Big Lots, with NJ footprint, mulls store closures, bankruptcy

Citing a pullback in consumer spending due to inflation, discount home goods chain Big Lots plans to close between 35-40 locations this year across the U.S.

In a June 13 filing with the Securities & Exchange Commission , the Columbus, Ohio-based retailer expressed “substantial doubt” about its ability to continue as a going concern.

Big Lots already closed 52 stores last year. According to the retailer, “elevated inflation” has put a damper on customers’ buying power. For the first quarter of 2024, the company's sales fell 10.2% to $1 billion. It also reported a net loss of $205 million .

As part of a turnaround effort, Big Lots has taken steps to reduce costs, improve sales and enhance its financial flexibility and liquidity, according to the regulatory filing.

The chain has been working to shore up liquidity in recent months; however, it raised doubts about its ability to survive based upon its current cash and liquidity projections.As of last month, the company had not breached its credit agreements, but indicated that could change soon.

In the filing, Big Lots said it anticipated “further operating losses” and “difficulty remaining in compliance with such covenants."

Falling out of compliance could trigger those loans being called. And that could force the company to file for Chapter 11 protection or even Chapter 7 bankruptcy.

To improve its situation, Big Lots said it is exploring alternatives. Those options include lease concessions and deferrals, entering a letter of credit facility, managing its working capital and raising additional capital.

Big Lots said it also is seeking to further monetize assets, such as its remaining owned real estate property, through outright sale or sale and leaseback opportunities.

A media representative from Big Lots did not immediately respond to a request for more information about which locations are facing closure.

'Aggressive action'

Nationwide, Big Lots has about 1,400 stores. Within New Jersey, the chain has 27 locations.

Commenting on the latest earnings report, Big Lots President and CEO Bruce Thorn said, “We remain focused on managing through the current economic cycle by controlling the controllables. As we move forward, we're taking aggressive actions to drive positive comp sales growth in the latter part of the year and into 2025, and to maintain year-over-year gross margin rate improvements.”

Thorn estimated that about 70% of Big Lots’ store base has “healthy unit economics.” But “there are still a significant number of underperforming stores that we are working hard to address," he said.

The CEO also made it clear that he was focused on liquidity and the bottom line.

"We are pleased with our actions to preserve and enhance liquidity in Q1, which included aggressive efforts to manage opex [operating expenses], capex [capital expenditures], and inventory, and the execution of a new term loan facility, which provides us with significant additional financial flexibility," he stated.

"While near-term conditions have been challenging, we're not slowing down on making progress to transform our business. The current financial performance does not yet reflect the stronger business model that we've created through our five key actions, but we expect the fruits of those efforts to become more apparent in the back half of the year,” Thorn said.

Post-pandemic, several well-known chains have filed for bankruptcy, including:

• Rite Aid



• Red Lobster



• Sam Ash



• Bed Bath & Beyond



• Bob’s Stores



• Christmas Tree Shops

 

Meanwhile, pharmacy chain Walgreens recently unveiled plans to shutter up to 2,000 stores amid falling retail sales.

Copyright © 2024 BridgeTower Media. All Rights Reserved.