The bankrupt retail chain is closing dozens more stores

The retail sector has struggled since the Covid-19 pandemic, which has resulted in companies facing financial difficulties and filing for bankruptcy.

Retailers suffered from store closures, supply chain issues, consumer flight from malls and malls, and rising labor costs, which led to lower revenues.

Related: Bankrupt Retail Chain Liquidates, Closes All Stores

The most significant retailer bankruptcy in the past year was Rite Aid’s Chapter 11 filing on October 15, 2023, as it sought to reorganize, shed store leases and close underperforming stores. The retailer initially identified 154 stores it planned to close, but that number grew to more than 800 stores by August.

Rite Aid emerged from bankruptcy on September 3rd.

Home Depot rival LL Flooring filed for Chapter 11 bankruptcy on Aug. 11, seeking to sell its assets, but opted to liquidate and close 430 stores after two sales proposals fell through.

LL Flooring reversed course on September 5 after reaching a sale agreement with private equity firm F9 Investments, which agreed to acquire 219 stores and continue to operate the company as a going concern. The company closed a further 211 stores.

Finally, discount home goods retailer Big Lots (GREAT) on September 9, it filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware, requesting a sale of its assets to its bidder, Nexus Capital Management, for a $760 million bid that includes $2.5 million in cash, paying off debt, and assuming debt.

The court has scheduled an auction for Oct. 18 if multiple bidders submit an offer, with a hearing to approve a proposed sale scheduled for Nov. 4.

Big Lots in its petition listed $1 billion to $10 billion in assets and liabilities. Its liabilities include $556.1 million in funded debt obligations consisting of a $433.6 million asset-based credit facility and a $122.5 million term loan.

Related: Another troubled motor oil company files for Chapter 11 bankruptcy

The Columbus, Ohio-based debtor said several significant macroeconomic and industry headwinds, including heightened competition, the disruption of Covid-19, a high interest rate environment and a less reliable supply chain, which are driving up operating costs, were the reasons why the company needed to file for bankruptcy. according to court documents.

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The company in Securities and Exchange Commission filings blamed increased inflation for the negative impact on its customers’ purchasing power. Big Lots had argued that mainstream consumers were reluctant to buy high-ticket discretionary items.

CEO Bruce Thorn said the company has struggled in recent quarters as a sagging economy has soured customers and hurt profits. The company posted a 10.2 percent drop in sales to $1.01 billion in the first quarter and a loss of $132.3 million.

Big Lots is the nation’s fourth-largest home goods retailer, with overall operating revenues of $4.7 billion in 2023.

The discount home goods retailer, founded in 1967, operated about 1,392 stores in 48 states earlier this year before filing for Chapter 11 protection. On Sept. 11, the debtor filed a preliminary injunction seeking approval of a initial store closing lists of 344 stores nationwide.

The first list of store closings was just the beginning of Big Lots’ downsizing, as the retailer filed a list of additional store closings on Sept. 20, looking to shutter another 49 locations nationwide. The retailer is likely to file more listings of additional store closings as its bankruptcy process unfolds.

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