Big Lots files for bankruptcy

Jordan Valinsky, CNN

New York (CNN) — Big Lots, nan beleaguered discount retailer that antecedently warned it had “substantial doubt” astir its survival, has revenge for bankruptcy.

As portion of its Chapter 11 filing, nan retailer announced that backstage equity patient Nexus Capital Management is acquiring “substantially all” of Big Lots stores and business operations. During nan process, its locations and website will stay unfastened for shopping.

“The actions we are taking coming will alteration america to move guardant pinch caller owners who judge successful our business and supply financial stability, while we optimize our operational footprint, accelerate betterment successful our performance, and present connected our committedness to beryllium nan leader successful utmost value,” said Big Lots CEO Bruce Thorn successful a property release.

Big Lots blamed respective economical factors for its bankruptcy, including precocious ostentation and liking rates. That has led customers to alteration their purchasing behavior. They’re seeking retired worth – but not needfully little costs. That’s why dollar stores person been struggling while income astatine Walmart and Amazon person been booming. It’s besides why McDonald’s has been struggling while casual chains for illustration Applebee’s person been growing.

“The prevailing economical trends person been peculiarly challenging to Big Lots, arsenic its halfway customers curbed their discretionary spending connected nan location and seasonal merchandise categories that correspond a important information of nan company’s revenue,” it explained.

More shop closures could beryllium coming, too. Big Lots is successful nan process of closing astir 300 of its 1,400 shop crossed nan United States. No further closures were announced Monday, but Big Lots warned it will “need to adjacent definite locations to guarantee that our business operates efficiently and we tin proceed serving our customers.”

The 57-year-old institution has secured $707.5 cardinal successful caller financing to support operating and to salary labor and vendors. Nexus was named nan “stalking equine bidder” pinch its acquisition expected to adjacent later this year, unless location are amended offers.

But it’s “unlikely that different bidder will emerge” because of nan short income timeline, according to Sarah Foss, world caput of ineligible and restructuring for Debtwire, a publication focused connected leverage markets.

Chapter 11 is useful for Big Lots because “it gives a debtor leverage successful negotiations and allows a institution to renegotiate and cull burdensome leases and contracts, which are often a awesome financial strain connected a distressed institution successful this sector,” Foss told CNN.

Big Lots joins a increasing database of well-known retailers hitting financial turbulence arsenic customers trim backmost spending connected non-essential items. Last week, LL Flooring announced that it couldn’t find a purchaser and is shutting down aft much than 3 decades successful business.