Ohio-based discount retailer Big Lots has filed for bankruptcy and will close more stores under new leadership, the company said Monday.
In July, they planned to close 35 to 40 stores, according to an SEC filing. That number grew to 315 by August.
The closures are tied to a sale agreement with an affiliate of Nexus Capital Management LP, Big Lots announced. They’ve also filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for Delaware.
Closing more locations will give the company a “more focused footprint,” said Bruce Thorn, Big Lots’ president and CEO. The company will also focus on improving its distribution center model.
"Though the majority of our stores are profitable, we plan to move forward with a more focused footprint,” Thorn said. “We will use this process to continue optimizing our store fleet.”
Big Lots has been working on boosting sales and profitability since the pandemic. However, high inflation and interest rates have made it difficult for the company to carry on as usual.
Customers have been more cautious about spending on home and seasonal products, which make up a large part of the store’s revenue.
Despite improving performance, the Board of Directors decided that entering into the sale agreement with Nexus is the best path forward, Big Lots said.
On Friday, Big Lots delayed its second-quarter earnings report to Thursday, Sept. 12. Thorn noted that Q3 is "off to a good start" and expects momentum to pick up later in the year.
Nexus will act as a “stalking horse bidder” in a court-supervised auction. If no higher bids come in, the sale could finalize by the fourth quarter of 2024.
Big Lots also secured $707.5 million in financing, including $35 million from current lenders.
The company has filed motions to continue paying employees, benefits, and critical vendors while proceedings continue.