Big Lots Files for Bankruptcy Protection, Sold to Private Equity Firm, Vows to Continue ‘Extreme Bargains’

Discount home goods retailer Big Lots filed for bankruptcy protection on Monday, facing challenges from high interest rates and a sluggish housing market that have dampened demand for its low-priced furniture and decor.

As part of its Chapter 11 filing, Big Lots has agreed to sell its business to private equity firm Nexus Capital Management for approximately $760 million, which includes $2.5 million in cash plus the company’s remaining debt and liabilities, according to court records.

With over 1,300 stores across 48 states, Big Lots is one of the largest closeout retailers in the U.S., known for offering deep discounts on home goods. The company generated about $4.7 billion in revenue for fiscal 2023, but has seen a decline in sales as pandemic-era demand for home furnishings subsided.

In its press release and court filings, Big Lots stated it will continue normal operations but will begin closing nearly 300 stores to restructure its balance sheet and cut costs.

“The steps we are taking today will position us for future success with new owners who support our business and provide financial stability,” said CEO Bruce Thorn. “We are committed to maintaining our focus on delivering extreme value, enhancing our operational efficiency, and providing a great customer experience.”

Nexus Capital Management’s managing director, Evan Glucoft, expressed confidence in Big Lots’ future, stating, “We are excited to partner with Big Lots and help restore this iconic brand to its status as a leading extreme value retailer.”

Big Lots has struggled in recent months due to macroeconomic factors like high inflation and interest rates, which have reduced consumer spending on home goods. While discount retailers generally perform well during economic downturns, Big Lots has faced stiff competition from other discount chains and online retailers.

Neil Saunders, managing director of GlobalData, noted that Big Lots has faced issues with value perception and product assortment, which has affected its competitive edge. “The assortment is often perceived as disorganized, and there are more appealing options available at other stores,” he said.

As part of the bankruptcy process, Big Lots will conduct a court-supervised auction for its business, where it could receive higher bids from other potential buyers. The company is working with law firm Davis Polk & Wardwell, investment bank Guggenheim Securities, and advisory firm AlixPartners, with A&G Real Estate Partners advising on real estate matters. Nexus will be represented by law firm Kirkland & Ellis.