'High Inflation' Forces Big Lots to File for Bankruptcy - Fate of Its 1,400 Stores Uncertain
Big Lots is in big trouble — and they say Bidenomics, in part, is to blame.
Oh, that exact word didn’t appear anywhere in the discount retailer’s Chapter 11 bankruptcy filing on Monday. However, the retailer, which operates roughly 1,400 outlets, cited high inflation and subsequent changes in consumer patterns as reasons for the filing, CNN reported.
The filing will likely see a private equity firm, Nexus Capital, acquire “substantially all” of the Big Lots stores and close roughly 300 of them.
However, since Nexus is a so-called “stalking horse bidder” — i.e., a low locked-in bid that acts as a sort of reserve in bankruptcy proceedings — another higher bidder could potentially emerge to take over the company’s operations.
However, Sarah Foss of financial publication Debtwire said it was “unlikely that another bidder will emerge” due to the short timeline; a news release stated that “if Nexus is deemed the winning bidder, the parties anticipate closing the transaction during the fourth quarter of 2024.”
The 57-year-old Big Lots has received over $700 million in fresh funding and all stores not slated to be closed will remain open during the process.
“We also intend to continue optimizing our store footprint during the process. Though most of our stores are profitable, and we are taking every step possible to improve the profitability of all our stores, we will need to close certain locations to ensure that our business operates efficiently and we can continue serving our customers,” the retailer said in a statement.
Big Lots added: “Taken together, these actions are intended to accelerate our efforts to improve our performance and strengthen our business for the future.”
“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,” said Big Lots CEO Bruce Thorn.
In the news release, Big Lots blamed economic factors beyond its control for the company’s bankruptcy filing.
“Like many other retail businesses, the Company has been adversely affected by recent macroeconomic factors such as high inflation and interest rates that are beyond its control,” the release read. “The prevailing economic trends have been particularly challenging to Big Lots, as its core customers curbed their discretionary spending on the home and seasonal product categories that represent a significant portion of the Company’s revenue.”
In addition, CNN noted in its report, consumers are “seeking out value – but not necessarily lower costs.”
“That’s why dollar stores have been struggling while sales at Walmart and Amazon have been booming. It’s also why McDonald’s has been struggling while casual chains like Applebee’s have been growing.”
Even so, as CNN noted, sit-down restaurants like Applebee’s have been forced to drive a hard bargain to get customers in the door — something that has backfired for other chains, like Red Lobster, which was also forced into a “stalking-horse” bankruptcy filing after attempts to increase foot traffic led to supersized order of red ink.
In other words, this is Bidenomics in action. And, now that we now know that the top half of the ticket isn’t going to be looking for another term in office, we can start calling it Kamalanomics, as well. After all, she’s the “last person in the room” when Biden makes a decision, right?
Even if inflation seems “tamed” on paper, salaries haven’t caught up. Discretionary spending is still tight, and the jobs market hasn’t exactly been on fire.
This is what the “joy” and “vibes” campaign wants you to sign up for another four years of: having to pinch pennies so tightly that even Big Lots is out of the equation.
Hasn’t America suffered enough?
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