Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Fernanda Tronco

Big Lots loyalists are devastated by company's latest troubles

It's no secret that Big Lots has been struggling with sales for the last two years, forcing the company to make major moves to stay afloat, leading to its Chapter 11 bankruptcy filing on Monday. 

Although drastic, the filing was to be expected after Big Lots announced it would postpone its Q2 earnings report release on the intended publishing date of September 6.

Related: Nostalgic seafood restaurant chain exits Chapter 11 bankruptcy

The company has seen a severe change in customer behavior due to economic trends that have resulted in high inflation and increasing interest rates, which prompted its target clientele to spend their money more consciously.

In its Q1 earnings report for 2024, Big Lots highlighted that its customer base is now focusing on value when it comes to their everyday needs rather than seeking lower prices, which is something the company is known for.

In its last published quarter, the company reported a net loss of $205 million, with a 10.2% sales decrease and a comparable net sales decline of nearly 10% compared to the year prior.

Big Lots shopper leaves store.

Bloomberg News

Big Lots officially files for Chapter 11

On Monday, Big Lots  (BIG)  announced it had entered a sale agreement with investment firm Nexus Capital Management to acquire the discount retail company, including all its assets and business operations. 

Big Lots said the acquisition would be in the company's best interest, and to facilitate the ownership transition, it would initiate a voluntary Chapter 11 bankruptcy filing.

"Operating under new ownership who believes in our business and provides increased financial stability will improve our long-term profitability," said Big Lots in a press release.

Related: Big Lots retail chain ready to file Chapter 11 bankruptcy

While the transition takes effect, Big Lots announced it would close multiple locations to continue smooth operations in its remaining ones.

As of the end of 2023, Big Lots has 1,392 stores in 48 states. 

Wall Street intervenes before bankruptcy

Big Lots' stock reached all-time highs during the pandemic but has steadily decreased over the past three years, including falling over 81% in the past three months. 

This downward spiral prompted Wall Street to step in before the bankruptcy filing and inform Big Lots that its stock was no longer compliant with trading requirements because it had an average closing price of less than $1 over a consecutive 30-day period, as stated in the Chapter 11 filing.

More bankruptcy:

However, this notice did not immediately remove the company's stock, which currently remains on the market at a flatline as of Tuesday's market close. 

A new era for Big Lots

As stated in the sale agreement, Nexus Capital Management is considered the winning bidder in the acquisition of Big Lots, which is anticipated to close during the fourth quarter of 2024. 

In the agreement, Big Lots secured $707.5 million in financing, including $35 million in funding from its current lenders. 

If approved by the court, the financing is expected to provide sufficient liquidity to support the company while it completes the sale transaction.

Nexus Capital Management is an investment company with a portfolio consisting of multiple investments in various businesses, including Sugarbear, Toms, and TruRoots. 

"The Big Lots business has incredible potential and we are confident that its greatest days are ahead,” said Managing Director of Nexus Evan Glucoft in the announcement.

Big Lots' cult following reacts

Despite not making enough sales to prevent bankruptcy, Big Lots has a fan base so committed that it could almost be considered a cult following. 

Currently, Big Lots has over 3.5 million followers on Facebook alone, and some of the distraught went on the social media platform to express their feelings about the devastating news.

One loyal customer commented on a post regarding the Chapter 11 filing saying:

"I would really miss that store both here and in AZ! Cross your fingers, say some prayers!!"

On another post, Big Lots fans chimed in by commenting:

"Awe, I'm sad. I love Big Lots. it's my go-to at Christmas for character stuff. They have stuff no one else does."

"Love big lots. It got me through really hard times. I'm going to miss it badly," another wrote

However, bankruptcy doesn't mean your favorite store immediately disappears forever, so some of these misgivings may be premature. 

Related: Veteran fund manager sees world of pain coming for stocks

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.