Discount retailer Big Lots announced on Monday that it has filed for Chapter 11 bankruptcy protection.
The filing will result in more store closures beyond the 315 announced in early August, the company revealed in a statement posted on its website.
The August announcement affected 26 of 106 Big Lots stores in Florida, including 10 of 17 operating in the tricounty region of South Florida.
Prior to the August announcement, Big Lots operated 1,389 stores in the United States.
Monday’s statement did not specify which additional stores will be closed, saying only they will be identified as the company continues to “assess its operational footprint.”
CEO Bruce Thorn said the company has entered into an agreement with an affiliate of Nexus Capital Management LP to purchase all of the company’s assets and ongoing business operations. The company expects to close the transaction before the end of the year, the statement said.
The bankruptcy filing, in U.S. Bankruptcy Court in Delaware, was necessary “to facilitate the transaction,” the statement said.
“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,” Thorn said.
The filing traced Big Lots’ financial troubles to a span between 2013 and 2018, when the company began prioritizing national brands and deemphasized sales of closeout products. “This change in the company’s commercial priorities resulted in higher average product prices, diminished customer traffic and stagnating sales volume,” the filing said.
And the company lost market share to competitors like Ollie’s Bargain Outlet, said Bill Read, executive vice president at Retail Specialists LLC.
“They stopped being treasure hunting stores and started carrying basics that even at a good price can often be acquired at many other retailers for less,” Read told the South Florida Sun Sentinel. “Ollies in the meantime has the feel that Big Lots used to have. Bargains stacked high and at treasure hunter prices,” which makes shoppers “want to buy it now than risk them not having more later.”
Thorn added that a majority of Big Lots stores are profitable. However, “we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve out customers.”
Combined with cash generated from ongoing operations, a $707.5 million financing commitment, including $35 million in new financing following the bankruptcy filing, will provide “sufficient liquidity to support the company while it works to complete the sales transaction,” the company said.
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