The Columbus, Ohio-based company plans to sell its assets and ongoing business operations to private equity firm Nexus Capital Management.
Big Lots, which sells furniture, home decor and other items, said in a statement on Monday that high inflation and interest rates have hurt its business as consumers have pulled back on their home and seasonal product purchases, two categories the chain depends on for a significant part of its revenue.
Big Lots plans to sell its assets and ongoing business operations to private equity firm Nexus Capital Management. Garret Roberts/Beaver County Times / USA TODAY NETWORK
Sales at stores open at least a year, a key gauge of a retailer’s health, have declined for nine straight quarters, according to FactSet.
Big Lots said that its performance has been improving, but that its board determined during a strategic review that the proposed sale to Nexus was the right move for the business.
The chain said it plans to close some stores, but didn’t specify how many or what locations would be impacted. Adam Cairns / USA TODAY NETWORK
“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 president and CEO Bruce Thorn said in a statement.
Nexus Capital will serve as a “stalking horse” bidder in a court-supervised auction, with the proposed sale subject to higher offers or other bids that could be considered better. If Nexus winds up as the winning bidder, the deal is anticipated to close in the fourth quarter.
Neil Saunders, managing director of GlobalData, said in an emailed statement that Big Lots seems to have lost some customers at a time when consumers are comparing prices more.
“Big Lots operates in a very crowded and competitive market where other value players do a far better job of delivering on low prices and compelling bargains. It needs to step up its game if it is to succeed post-bankruptcy,” he said.
Big Lots has secured commitments for $707.5 million of financing, including $35 million in new financing from some of its current lenders. Michele Eve Sandberg/Shutterstock
Big Lots Inc. has secured commitments for $707.5 million of financing, including $35 million in new financing from some of its current lenders.
Once approved by the court, the financing, along with cash from its ongoing operations, is expected to provide sufficient liquidity to support the company while it works to complete the sale.
The chain has also received a notice from the New York Stock Exchange because the average closing price of its shares was below $1 over a consecutive 30 trading-day period.
The notice doesn’t mean that Big Lots’ stock will be immediately delisted as the company can appeal.
In premarket trading, shares slid 40% to 30 cents.
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It's their own fault. In bad times discount stores usually do well. They really weren't a discount store. Quality wasn't great and neither were the prices you can find stuff at Ollie's outlet for a lot less.
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