prominence as a leader in discount retail.