SAN ANGELO, TX - Big Lots, a discount retailer, has filed for Chapter 11 bankruptcy protection as it faces declining consumer spending and sluggish sales.
The Columbus, Ohio-based company plans to sell its assets and ongoing business operations to private equity firm Nexus Capital Management.
The retailer, known for its furniture, home decor, and other items, said Monday that high inflation and interest rates have hurt its sales. Consumers have cut back on purchases of home and seasonal products, key revenue drivers for the company. Sales at stores open for at least a year have fallen for nine consecutive quarters, according to FactSet.
Despite some recent performance improvements, Big Lots’ board determined after a strategic review that selling to Nexus is the best path forward. The company postponed its second-quarter results, now set to be released later this week.
Big Lots will continue selling goods in stores and online during the court-supervised process. The company, which operates nearly 1,400 stores in 48 states, may close some locations but has not specified how many or which ones.
“The actions we are taking today will enable us to move forward with new owners who believe in our business and provide financial stability,” said Big Lots President and CEO Bruce Thorn in a statement.
Nexus Capital will serve as the “stalking horse” bidder in a court-supervised auction, with the deal expected to close in the fourth quarter if no better offers emerge.
The company has secured $707.5 million in financing, including $35 million in new funding, and expects to have sufficient liquidity to support operations while finalizing the sale.
Big Lots also received a notice from the New York Stock Exchange for its stock price falling below $1 over 30 consecutive trading days. While this does not mean immediate delisting, shares dropped 40% to 30 cents in premarket trading.
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