(LOOTPRESS) – Big Lots, a discounter struggling and already having warned that it was in “substantial doubt” about its survival, has filed for bankruptcy.
As part of the Chapter 11 filing, the retailer also announced that private equity firm Nexus Capital Management will purchase “substantially all” of its Big Lots stores and business operations. Its locations and website will remain open during the process.
“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 CEO Bruce Thorn said in a press release.
Big Lots blamed a number of economic factors for its bankruptcy, specifically calling out high inflation and interest rates, which it said have caused customers to shift their buying habits. They are now in search of value—though not necessarily low prices. That’s why dollar stores have been foundering while Walmart and Amazon have been thriving. That’s also why McDonald’s has been foundering while casual chains like Applebee’s have been gaining.
“Trends in consumer spending have proven to be especially difficult for Big Lots. Its core customers reduced their discretionary spending in the home and seasonal product categories which are significant contributors to the company’s overall sales,” it said.
More store closures could be coming, too. Big Lots is in the process of closing roughly 300 of its 1,400 stores across the United States. No other additional closures were announced Monday, but Big Lots warned it will “need to close certain locations to ensure that our business operates efficiently and we can continue serving our customers.”
The 57-year-old company had lined up $707.5 million in fresh financing to stay in operation, pay its employees, and vendors. An auction is scheduled, with the deal expected to close later this year unless there are better offers. Nexus was named the “stalking horse bidder.”
Big Lots is just another in a growing line of well-known retailers hitting financial turbulence as customers pare back spending on non-essential items.
Last week, LL Flooring — formerly Lumber Liquidators — announced that it couldn’t find a buyer and is shutting down after more than three decades in business.
