A discount homeware store chain in the U.S. has considered filing for bankruptcy protection, sparking fears of mass store closures.
Columbus, Ohio-based Big Lots, which boasts of almost 1,400 stores across the country, is the latest to warn of money problems. The company has told financial regulators that it many not be able to continue as a "going concern." Big Lots has seen its earnings fall consistently for each of the past 10 quarters, losing $132 million in the first three months of 2024 alone.
In a recent filing with the Securities and Exchange Commission (SEC), Big Lots said the losses so far this year – on top of further losses in 2022 and 2023 – meant it had used up most of its spare cash. Retailers need money in the bank to cover the cost of stock. According to company executives, Big Lots "expects to experience further operating losses and expects to experience difficulty remaining in compliance" with credit agreements later this year.
The SEC filing also stated that the company has tried to cut costs, boost customer spending, and get cheaper credit. But these steps might not be enough, raising "substantial doubt about the company's ability to continue as a going concern."
Big Lots was founded in 1967 by Sol Shenk. It was one of the first types of store known as close-out, which meant it sold goods that were nearly out of date in the case of food or not the current season for fashion and homeware. The chain grew over the years to include stores operating under several names including Mac Frugal's Bargains, Closeouts and Pic 'N' Save.
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In 2023, Big Lost closed down 52 stores – which was followed by 13 store closures this year. But the discount homeware retailer isn't alone, as other discount retailers are feeling the pinch. They are even more exposed to Americans cutting back on spending than stores that attract middle-class shoppers.
Lower-income customers have been cutting back after two and a half years of punishing price rises. This led to Big Lots looking for fresh financing in February, according to Bloomberg News.
Big Lots managers: Stores keep on getting stuff nobody wants to buy
But some managers of Big Lots stores are not surprised. They have complained that company's top management in Ohio keep on sending truckloads of products that customers don't want. Some of them have taken to the Reddit discussion platform to air out their complaints.
"In the last month, we received four of the largest trucks we have seen all year and triple the amount we normally get," one wrote. "The warehouse is pretty much full to capacity and none of [it] is selling."
Another posted: "Isn't that the weirdest thing? So much stuff, but none of it is what people want. Perhaps instead of blowing our budget on cheap garbage nobody wants, corporate will look into what's popular and will only buy that.'"
These problems for Big Lots come amid a widespread "retail apocalypse," which is seeing brick-and-mortar stores struggle to combat rampant theft and increasingly tight margins. There have been almost 2,600 store closures so far in 2024.
Walmart recently closed three of its under-performing locations, while Rite Aid said it is shutting 27 pharmacies. Dollar stores have been hit hard too, with 99 Cents Only announcing in April it would shutter all 371 of its locations across California, Texas, Arizona and Nevada. (Related: Walmart store closures leave local communities grappling with economic and social consequences.)
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