Discount retailer Big Lots has declared bankruptcy and sold itself to an investment firm.
The company announced Monday (Sept. 9) that it had entered voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware, to facilitate its sale to an affiliate of Nexus Capital Management. The retailer also indicated it will close some locations.
“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 in a news release.
Extreme value and “extreme bargains” had been the company’s rallying cry in the last few quarters as it looked to boost sales.
But Big Lots and other discount chains have been struggling this year as consumers cut back, with the company announcing in July it would shutter 35 to 40 of its roughly 1,400 stores this year, following 52 closures in 2023.
“In 2024, the U.S. economy has continued to face macroeconomic challenges including elevated inflation, which has adversely impacted the buying power of our customers,” the company said in a Securities and Exchange Commission (SEC) filing. And during a June earnings report, the company reported a 10.2% drop in sales.
“We missed our sales goal due largely to continued pullback and consumer spending by our core customers, particularly in high-ticket discretionary items,” Thorn said at the time. “The consumer environment softened in the first quarter, and both consumer confidence and sentiment declined due to concerns about inflation, unemployment and interest rates.”
This year has also seen the northeastern U.S. discount merchant Bob’s Stores announce plans to shut down its entire 21-store chain as part of its bankruptcy proceedings, with 99 Cents Only doing the same thing for its 371 locations on the other side of the country. Likewise, Dollar Tree has said it plans to close almost 1,000 of its Family Dollar stores.
News of Big Lots’ bankruptcy comes days after reports that the company was considering a Chapter 11 filing.
It’s also happening at a time when a majority of consumers are making “more conservative budgeting decisions,” as noted here last week, leading them to cut back when making retail purchases, per research by PYMNTS Intelligence.
That research found that 42% of consumers have responded to inflation by adopting the “budget shopper” persona when buying retail products. These consumers “trade down by turning to cheaper merchants and plan their purchases around sales and discounts.”
The post Big Lots Declares Bankruptcy as Consumers Chase Deals appeared first on PYMNTS.com.
