Big Lots files Chapter 11 bankruptcy protection and will close more stores
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Big Lots filed for bankruptcy protection Monday after the retailer's strategy of "extreme" discounts failed to deliver a turnaround.
Why it matters: With more than 1,300 stores in 48 states, the Columbus, Ohio-based company has about 27,700 employees and is hoping to stay in business, according to a court filing.
Driving the news: Big Lots filed for Chapter 11 bankruptcy and agreed to sell itself to an affiliate of private equity firm Nexus Capital Management for $620 million, CFO Jonathan Ramsden said in a court filing.
- The company — which suffered 16 straight quarters of comparable sales declines — said it will continue to close underperforming stores as it seeks financial stability.
- The sale will require a court's permission.
- "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," CEO Bruce Thorn said in a statement.
The big picture: Dollar stores and discount stores catering to lower-income shoppers are under pressure as their target audience is increasingly pinching pennies.
- With Big Lots in crisis mode earlier this year, the company turned to more of the "extreme" bargains it has long considered its sweet spot — but those deals weren't enough to stave off financial ruin.
- The company also cut costs and implemented productivity improvement measures.
Zoom in: Big Lots suffered in part because it was "not always good value for money" and equivalent products "can often be found much cheaper at other stores, including Walmart," GlobalData retail analyst Neil Saunders wrote Monday.
- "At a time when consumers are comparing prices more, this has lost Big Lots custom and loyalty," he said, adding that the retailer's "assortment is very jumbled and muddled."
