Big Lots Files For Bankruptcy Citing Inflation

Big Lots filed for bankruptcy on Monday citing inflation and high interest rates as main reasons for the discount retail store’s financial troubles.

The home goods chain, which boasts bargain prices for furniture and decor also pointed to fewer people spending money on these things in the wake of the pandemic.

“The company has been adversely affected by recent macroeconomic factors such as high inflation and interest rates that are beyond its control,” Big Lots said in a press release.

“The prevailing economic trends have been particularly challenging to Big Lots, as its core customers curbed their discretionary spending on the home and seasonal product categories that represent a significant portion of the company’s revenue,” the company said.

As part of its Chapter 11 bankruptcy filing, Big Lots agreed to sell its business to a private equity firm, Nexus Capital Management for about $760 million, according to court records.

Big Lots runs more than 1,300 stores across 48 states and made around $4.7 billion in revenue over the year that ended in September 2023.

Nearly 300 stores will now close, the company said, but the remaining stores will continue to offer “extreme bargains.” Previously, Big Lots had told the Securities & Exchange Commission (SEC) it planned to close only 35 to 40 stores.

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CEO Bruce Thorn said the bankruptcy filing will enable Big Lots to move forward with more financial stability, and they “remain committed to offering extreme bargains, enabling easy shopping in our stores and online, and providing an outstanding customer experience.”

Nexus’ managing director said the firm is confident Big Lots’ “greatest days are ahead” and they 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.”

Big Lots will be sold during a court-supervised auction. Technically, Big Lots could sell to a different buyer if someone makes a higher bid than Nexus’ offer, but such a situation is unlikely.

About three months ago, Big Lots noted “substantial doubt about the Company’s ability to continue” in an SEC filing.

Brick-and-mortar retail stores have seen declining foot traffic for years now, but the pandemic dealt a particularly strong blow. Sky-high inflation in the years following COVID caused people to slow their discretionary spending dramatically as well.

Big Lots has also struggled to compete with similarly inexpensive retail chains that sell the same products, often for even lower prices, like Walmart.

Big Lots is headquartered in Columbus, Ohio.