A Big Lot store in Los Angeles on September 7, 2024. Continue operations.
Eric Thayer | Bloomberg | Getty Images
Discount Home Furnishings Retailer large batch Bankruptcy filing on Monday following high interest rates and debt crisis Real estate market downturn Demand for its lower-priced furniture and decorative items has slowed.
As part of the Chapter 11 filing, Big Lot agreed to sell the business to private equity firm Nexus Capital Management for about $760 million, including $2.5 million in cash and remaining debt and liabilities, court records show.
The company operates more than 1,300 stores in 48 states and is one of the largest clearance retailers in the United States, specializing in special deals on all home furnishings. It brought in about $4.7 billion in fiscal 2023, but sales have continued to decline after demand for home goods fell during the pandemic.
Big Lot said in press releases and court filings that it will operate business as normal but has begun closing nearly 300 stores in an effort to repair its balance sheet and reduce costs.
“The actions we take today will allow us to move forward with a new owner who believes in our business and provides financial stability while we optimize our operating footprint, accelerate our performance improvements and deliver on our commitment to be a leader in the extreme segment. value,” CEO Bruce Thorne said in a press release. “As we work through this process, we remain committed to delivering great deals, making shopping easy for you in our stores and online, and delivering a great customer experience.”
Nexus managing director Evan Glucoft said the company “believes” Big Lot’s “best days are ahead”.
“We are excited for the opportunity to partner with Big Lot and help restore this iconic brand to its position as America’s leading value retailer,” said Glucoft.
Big Lot has been teetering on the edge in the months following high interest rates and a sluggish real estate market. Slowing consumer demand Suitable for new furniture, decor and other home items. While discount retailers tend to perform well during economic downturns, Big Lot caters primarily to low- and middle-income consumers who are more restrained on discretionary spending than wealthier consumers.
“The company has been adversely affected by recent macroeconomic factors, such as high inflation and interest rates that are beyond its control,” Big Lot said in the release. “Current economic trends are particularly challenging for Big Lot because of its core customer constraints ”
In addition to macroeconomic conditions, Big Lot operates in a highly competitive space and has been working hard to differentiate itself from other discount stores that offer home furnishings or specialize in this category, e.g. wayfel, Walmart and TJX Ltd.‘Homewares.
Neil Saunders, managing director of GlobalData, said: “Big Lot doesn’t always provide good value for money. Many of the items it sells are not high-end and not very expensive, but can often be found much cheaper at other stores, including Walmart. similar products.
“Another problem is that the product range is very confusing, which is partly a function of the way the business operates,” Saunders added. “However, there are too many choices and not enough treasures to attract consumers. This creates a “
Big Lot will hold a court-supervised auction of its business as part of the bankruptcy proceedings. If other buyers bid higher than Nexus’ bid, it may be acquired by other buyers.
The company is working with law firm Davis Polk & Wardwell, investment bank Guggenheim Securities and advisory firm AlixPartners. A&G Real Estate Partners has been appointed as real estate advisor to Big Lot, while Nexus will be represented by law firm Kirkland & Ellis.
