Big Lots Moving On with Chapter 11 Bankruptcy

September 9, 2024  by Karen Parrish in Bankruptcy, Industry   

To facilitate the transaction, the Company, together with each of its subsidiaries, initiated voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. During and after this process, Big Lots will continue to serve customers at their nearest store location or online at biglots.com.

Bruce Thorn, president and CEO, said, "We are proud of the work we do every day across Big Lots to provide our customers with unmistakable value and exceptional savings, as well as building stronger communities through our philanthropic efforts. 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."

Evan Glucoft, managing director of Nexus, said, "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. The Big Lots business has incredible potential, and we are confident that its greatest days are ahead."

Since the pandemic, Big Lots has taken steps to accelerate its strategic initiatives focused on improving sales and boosting its long-term performance and profitability. Like many other retail businesses, the Company has been adversely affected by recent macroeconomic factors such as high inflation and interest rates that are beyond its control. 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.

While the Company's underlying performance has been improving, the Board of Directors conducted a broad strategic review of alternatives and determined that entering into the Sale Agreement with Nexus, and initiating a court-supervised sale process, is the best path forward to maximize value and ensure continued operations.

Ongoing Optimization of Go-Forward Store Footprint

As part of the court-supervised sale process, the Company is continuing to assess its operational footprint, which will include closing additional store locations. The Company will also continue to evaluate and optimize its distribution center model.

Mr. Thorn added, "Though the majority of our store locations are profitable, we intend to move forward with a more focused footprint to ensure that we operate efficiently and are best positioned to serve our customers. To accomplish this, we intend to use the tools afforded by this process to continue optimizing our store fleet in an orderly manner."

Additional Information About the Court-Supervised Process

Additional information regarding the Company's restructuring and sale process is available at a dedicated website, bigstepforbiglots.com.

Court filings and other information related to the proceedings, including how to file a proof of claim, are available on a separate website administrated by the Company's claims agent, Kroll Restructuring Administration LLC, at https://cases.ra.kroll.com/biglots, by calling toll-free at (844) 217-1398 (or +1 (646) 809-2073 for calls originating outside of the U.S. or Canada), or by sending an email to biglotsinfo@ra.kroll.com.

Second Quarter 2024 Preliminary Results

Turning to the Company's second quarter 2024 performance, Mr. Thorn stated, "Despite a challenging consumer environment and financial pressures facing our business, we are pleased to have achieved underlying comp sales, gross margin, and operating expenses in line with our guidance. Underlying comp sales improved sequentially relative to Q1 on a year-over-year basis and gross margins significantly improved, driven in part by advancing our five key actions, particularly through increasing our extreme bargain offerings.

Additionally, Q3 to date is off to a good start, with a significant sequential improvement in underlying comp sales relative to Q2, as well as underlying gross margin expansion versus last year. We expect the positive momentum to continue into the back half of the year."

The Company will report full second quarter results as part of its upcoming 10-Q filing, which is due to be filed on September 12, 2024.