The retail sector's struggles over the last two years led to several major chains filing for bankruptcy protection to reorganize or liquidate and close their businesses.
Home decor retailers Bed Bath & Beyond and Tuesday Morning filed for Chapter 11 in 2023 but did not survive their bankruptcy filings and those brick-and-mortar retailers disappeared.
Party City and Rite Aid both filed for bankruptcy in 2023, with Party City emerging in October 2023, and Rite Aid exiting on Sept. 5, 2024.
Related: Nostalgic seafood restaurant chain exits Chapter 11 bankruptcy
Teen apparel chain Rue 21, discount retail chain 99 Cents Only, and home improvement retailer LL Flooring all filed Chapter 11 bankruptcy in 2024, which led the companies to liquidate their stores.
Several mattress retail chains have also filed for bankruptcy in the last two years, including Mitchell Gold + Bob Williams and Z Gallerie filing in 2023 and The RoomPlace, Factory Mattress, Conn's HomePlus and Metro Mattress so far in 2024.
Fabric and crafts store Joann and mall-based clothing retail chain Express filed Chapter 11 bankruptcy in 2024 and closed stores as part of their reorganizations and continue operating.
Finally, discount home goods retail chain Big Lots plans to file for Chapter 11 bankruptcy as soon as Sept. 8, seeking to sell all of its assets through a Section 363 bankruptcy process, Bloomberg reported.
Related: Bankrupt Home Depot rival to liquidate remaining stores
The bankruptcy filing and sale are necessary for the company after years of slumping sales. The company in Securities and Exchange Commission filings has blamed elevated inflation for adversely impacting its customers' buying power. Big Lots had claimed its core consumers were hesitant to purchase big-ticket discretionary items.
Big Lots has struggled in recent quarters. CEO Bruce Thorn said a downturned economy has soured customers and hurt profits. The company had a 10.2% drop in sales to $1.01 billion during the first quarter and a loss of $132.3 million.
"While we made substantial progress on improving our business operations in Q1, we missed our sales goals due largely to a continued pullback in consumer spending by our core customers, particularly in high ticket discretionary items," Thorn said.
Big Lots plans to continue operating under bankruptcy protection and seek a stalking-horse bidder in a potential sale or auction.
In bankruptcy cases, a stalking-horse bid refers to a deal with a potential buyer that is hidden from the public, creditors, and the courts. The idea is for the bidder to make the first bid to buy the company’s assets. That sets a floor on the value of the assets.
The retail chain, which has about 1,400 stores, revealed in July that it would close 315 underperforming stores.
More bankruptcy stories:
- Another popular ice cream brand files for Chapter 11 bankruptcy
- Popular burger chain faces likely Chapter 11 bankruptcy
- Huge shipping company files Chapter 11 bankruptcy to liquidate
On August 12, the company hinted that it might file bankruptcy as soon as its board of directors approved one-time cash retention awards totaling $5.24 million to four top executives, according to a Securities and Exchange Commission Form 8-K. Offering retention bonuses is a common practice before a company files bankruptcy.
The one-time bonuses included $3.15 million for CEO Bruce K. Thorn, $969,938 for Chief Financial and Administrative Officer Jonathan A. Ramsden, and $561,068 each for Chief Legal and Governance Officer Ronald A. Robins Jr. and Chief Human Relations Officer Michael A. Schlonsky.
The discount retail chain on Sept. 6 postponed its second-quarter earnings release and rescheduled it for Sept. 12.
Big Lots' stock price has fallen by over 90% in the last year and declined by over 43% in after-hours trading on Sept. 6 to 28 cents per share.
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