Closeout retailer Big Lots has significantly expanded the number of stores it plans to shut to roughly 450 locations, as part of one of the bankruptcy proceedings that is throwing millions of square feet of retail space onto the U.S. market.
The Columbus, Ohio-based company, which filed for Chapter 11 protection in September, has been steadily adding to the list of stores it plans to close. What started out as only 35 to 40 expected closings announced in June has now increased in increments to 449 stores, rising by about 100 locations in the past few weeks, according to an analysis by Bill Read, executive vice president of advisory firm Retail Specialists. He tracks the closings through court documents.
The latest Big Lots closings will help drive total closed retail space this year in the United States to nearly 89 million square feet, Coresight Research reported Thursday.
And there's more of that coming from Conn's HomePlus and Badcock Home Furniture & More, which are actually liquidating and winding down their businesses as part of their bankruptcy proceedings. They had about 550 stores when they sought Chapter 11 protection in July, with leases to be auctioned.
Between Conn's HomePlus, Badcock and Big Lots alone, more than 27 million square feet of retail space is becoming available shortly via auction, according to Read. That's in addition to other store leases, like those of the now-defunct discount chain 99 Cents Only, that were put on the block earlier this year. But the new space is coming online at a time when the U.S. retail vacancy rate is extremely low, at 4.1%, and there still isn't much availability for would-be retail tenants.
"The U.S. retail market heads into the second half of 2024 in one of its tightest fundamental positions on record thanks to steadily rising demand, a reduction in tenant bankruptcies and store closures, and limited new supply," according to a CoStar report on the sector. "While certain high-profile retail tenants such as Bed Bath & Beyond, Rite Aid, 99 Cents Only, Rue21 and Express have filed for bankruptcy over the past 18 months, subsequently closing some if not all of their stores, the overall space market impact of closures remains a fraction of the totals seen in the years preceding the [COVID-19] pandemic."
For comparison, the scope of Big Lots' closings isn't as large as other examples in recent memory. In 2016, Sports Authority shut 463 stores that totaled 18.52 million square feet, according to Read. In 2018, Toys "R" Us closed about 800 stores that represented 32 million square feet, he said. And last year, Bed Bath & Beyond shuttered roughly 760 stores that had 18.24 million square feet.
Rounds of auctions
The Big Lots' closings slated so far will total roughly 14.6 million square feet, according to Read. The closings of The Woodlands, Texas-based Conn's HomePlus stores will account for 5.4 million square feet and Badcock, based in Mulberry, Florida, will be 7.4 million square feet.
Melville, New York-based A&G Real Estate Partners is conducting the store-lease auctions for Big Lots. When the retailer filed for Chapter 11 last month, it had more than 1,300 stores. Shortly after that, A&G announced the first two rounds of bidding for leases, with the first one for 143 locations and the second wave for 152 stores.
The first auction was completed and there were bids — from either a retailer or a landlord wanting to pay a termination fee — submitted for only 20 locations out of the roughly 140 leases for sale, according to Read. He described the outcome as "relatively unimpressive."
Ollie's steps up
Six of the 20 bids were lease terminations, Read said. The remaining 14 leases went to: Ollie's Bargain Outlet, seven; Burlington Stores, five; Ocean State Job Lot, one; and American Signature, one.
Leases that aren't purchased at auction "will generally be a rejected lease and fall back into the [landlord's] hands to lease," Read said on LinkedIn.
A&G's most recent flyer on Big Lots, with the newest additions of stores, is marketing 305 store leases across 40 states. Those sites range from 18,000 to 58,400 square feet.
An A&G spokeswoman on Wednesday declined to comment on the number bids that have been submitted for the next series of auctions.
Hilco Real Estate, based in Northbrook, Illinois, is handling the auction of the Conn's HomePlus and Badcock leases. In its current marketing brochure, Hilco said it is auctioning more than 350 Conn's HomePlus and Badcock store leases throughout 15 states. Most of the locations are in: Texas, 83; Colorado, 55; North Carolina, 45; Florida and Georgia, 40 each.
That auction has been postponed several times and is now slated for next Monday.
Interest in assets
“The debtors have received significant interest in the assets and anticipate that this extension will provide potential bidders time to complete their work and submit binding qualified bids," Conn's HomePlus said in court documents.
Hilco didn't immediately respond to an email from CoStar News seeking comment Wednesday.
Conn’s HomePlus on Wednesday asked the bankruptcy court to designate Jefferson Capital Systems as its stalking horse bidder, with an offer of $360 million.
As part of its bankruptcy proceedings, Big Lots has struck a deal to be acquired by private equity firm Nexus Capital Management and said it plans to move forward with a store footprint that's "more focused." Los Angeles-based Nexus intends to acquire substantially all the retailer's assets and ongoing business operations as a "stalking-horse" bidder.
Big Lots buys home goods merchandise through closeouts, liquidations and overstocks to sell to shoppers at relatively low prices.