Discount home goods retailer Big Lots has filed for Chapter 11 bankruptcy protection, citing the impact of high interest rates and a sluggish housing market that slowed demand for its low-priced furniture and home decor. As part of the filing, Big Lots has agreed to sell its business to private equity firm Nexus Capital Management for $760 million. The deal includes $2.5 million in cash along with the assumption of the company’s debt and liabilities, according to court records.
Big Lots, one of the largest closeout retailers in the U.S. with over 1,300 stores across 48 states, has struggled to maintain sales momentum following a surge in demand for home furnishings during the pandemic. In fiscal 2023, the company generated $4.7 billion in revenue, but demand has since declined, leading to financial instability. The company has now begun the process of closing nearly 300 stores in an effort to reduce costs and restructure its balance sheet.
CEO Bruce Thorn stated that the bankruptcy filing and subsequent sale to Nexus Capital Management will provide financial stability and allow Big Lots to refocus on its operational footprint. “We remain committed to offering extreme bargains and providing an outstanding customer experience,” Thorn said in a statement. The retailer intends to operate its stores and online business as usual throughout the bankruptcy process.
Evan Glucoft, managing director at Nexus, expressed optimism about Big Lots’ future, stating that the private equity firm is “confident” in the company’s potential. “We are excited to partner with Big Lots and help restore its status as America’s leading extreme value retailer,” Glucoft added.
Big Lots has been facing challenges for several months as economic factors, such as high inflation and interest rates, have hit its core customer base—lower- and middle-income shoppers—particularly hard. These customers have cut back on discretionary spending, especially in the home and seasonal product categories that are key to Big Lots’ business.
In addition to economic pressures, Big Lots faces stiff competition from retailers such as Walmart, Wayfair, and TJX’s HomeGoods. Critics have noted that while Big Lots offers low prices, similar items are often available for less at competitors, and its product assortment has been described as disorganized.
As part of the bankruptcy proceedings, a court-supervised auction for the company will be held, potentially opening the door for other bidders to surpass Nexus’ offer. Big Lots is being advised by law firm Davis Polk & Wardwell, investment bank Guggenheim Securities, and consulting firm AlixPartners.
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