Big Lots announced last week that it was filing for Chapter 11 bankruptcy.

The filing will help facilitate a sale of the company to Nexus Capital Management LP, pursuant to which Nexus has agreed to acquire substantially all of Big Lots’ assets and ongoing business operations.

“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,” said Big Lots CEO Bruce Thorn in a press release.

Big Lots currently operates 1,392 stores in 48 states. It plans to keep the stores open during the bankruptcy process.

Prior to filing for bankruptcy, Big Lots ranked No. 237 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s top online retailers by their annual web sales. Also prior to the Big Lots bankruptcy, Digital Commerce 360 had projected Big Lots ecommerce sales to reach $426.12 million in 2024.

Big Lots ecommerce sales

Details about Big Lots bankruptcy filing

Meanwhile, Nexus lauded Big Lots as a great fit for its portfolio.

“We are excited to have the opportunity to partner with Big Lots and help return this iconic brand to its status as America’s leading extreme value retailer,” said Evan Glucoft, managing director of Nexus, in a press release. “The Big Lots business has incredible potential and we are confident that its greatest days are ahead.”

The Big Lots bankruptcy also includes an influx of fresh funding.

“In connection with the court-supervised process, Big Lots has secured commitments for $707.5 million of financing, including $35 million in new financing,” Thorn said.

The discount retail segment has experienced turbulence this year. Family Dollar, Dollar Tree, and Dollar General all have struggled as consumers seek a blend of value and quality that the segment has struggled to provide.

Industry expert: Big Lots Chapter 11 filing not ‘unexpected’

Retail experts were generally not surprised by Big Lots filing for Chapter 11 bankruptcy.

“Big Lots’ Chapter 11 filing isn’t entirely unexpected given the company’s ongoing struggles with liquidity, sales declines, and a difficult retail environment,” said Bassem Mostafa, the owner and lead market analyst at GlobeMonitor Market Research Agency, which monitors retail trends.

Mostafa said for Big Lots to succeed, it will have to transform itself digitally.

“One of the company’s key weaknesses has been its inability to innovate and adapt quickly to the digital shift, which many of its competitors have embraced more effectively,” Mostafa said.

He added that ecommerce accounts for only a small fraction of Big Lots’ overall sales. The retailer’s digital transformation efforts have been late and underwhelming, he said.

“However, without substantial investment in technology and a strategic overhaul, the company’s future remains uncertain,” Mostafa said.

Mostafa said that Big Lots has been too dependent on their brick-and-mortar stores, and not enough on their online presence.

“Their dependence on brick-and-mortar locations without sufficient digital integration left them exposed to the changing retail dynamics, where omnichannel capabilities and efficient supply chain management are essential for success,” Mostafa said.

Michael Zakkour, founder and chief analyst at 5 New Digital, a retail consultancy, said Big Lots fell also fell short on quality.

“Consumers are spending where they know they are getting value for money,” Zakkour said. “Cheap is good, but cheap and high quality is better. Big Lots did not deliver on that demand and promise.”

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