Big Lots plans to close all its nearly 900 remaining stores after the pending sale of the chain fell through, capping what has been a tough year full of liquidations and bankruptcies for U.S. brick-and-mortar retail operators.
The Columbus, Ohio-based home goods chain that filed for Chapter 11 bankruptcy protection in September said on Thursday said it would be kicking off going-out-of-business sales at its last locations in the coming days "to protect the value of its estate." Big Lots is taking the step to wind down its business after its previously announced acquisition by Nexus Capital Management derailed, according to a statement from the retailer.
Earlier this week in bankruptcy court, landlords — unsecured creditors owed millions of dollars in back rent by Big Lots — voiced concern about how and if they would be reimbursed, according to Bloomberg News. They wanted to know why the sale to Nexus hadn't been consummated yet.
Big Lots didn't respond to an email from CoStar News seeking a comment Thursday, but the chain has already shuttered hundreds of stores. At this point, Big Lots will start going-out-of-business sales at 870 remaining stores, according to court documents. Before it filed for bankruptcy, Big Lots had about 1,400 locations.
This year has been chock-full of store closings, Chapter 11 filings and liquidations by retailers that have been reeling from the aftershocks of the COVID-19 pandemic, high interest rates and consumers tightening their purse strings. U.S. retailers so far this year have announced 7,308 store closings, outpacing the 5,881 planned store openings, according to data firm Coresight Research. And, as of Dec. 13, Coresight has tracked 49 U.S. retail bankruptcies — including auto dealers and direct-to-consumer brands — compared to 25 bankruptcies in calendar 2023.
A number of chains closed up shop and liquidated this year, including 99 Cents Only Stores, Conn's HomePlus, Badcock's Home Furniture & More, Bob's Stores, Sam Ash Music, and American Freight.
And the store closings and bankruptcies may not be done for the year. Woodcliff Lake, New Jersey-based Party City is expected to file for Chapter 11 and possibly seek to shutter its stores in the next few weeks, according to several media reports. That would mark the second time the chain has sought bankruptcy protection. And The Container Store Group, headquartered in Coppell, Texas, is facing financial uncertainty after Beyond — Bed, Bath & Beyond's parent — warned that it might pull its $40 million investment from the retailer.
Big Lots' business model was to buy home goods and other merchandise through closeouts, liquidations and overstocks to sell at relatively low prices to consumers.
While Big Lots said it doesn't anticipate completing its sale to Nexus, it plans to continue "to work toward completing an alternative-going concern transaction with Nexus or another party," according to the company, even as it conducts liquidation sales. The goal would be to complete such a sale by early January.
“We all have worked extremely hard and have taken every step to complete a going-concern sale," Big Lots President and CEO Bruce Thorn said in the company's statement. "While we remain hopeful that we can close an alternative going-concern transaction, in order to protect the value of the Big Lots estate, we have made the difficult decision to begin the [going-out-of-business] process.”
Big Lots has filed a Worker Adjustment and Retraining Notification, or WARN, notice with state labor officials in Ohio saying it plans to lay off 555 employees at its headquarters at 4900 E. Dublin Granville Road. The layoffs are slated to start Dec. 29 and be completed by next April. The position of president and CEO, Thorn's job, is on the layoff list.
For the record
Davis Polk & Wardwell is serving as legal counsel, Guggenheim Securities is serving as financial adviser, and AlixPartners is serving as restructuring adviser to Big Lots. In addition, A&G Real Estate Partners is serving as real estate adviser.