Carle Place, N.Y.: The Big Lots store in Carle Place, New York on July 23, 2024. This location is … [+] one of the Big Lots locations that is closing. (Photo by Howard Schnapp/Newsday RM via Getty Images)
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The bankrupt Big Lots home goods closeout retailer just announced its planned sale to Nexus Capital Management has hit the skids so it will begin going-out-of-business sales (GOB) at its remaining 900 stores; it has already closed about 400 stores this year.
Though Nexus may return to the table in a bid for some of its stores or another buyer found, the company said it had no alternative but to plan for eventually closing all stores in the New Year.
Big Lot’s president and CEO Bruce Thorn said in a statement, “While we remain hopeful that we can close an alternative going-concern transaction, in order to protect the value of the Big Lots estate, we made the difficult decision to being the GOB process.”
In September, Big Lots entered into voluntary Chapter 11 bankruptcy proceedings to pave the way for its acquisition by Nexus for an undisclosed sum. Nexus other holdings include Dollar Shave Club, FTD floral services firm, Toms shoes and Lamps Plus.
Nexus managing director Evan Glucoft said at the time, “The Big Lots business has incredible potential and we are confident its greatest days are ahead,” as it planned to return Big Lots to its preeminent position as an “iconic” extreme-value retailer.
Apparently, Big Lots didn’t look so iconic after Nexus started kicking the tires so Big Lots is left to find another buyer post-haste to keep the lights on.
The announcement of the GOB sale couldn’t come at a better time for consumers with less than a week before Christmas. But it couldn’t come at a worse one for the company’s 27,000 employees facing unemployment in the New Year.
LinkedIn reports it is awash with Big Lots employees looking for their next opportunity after Thursday’s announcement.
Big Lots’ Fall From Grace
Big Lots most recent first quarter 2025 earnings call was in June, and it postponed the second quarter announcement in September as it was putting the Nexus deal in place. It delisted from the New York Stock Exchange about the same time.
Through May 4, Big Lots reported net sales of $1 billion, down 10% from the previous year with a net loss flat at $205 million. It ended fiscal 2024 with revenues of $4.7 billion, off 14% from previous year, and a net loss of $482 million from $211 million in 2023.
In its first quarter earnings call, Thorn advised the company would achieve positive comp sales growth later in the year. He also reported the company was ahead of its cost-control measures, foreseeing $185 million in cumulative bottom-line benefits by year end.
Blaming the quarter’s missed sales goals on a pullback in consumer spending, most especially in high-ticket discretionary items, Thorn said, “We remain focused on managing through the current economic cycle by controlling the controllables.”
Yet despite its promise to help people “Live Big and Save Lots” and firm up its position as “America’s Discount Home Store,” it couldn’t overcome headwinds in the home retail market.
Through November, the furniture and home furnishings retail segment has declined 3.3% to $123 billion, making it the biggest loser in a core retail market that is up 3.5%, according to the National Retail Federation.
More Details
According to Bloomberg, the Nexus deal imploded because its valuation appraisal of the company’s inventory was lower than expected, “making the economics of the sale to Nexus no longer viable,” per unidentified sources with insider knowledge.
The company reported inventory of $950 million at the end of the first quarter, representing a 13% decrease from previous year on fewer on-hand goods and lower average unit costs.
Big Lots retail landlords are lining up to get that their back rent paid. Landlord attorney Ivan Gold told Bloomberg, “To a certain extent, we were the canary in the coal mine with our motion for a status conference.”
Fearing that they will be the last in line after the company covers the costs of bankruptcy and attorney fees, an official committee of unsecured creditors claimed there is “tens of millions of dollars” owed in unpaid rent.
They asked the bankruptcy court to have company assets liquidated by a court-appointed trustee so they get their share of what’s left. Big Lots most recently reported having $46 million in cash or cash equivalents on hand.
Hope Springs Eternal
Big Lots attorney said the company is still in talks with Nexus and another firm about keeping “several hundred” stores, instead of buying the full lot as Nexus originally planned. However, a plan to keep some stores going will have to come together in a few short weeks.
While Big Lots fights to stay afloat, other retailers face a similar tough slog in the home sector.
LL Flooring, now doing business under its previous Lumber Liquidators banner, filed for bankruptcy earlier this year and completed the sale of 219 of its roughly 400 stores to F9 Investments. True to its name, the remaining stores are being liquidated in partnership with Hilco Merchant Resources.
The Container Store with about 100 stores selling home organization solutions is on the verge of a bankruptcy filing, according to Bloomberg Law. Net sales declined 11% in its second quarter to $197 million with adjusted EBITDA down 77%.
The Container Store’s financial troubles have upended a proposed $40 million investment from Beyond, the multi-brand home-centric online retailer operating Bed Bath & Beyond, Baby & Beyond and Overstock, plus fashion-focused Zulily. That deal is on hold until The Container Store secures new financing that is deemed acceptable to Beyond.
And Beyond is facing troubles all its own. Net revenue was down 17% in third quarter 2024 to $311 million, with orders off 19% and a net loss of $61 million.
While executive chairman Marcus Lemonis said the company is in “early innings” of realizing its mission to help customers “unlock value within the four walls of their home and four corners of their property.”
He explained the company is in the process of transforming “its asset-light business into an affinity and data monetization model with a strong technology focus.” That sounds impressive, but it would help if he translated what that means into plain English.
Currently Beyond stock is trading down over 80% since the beginning of the year from $27 per share to just over $5 currently.
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